Summary:
LMS Compliance (LMS), the next S$100mil market cap asset protection provider expected to triple earnings over next 2 years driven by 4 new businesses in Novel Food certification (18% FY26F Net Profit), Data Center water testing (15%), EV inspection (8%) & associate Prismatic (8%).
Robust business model with FCF yield above 14%, no gearing and circa 45% of balance sheet in cash. Currently trades at significant FY26F PE & PEG discount to global TIC peers (50-94%) and STI index (22-93%).
Near term macro risks due to Iran conflict is beneficial for Asset protection services; Rising petrol prices driving demand for EVs, shortage of global fertilizers & spillover demand for alternative proteins, higher input F&B costs & search for cheaper substitutes will drive tighter regulatory oversight.
Based on LMS’ long-tail annuity/ SaaS like B2B & B2G business model, we estimate LMS Intrinsic Value/Target Price at 68cts. Initiate BUY with potential +84% upside.
George.Koh@rhtgoc.com
Paul.Schymyck@rhtgoc.com
