SINGAPORE (July 27): NRA Capital is maintaining its “overweight” rating on LHN at a fair value of 22.5 cents on the company’s recent announcement of acquiring a 50% stake in Golden Mile Tower’s carpark at 6001 Beach Road.

In a Wednesday report, analyst Liu Jinshu says LHN is on track to meeting NRA’s EBIT growth forecast of $1.1 million from FY16 in FY17 with its carpark acquisition, as the property may add about $0.6 million to LHN’s earnings before interest & tax (EBIT) upon completion by the end of FY9/16.

The new property demonstrates vertical integration strategy as well, he adds. As LHN will be managing the property as part of its facilities management business, the analyst says its operating profitability can be “relatively high” to LHN.

Furthermore, Liu thinks there is potential for 6001 Beach Road to be acquired at a later stage, leveraging on the theme of redeveloping Beach Road. The property is located near the recently-completed Concourse Skyline, as well as KeyPoint, which is currently being redeveloped as City Gate.

“In the near term, we expect LHN to report a strong set of 3Q FY16 results, following pre-tax profit growth of 30.3% year-on-year in 2Q FY16,” Liu asserts.

He reiterates that shareholders can expect higher dividends this year given an interim dividend of 0.2 cents against the full year dividend of 0.3 cents for FY15.

LHN commenced share buybacks in July, acquiring some 1.85 million shares for about $250,000.

On this, Liu states: “We are encouraged by the transactions which signal that the company views its share price as undervalued. At the same time, the shares can be used to reward staff as part of the LHN Performance Share Plan, without diluting existing shareholders.”

LHN closed 1.43% higher at 14.2 cents.