LHN looking at options to enhance shareholder value

SINGAPORE – Space-optimisation and serviced-apartment specialist LHN Group is looking at options to enhance shareholder value, including boosting its dividend payouts and putting in place a firm dividend policy.

On Friday, the company announced an interim dividend of one cent per share for the first half of its financial year, a 67 per cent increase from the previous year. This works out to a yield of 3.57 per cent on the stock’s Friday closing price of 28 cents.

The dividend payout came despite interim net profit sliding 47 per cent to $16.9 million for the six months to March 31, from $32.2 million for the same period a year earlier.

But LHN said the decline is primarily due to “fair-value losses associated with the company’s investment properties and joint-venture investment properties”, compared with the fair-value gains a year earlier.

The company said it is seriously evaluating various initiatives aimed at enhancing shareholders’ value. One of the initiatives involves “actively seeking capital recycling opportunities” to fund the growth of the Coliwoo business, it said.

“Despite this, the group maintains a strong interest coverage ratio of 6.8 times (excluding fair-value gain or loss) and remains comfortable with its future funding access,” it added.

Coliwoo is the group’s co-living business, which has 12 properties across Singapore, according to its website.

LHN also intends to recommend a dividend payout for the financial years ending Sept 30, 2023, and Sept 30, 2024, to distribute dividends amounting to not less than 30 per cent of adjusted net profit after excluding fair-value gains and losses on owned and joint-venture investment properties, impairment/write-off of assets, non-recurring and one-off items.

The company said its core business remains strong and is growing robustly. While first-half revenue slipped 6 per cent to $55.6 million from $59.2 million, this was due to a reduction in revenue from the dormitory business in its facilities management business.

Excluding revenue contributions from this dormitory business, adjusted revenue during the October 2022 to March 2023 period would have increased by 19.3 per cent year on year.

Adjusted profit for LHN’s space-optimisation business surged 44 per cent, spearheaded by its industrial and residential properties. These properties enjoyed occupancies in the high-90 percentages.

Led by founder and executive chairman Kelvin Lim Lung Tieng, LHN has been aggressively growing its co-living/serviced-apartment businesses in Singapore and around the region.

In February, it launched Coliwoo Orchard, its second-largest Coliwoo property, located at 2 Mount Elizabeth Link. The 22-storey building comprises 135 units with a total of 411 keys (a measure of rooms). 

Coliwoo Lavender Collection, which is a newly renovated mixed-use development comprising a row of shophouses along Lavender Street, has also started operations.

LHN said both properties enjoy healthy occupancy rates and are expected to contribute significantly in the second half of its financial year ending Sept 30.

It currently has around 1,500 keys under its co-living business, and this is expected to reach almost 2,500 keys by the end of 2023. 

As for enhancing shareholder value, some analysts reckon that LHN should even consider an in-specie distribution of shares in its 84 per cent-owned listed logistics arm, LHN Logistics. They calculated that this would be worth about 6 cents a share to LHN Group shareholders.

LHN Logistics announced a trebling in interim net profit to $1.98 million, up from $658,000 a year earlier, and declared a dividend of 0.34 cent per share. No dividend was paid a year earlier.