LHN’s Net Profit Fell 55%. Here Are 5 Reasons It Was Actually a Landmark Year

At first glance, LHN Limited’s full-year financial results for 2025 present a confusing picture. The Group’s revenue grew by a healthy 8.6% to S131.5 million, a clear sign of expansion. Yet, its net profit plummeted by a staggering 55.4% to S21.4 million. This apparent contradiction can leave investors scratching their heads: was it a good year or a bad one?

As is often the case in financial reporting, the headline figures don’t tell the whole story. Hidden beneath the surface of these numbers is a narrative of strategic repositioning, the birth of a major new business line, and a sharp focus on core profitability that paints a much more positive picture of the company’s health and future direction.

This article unpacks LHN’s FY2025 performance by revealing five surprising and impactful takeaways from its financial results. By looking past the headline profit number, we can uncover the company’s true operational performance and strategic vision for growth.

1. The Profit Paradox: A Paper Loss Masked a Surge in Real Earnings

The most significant takeaway is the stark contrast between reported profit and actual operating performance. While net profit fell 55.4% to S21.4 million, the Group’s adjusted profit before taxation—a figure that, according to the company, excludes non-cash net fair value changes on investment properties and other one-off items like listing expenses—surged by 33.4% to S45.7 million.

The primary reason for this discrepancy was a non-cash accounting adjustment related to property valuations. In FY2025, the company recorded a net fair value loss on investment properties of S18.0 million. This is a complete reversal from the previous year, when it recorded a net fair value *gain* of S10.5 million. This single, non-cash item was the main driver of the drop in reported net profit.

This is a crucial distinction because it shows that the company’s core business operations did not weaken; in fact, they became significantly more profitable. The headline profit figure was skewed by property valuation estimates, not by a decline in the company’s ability to generate real earnings from its operations.

2. A New Powerhouse: The Property Development Business Went from Zero to $14 Million

One of the most surprising successes of the year was the emergence of the Property Development Business as a major new revenue stream. This business segment generated S$14.1 million in revenue in FY2025, a remarkable achievement considering it produced zero revenue in FY2024.

This inaugural revenue was driven by the successful sale of seven strata-titled units at the company’s food factory located at 55 Tuas South Avenue 1 in Singapore. While a powerful new revenue driver, the segment’s initial profitability was modest, contributing an adjusted profit before taxation of S$0.3 million as it incurred significant commission and marketing expenses for these inaugural sales.

The impact of this development is nonetheless significant. It demonstrates LHN’s successful strategic diversification, creating a powerful new engine for growth. The company has effectively built a new, multi-million dollar business from a standing start, adding a substantial and previously untapped source of income to its portfolio.

3. The Real Growth Story Isn’t What You Think

While the Group’s overall revenue grew by a solid 8.6%, a closer look reveals a counter-intuitive story. The company’s largest and most established business segment, Space Optimisation, actually saw its revenue decrease by 6.8%, falling from S82.9 million to S77.2 million.

So where did the growth come from? The S5.7 million revenue decline from the core Space Optimisation business was more than offset by a combined **S16.2 million** in new and growing revenue from Property Development (S14.1 million) and Facilities Management (S2.1 million). This demonstrates a successful and significant strategic pivot in revenue generation. Furthermore, the dip in the core residential segment wasn’t caused by a decline in recurring rental income; rather, it was because the previous year’s results had been inflated by a large, one-off retrofitting project that did not repeat in FY2025.

This is an important insight because it shows the company is not solely reliant on its traditional core business. It is successfully incubating new growth engines that are already strong enough to more than compensate for minor fluctuations in its largest segment, highlighting a robust and diversified growth strategy.

4. Addition by Subtraction: Exiting a Losing Venture Helped Profits Soar

The Facilities Management Business delivered an impressive performance, with its adjusted profit before taxation increasing by a massive 110.3% to S$4.8 million. While new contracts in Singapore contributed to revenue growth, a key strategic move was instrumental to this profit surge.

Buried within the business review is a crucial detail: in April 2025, the Group exited its loss-making car park business in Hong Kong. This strategic pruning was combined with growth in its home market, where the company secured new facilities management contracts and car park spaces in Singapore, creating a dual-engine improvement in the segment’s performance.

This decision to cut losses from an underperforming venture is a prime example of smart capital allocation. By shedding the Hong Kong car park business, LHN was able to significantly improve the overall profitability of the segment and refocus its resources on more promising opportunities, directly contributing to the segment’s soaring profits.

5. Unlocking Value: The Coliwoo Co-Living Bet Is Getting Bigger

Despite the temporary revenue dip in the broader Residential Properties segment, the Group made major strategic moves that underscore its immense confidence in its Coliwoo co-living brand. FY2025 was a landmark year for this business, marked by two significant strategic wins.

First, the company successfully spun off and listed Coliwoo Holdings Limited on the Mainboard of the SGX-ST. This initial public offering (IPO) was a major success, raising approximately S$101 million and creating a dedicated, high-profile platform to fund the brand’s growth.

Second, the company announced an ambitious expansion plan for its Coliwoo portfolio. It aims to grow from its current base of approximately 2,933 rooms to nearly 4,000 rooms in Singapore by the end of 2026, signaling a clear intent to dominate the burgeoning co-living market.

Executive Chairman Kelvin Lim summarized the strategy:

FY2025 was a landmark year for LHN. We successfully unlocked significant value through the spin-off and listing of our Coliwoo co-living business on the Mainboard of SGX-ST, which raised approximately S$101 million and provides a dedicated platform for its ambitious growth. We also delivered the first revenue from our Property Development Business. Looking ahead, our focus is clear. We have a defined pipeline to expand our Coliwoo portfolio to nearly 4,000 rooms by 2026, capturing the strong demand in the residential market. With our Property Development, Facilities Management and Energy businesses poised for further growth, we are confident in our ability to continue delivering sustainable, long-term value to our shareholders.

These actions—unlocking value through a public listing and committing to aggressive expansion—demonstrate a powerful, long-term belief in the future of the co-living sector.

Conclusion

Looking past the misleading headline net profit reveals a company executing a clear and effective strategy. In FY2025, LHN Limited demonstrated its ability to grow core operational earnings, successfully launch a brand-new business from scratch, strategically exit underperforming ventures, and make bold investments in its highest-growth-potential segment. The story is not one of decline, but of deliberate and successful transformation.

This was a year of building new foundations for future growth. With its strategic direction now clear, the key question for investors is whether these new growth engines in property development and co-living can scale their profitability as successfully as they have scaled their revenue.

WATCH THE EXPLAINER VIDEO BELOW:

LISTEN TO THE PODCAST BELOW:

Related stories: How Goodland Group Flipped Loss To Profit In FY2025