LHN (SGX:41O) Net Profit Margin Drops to 15.3% on One-Off Loss, Challenging Stability Narrative

LHN (SGX:41O) has just released its FY 2025 financial results, reporting revenue of SGD60.9 million and basic EPS of SGD0.014 for the most recent half. Looking at the bigger picture, the company saw revenue climb from SGD105.3 million in FY 2024 H1 to SGD137.0 million in FY 2025 H1. While the headline numbers delivered plenty for investors to consider, compressed profit margins set the tone for this earnings season.

See our full analysis for LHN.

Next up, we will see how these fresh results compare to the narratives investors have been following. Some expectations may hold up, while others could be put to the test.

Curious how numbers become stories that shape markets? Explore Community Narratives

One-Off Loss Weighs on Net Profit

• Net profit margins fell to 15.3% over the past twelve months, a sharp drop from last year's 39.1%, as a one-time loss of SGD17.9 million hit the bottom line.
• Market watchers highlight that while LHN’s recurring operations stayed resilient, this large non-recurring loss pushes reported earnings below historical levels.
  • Bulls may argue that with core operations still delivering steady results, future recovery in margins is plausible once the exceptional charge cycles out of earnings data.
  • On the other hand, a dip of this size challenges claims that profit stability is assured, especially as margin compression continued despite 10.6% annual revenue growth.

DCF Valuation Gap Remains Wide

• Shares currently trade at SGD0.67, which is 42.7% below the DCF fair value of SGD1.17. This represents a substantial discount that stands out in the real estate sector.
• Several investors see this sizable valuation gap as an opportunity, especially with LHN’s price-to-earnings ratio at 14.3x, lower than industry at 17.4x and peers at 41.3x.
  • The bullish narrative is reinforced by consensus that strong forecasted earnings growth (projected at 40.9% per year for the next three years) could help close the discount if the business manages leverage and sustains positive trends.
  • Still, the presence of high debt and fluctuating margins may keep some investors cautious despite the apparent value on offer.

Debt and Margin Trends in Focus

• LHN’s high debt level and unstable dividend track record remain caution flags, with recent margin declines and one-off items highlighting the risks behind the numbers.
• While a steady 10.6% revenue growth rate outpaces the broader Singapore market’s 4% benchmark, investors emphasizing risk note that persistently lower profitability and earnings variability could overshadow solid top-line gains.
  • Industry peers commonly cite margin and leverage management as key to unlocking further upside, meaning any slip in these areas could quickly shift sentiment.
  • The current setup leaves the company balancing attractive growth prospects against a backdrop of financial caution and the need to prove sustainability.

To see how current margin pressures and valuation signals are shaping the broader investment story, dive into the full community narrative for LHN. 📊 Read the full LHN Consensus Narrative.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on LHN's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

LHN’s high debt levels, fluctuating margins, and uneven dividend history highlight ongoing concerns about financial stability and risk management.

If you’re looking for companies with stronger financial health and reliable balance sheets, use our solid balance sheet and fundamentals stocks screener (1944 results) to target stocks built for resilience and lower risk right now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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