- FY24 revenue and adj. PATMI beat our expectations at 110%/119% of our FY24e forecast, respectively. Earnings beat expectations from lower administration expenses due to bonus provisioning and higher co-living revenue.
- Co-living remains the growth driver for LHN. The number of keys jumped 51% YoY to 2,541 (or +9.5% YoY excl. healthcare lodging). Occupancy climbed 3% points YoY to 97.5%. The strength of the Coliwoo brand is reflected by the estimated 70-80% direct sourcing of customers.
- We raise our FY25e earnings by 19% from lower administration costs and higher co-living revenue. Our target price is raised from S$0.42 to S$0.56 and the BUY recommendation is maintained. We peg our valuations to 6.5x FY25e P/E, a discount to the industry which is trading around 13x. Our valuations and forecast exclude the food processing development project, which we deem a one-off. Key earning drivers in FY25e are (i) Commencement of management fees from the 350 healthcare beds; (ii) Exit of loss-making Hong Kong car parks; and (iii) Sale of 49 food processing industrial units. FY26e will benefit from the addition of more than 330 Coliwoo keys. We believe LHN’s co-living franchise is expanding into healthcare accommodation, while the Coliwoo brand is enjoying premium pricing and recognition. The stock trades at a forward PE of 5.1x, dividend yield of 5.4% and 27% discount-to-book value of S$0.608.
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