It looks like LHN can do no wrong, with its share price shooting higher and higher.
But as the 2025 Annual General Meeting comes up, I thought it would be useful to share some key questions based off their latest annual report.
Is there ever going to be a cap on coliving?
Over the last year, their coliving segment increased by 85.5%. But one really needs to ask, what is the unique value add of a property that costs $2.7k, for a single room?
I went to look at Property Guru for some similar priced properties. You can see condos, with complete swimming pools, listed at the similar price.
What is it that Coliwoo offers that you don’t have in a condo?
From what Coliwoo says, it appears that the main value add is around the fact that it’s serviced. That means someone comes in to clean your room, your shared spaces, and you don’t have to worry about cleaning.
But is that worth the premium? What explains the popularity?
I still struggle to understand.
That said, there are still other bright spots.
Property development
They are going to sell their food factory, which they did under their new property development arm.
This might be about a $100 million in the bank, and all these will add to the revenues they earn.
The 3Rs of capital – recycle, recycle, recycle
But what’s more important is how actively they are recycling capital. According to this article he did with EdgeProp, Executive Chairman Kelvin Lim spoke about selling the smaller properties with 20 to 60 keys, and aiming for those with at least 150 keys.
This means that they are going to be having more and more cash, to redeploy into assets that have better financial efficiencies in terms of operating costs.
For example, they most recently put up their 3 co-living properties for $120 million, hoping to attract family offices that wanted cash-generating assets. With the land bank in Singapore being extremely tight, not many people have properties to sell.
But LHN does have. A lot of them.
If you don’t know LHN, that’s okay. But they are doing so many deals that it’s hard to ignore them.
Meanwhile, LHN remains active in its capital recycling initiatives to ensure a healthy balance sheet while funding the growth of the Group’s businesses. On 31 July 2024, the Group’s 40% associated company sold the car park at Bukit Timah Shopping Centre, located at 170 Upper Bukit Timah Road (sale price of S$22 million) and the Group invested in a 50% joint venture which purchased Wilmer Place, located at 50 Armenian Street (purchase price of S$26.5 million) which will be operated under the Coliwoo co-living brand.
This mix of capital reallocation is wise, and extremely good in pushing the business forward.
All these bode well for you, the stock investor.
Real estate as a service
During a recent results briefing, I had a friend who went to Coliwoo’s office to attend the briefing.
He was surprised by how caring the staff were. When he went there, he was early by an hour, having mistaken the time. The staff told him it was okay to sit there, and immediately got him a cup of coffee. Of course, the cynics might say that with investors, you always have to be careful in how you treat them.
But mind you, I don’t think this is simply a question about investors.
When I recently wrote to Kelvin Lim asking if I could write his book, he responded with his Corporate Communications Manager to say that there was still much to learn from other pioneers in the field and that it might not be the wisest thing to introduce a book when he was still at the early stages of his career.
You can already see the humility in this man.
That humility translates into how he treats his customers at the various brands he runs.
Even through Coliwoo, he’s expressed an interest to develop a good offer for those working in semiconductor and R&D industries, moving to Singapore for better opportunities.
They are entering ASEAN
For them to enter bigger ASEAN markets is potentially a bigger momentum to their existing business.
As the interest in coliving rises in the region, and more people look to ASEAN as a growing source of economic growth, there are going to be more and more young people moving into neighbouring countries to develop their careers.
That leaves LHN in a prime position to capitalise on the young, aspirational adult who wants a community around him, and a good living environment.
That’s where you might want to invest in LHN.
Don’t miss out on them, especially in an era where interest rates are dropping. This will only push them to do more deals, with more properties being cheaper to get.
Don’t miss this aggressive beast.