LMS COMPLIANCE | SGX: LMS – 1H26 In-Line, Execution on Track

Summary:

LMS Compliance (LMS) saw record revenue growth of RM$18.19 mil, +40.5% yoy, in 1H FY26, significantly outpacing the 32.5% growth in FY25 and translating into a solid +23.9% yoy increase in Net Attributable Profit to RM$3.43 mil. This was in line with RHTC’s investment thesis for LMS of a doubling in revenues in the next couple of years driven by recent acquisitions and forays into new business streams.

The robust top-line growth was largely driven by stronger contributions from certification and consultancy services of RM$5.44 mil, a phenomenal 1,833.7% yoy, supported by the integration of recently acquired business units (such as 75%-owned Anchor Technology). ACC has captured substantial market share in Chinese Novel Food (NF) exports into the USA. RHTC estimates the implied recurring revenue contribution of circa RM$16.8 mil. 1H FY26 results show LMS is executing this strategic pivot and is well on track to capture this revenue upside.

While traditional core laboratory testing and assessment saw slight moderation of RM$0.30 mil, -2.5% yoy, the surge in high-value certification services and ESG/decarbonisation solutions more than offset the decline and means LMS has now grown a substantial second business pillar since FY25. Profitability expanded by a very solid 23.9% to RM$3.43 mil, though net margins faced slight compression but were still a very healthy 18.9%. They should rebound to the mid-20% as LMS scales up the high-value certification side of the business.

After digesting the FY26 results, we are confident that RHTC’s investment thesis for LMS of a doubling in revenue driven by LMS’s high-value testing and certification and ESG/tech expansion in Asia, particularly China. Our intrinsic valuation of $0.68 still stands (60% upside from 6 August’s share price of $0.425 which is already up a market beating 14% since our initiation report on LMS on 4 May 2026.