LNH Ltd (Catalist:410) is a Catalist listed stock in SGX that deals with and manages properties. Their core business include managing properties for commercial and industrial use. They also provide carpark management and logistics solution. LNH runs several subsidiaries including container spaces, storage warehouses and service offices.
In the past 5 days, LNH rose to $0.43 which is a 41% increase from $0.30 merely 5 days ago. In the past 1 year, the company rose a staggering 286% from a base price of $0.11.
In term of finances, the 2020 Annual revenue was at 134.21M and the net income was 24.14M. This represents a good increase in net income of 8.19M in 2019. This are encouraging numbers given the circuit breaker implementation f=due to COVID-19 in 2020. They
The latest rise in stock price was merely 1 day ago when LNH announce a placement of 6.5M new shares at 0.3351 in order to raise $2.2M. The money is likely to be used for purchasing new spaces for co-living use. LNH have in fact been aggressively looking for places in order to expand their co-living and co-working spaces in Singapore.
The PE (price to earning)of LNH is currently at 4.8 times, which seems to be a pretty good number compared to the real estate average of 14x. This said, LNH operates differently in most real estate companies in that it manages properties rather than buy and sell properties.
The PB (Price to book ratio), which is a measure of the share price compared to it’s book value is at 1.3. This is higher than the usual cut off of 1. Which means that LNH could be currently overvalued, or that it is a growth stock and the price has taken future growth into account.
Would I buy the stock now, I would do so cautiously at this point given how much the stock has risen. While the business model is sound and co-living spaces are going to be increasingly popular, there are several things I am worried about currently.
Firstly, the company is aggressively buying properties and taking on a lot more debt. This could prove to be fatal if the popularity of their spaces rise slower than expectation. Secondly, the enumeration of their CEO and board leadership team are high compared to most companies of their size.
All in all, I would still expect the price of LNH to go up over the short terms the next few months to at least $0.50. I am less certain if it will be sustainable in the long run. I would proceed with caution.
Tilt Lee
The above represents my personal opinion only