This article first appeared in Capital, The Edge Malaysia Weekly on March 17, 2025 - March 23, 2025

FULL-fledged property developer and construction firm Lim Seong Hai Capital Bhd (LSH Capital) (KL:LSH), which is set to migrate from the LEAP Market and make its debut on the ACE Market this Friday (March 21), is looking to expand its footprint in the facilities management sector, following its latest win — a 20-year concession to operate and maintain the iconic Kuala Lumpur Tower.

LSH Capital major shareholder and non-executive chairman Tan Sri Lim Keng Cheng says the group is ready to explore facilities management opportunities for all assets that could benefit from its expertise.

“We are actively building up our tender and order books to have a sustained revenue growth. We have just set foot in the facilities management segment with the KL Tower project. This is a new segment that will provide us with a steady and recurring income.

“We also have plans to explore potential infrastructure construction projects and concession ownership opportunities that can strengthen our business growth,” he tells The Edge in an exclusive interview at his office in Wisma Lim Seong Hai, in Jalan Gombak, Kuala Lumpur.

According to Keng Cheng, there is potential for facilities management to become one of LSH Capital’s main revenue contributors. As such, the group is strategically positioning itself to capture this market.

From his work desk, Keng Cheng enjoys a clear view of KL Tower, the world’s seventh-tallest telecommunication tower. “That is why I wanted to do the interview with you here,” he jokes.

Keng Cheng’s office also offers a sweeping panorama of KL’s ever-expanding skyline. Asked whether newer, taller skyscapers might compete with KL Tower for tourist footfall, he remains unfazed.

At 421m, Keng Cheng points out, KL Tower is still the only skyscraper in the city offering a true 360° panoramic view. Rather than seeing the rising skyline as competition, he believes it will only make tourists more eager to visit KL Tower.

“I don’t see them as competitors. I see them as contributors,” he says, half in jest.

On March 10, LSH Capital announced that it had signed the KL Tower concession agreement with the federal government, to commence on April 1.

The concession was awarded to LSH Service Master Sdn Bhd (LSHSM), a 70:30 joint venture between LSH Capital’s wholly-owned subsidiary LSH BEST Builders Sdn Bhd and Service Master (M) Sdn Bhd (SMMSB).

SMMSB, a privately held bumiputera company, specialises in mechanical and electrical (M&E) works and provides building maintenance services.

As part of the agreement, the government will receive 15% of LSHSM’s annual revenue.

The agreement gives LSHSM exclusive rights to operate, manage and maintain KL Tower and its concession areas. These include refurbishment and maintenance work, security management and facility management services.

“This new expansion into the facilities management is expected to provide a stable base of recurring income, allowing us to achieve sustainable growth,” says Keng Cheng.

He declines, however, to disclose financial projections for the KL Tower concession.

The tower’s current occupancy rate stands at roughly 90%. Unlike traditional shopping malls, however, its space is not dominated by store lots and kiosks. Instead, most of its retailers are in the food and beverage sector.

In 2025, KL Tower hopes to host several Asean events that are anticipated to bring more visibility and foot traffic to the building. With Visit Malaysia Year 2026 on the horizon, LSH Capital’s focus next year will be to leverage this opportunity to attract more visitors and businesses.

“Currently, KL Towers sees around 2,000 visitors per day. While these numbers remain relatively low post-Covid, we see room for growth as tourism and business activities pick up,” says Keng Cheng, who has more than four decades’ experience in construction and property development-related industries.

LSHSM is authorised to collect admission fees, generate revenue from commercial activities, and develop new facilities such as retail spaces, event venues, and parking areas. In addition, it will manage existing commercial facilities, including restaurants and kiosks, while retaining all related income.

The concession is not expected to have a significant impact on the group’s gearing, with operational costs estimated at RM10.3 million annually.

The deal allows LSH Capital to monetise KL Tower’s potential as a tourism and broadcasting hub while establishing facility management services as a new source of recurring income. Meanwhile, the design and construction of ancillary facilities, estimated at RM70.2 million, are expected to boost LSH Capital’s current construction order book.

“We’re not here to criticise anyone but, previously, the government had to pay for KL Tower’s maintenance. With our model, not only do we take on that responsibility but we also contribute 15% of our [LSHSM’s] revenue back to them,” says Keng Cheng.

KL Tower, a government-owned asset, has been under scrutiny since 2022, when the Malaysian Anti-Corruption Commission (MACC) launched an investigation into alleged irregularities surrounding its ownership transfer from Telekom Malaysia Bhd (KL:TM) to a lesser-known firm.

Previously, KL Tower was managed by Menara Kuala Lumpur Sdn Bhd, a subsidiary of TM. In October 2021, however, TM decided not to renew the concession, citing the tower’s shift from telecommunications services to a tourism and hospitality-focused operation.

In April 2023, Hydroshoppe Sdn Bhd director Abdul Hamid Shaikh Abdul Razak Shaikh was charged with offering RM500,000 annually for 15 years to then-Communications and Multimedia Minister Tan Sri Annuar Musa to fast-track the takeover of the KL Tower concession by his company.

Then, in May last year, the federal government announced that LSHSM had been awarded the KL Tower concession for 20 years, following a tender evaluation by the government and the Public Private Partnership Unit (UKAS).

LSH Capital’s initial public offering (IPO) is estimated to raise RM168.08 million. The IPO, priced at 88 sen, comprises 132 million new shares and an offer-for-sale of 59 million existing shares, according to the prospectus released on Feb 28. Collectively, the listing will offer investors a 22.78% stake in the company.

The public issue is expected to raise gross proceeds of RM116.16 million, of which RM108.86 million has been earmarked as working capital for the group’s construction projects, with the remaining amount to be used to cover its estimated listing expenses.

Under the public issue, LSH Capital will allocate 16.77 million new shares for the Malaysian public and reserve 12.58 million new shares for eligible individuals. Meanwhile, 102.66 million new shares will be offered to bumiputera investors via private placement.

Overall, the IPO was oversubscribed by 11.88 times.

As for the offer-for-sale through private placement, it involves 2.14 million existing shares to approved bumiputera investors, and 56.86 million shares to institutional and select investors.

AmInvestment Bank is the IPO’s principal adviser, sponsor, sole underwriter and sole placement agent.

Notably, LSH Capital is the largest LEAP Market-listed company on Bursa Malaysia. When LSH Capital first floated its shares on the LEAP Market in 2021, it was valued at merely RM46.16 million. Back then, the company was targeting a market capitalisation of RM1 billion within 10 years.

Now, at the ACE IPO price of 88 sen, LSH Capital would have a market capitalisation of RM737.76 million. Upon listing, the company will be valued at 9.92 times its earnings in the financial year ended Sept 30, 2024 (FY2024).

“LSH Capital’s price-earnings ratio is lower than the industry average of 16.47 times, making it an attractive investment. We have a dividend policy of 30% of net profit, while also retaining funds for growth. With our expansion strategy in place, we wish to provide our investors with long-term value appreciation and potential dividend yield growth,” says Keng Cheng.

The Lim Seong Hai Group (LSH Group) was founded in 1966 by the late Lim Seong Hai under the name Lim Seong Hai Construction & Co. It is an integrated group with core interests in property development, construction, financial services, real estate, heavy machinery leasing, building materials and the trading, retailing and manufacturing of electrical supplies.

Seong Hai passed away in 1976. The LSH Group — including the listed vehicle LSH Capital — is now run by his four children: Keng Cheng, Datuk Lim Keng Guan, Jaclyn Lim Pak Lian and Alex Lim Keng Hun. Post-listing, the Lim siblings’ combined stakes will be diluted to a little under 65%.

LSH Capital was incorporated in November 2020 during the Covid-19 pandemic, before it was listed on the LEAP Market in July 2021.

At that time, only Lim Seong Hai Lighting Sdn Bhd (building materials and lighting products supplier) and Knight Auto Sdn Bhd (wholesale and distribution of hardware products, as well as rental of machinery and equipment) were injected into LSH Capital. These businesses are now grouped under LSH Capital’s construction products division.

Today, LSH Capital also focuses on two other business segments: property development; as well as construction and engineering works, and construction-related services and solutions.

LSH Capital reported a net profit of RM74.3 million on the back of revenue of RM361.4 million in FY2024.

As at end-January this year, the group’s construction order book stood at RM1.5 billion, with a healthy tender pipeline. LSH Capital has two major ongoing property development projects, which carry a total gross development value (GDV) of RM1.6 billion.

LSH Segar in Cheras, with a GDV of RM395.86 million, is slated for completion in the third quarter of 2026. Lake Side Homes in Sungai Besi, with a GDV of RM1.153 billion, is estimated to be completed by the fourth quarter of 2029.

“Our current total outstanding construction order book, with a strong pipeline of projects, provides earnings visibility for the coming three to four years. We are still actively pursuing more infrastructure construction and property development projects, as well as concession-based infrastructure projects,” says Keng Cheng.

He reiterates that LSH Capital’s primary focus remains on scaling its business further.

“As for the next major milestone, I do not rule out the possibility of exploring a listing on the Main Market when we have further proven our business and when the time is right,” he says. 

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