DBS initiates coverage on JustCo with ‘buy’, S$1.06 target price
Bank says the regional co-working player is at an inflection point as demand for hybrid working rises
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[SINGAPORE] DBS on Tuesday (Jul 14) initiated coverage on home-grown co-working player JustCo with a “buy” and a 12-month target price of S$1.06.
Analysts Dale Lai and Derek Tan said that the regional co-working player is at a structural inflection point, driven by accelerating enterprise demand for hybrid working configurations.
Another boost for JustCo will be its ambitious 40 per cent capacity expansion pipeline mapped out for the current fiscal year. The company on Friday said it was taking over the master tenancy of the OG Orchard Point building. The building will be renamed JustCo Place.
JustCo also unveiled JustAt, a new co-living brand that will debut at JustCo Place and operate from January next year.
Founded and headquartered in Singapore, JustCo has grown into the Republic’s largest flexible workspace provider, commanding a double-digit penetration share across marquee Asia-Pacific business hubs, according to the DBS report.
These include a 15.6 per cent share in Singapore, 17.7 per cent in Bangkok and 35.3 per cent in Taipei.
As at late 2025, the group operated a network of 50 centres across 10 regional cities, totalling roughly 35,000 workstations.
JustCo had a tough start after its initial public offering of about S$0.94 per share. On its first trading day on May 22, its shares closed at S$0.775 – about 17.6 per cent below its IPO price. Since then, JustCo’s shares have sunk even lower and closed at S$0.60 on Monday.
Apac penetration low
The analysts noted that while flexible offices have expanded rapidly across the Asia-Pacific region, structural penetration remains in its infancy.
“Penetration across key markets in Apac remains relatively low at around 5.4 per cent, well below the 10.6 per cent seen in more developed markets such as Central London,” said the report.
“This underscores the significant structural growth headroom and long-term opportunity in the region.”
Driven by return-to-office trends where peak daily utilisation outpaces weekly averages, corporations are using flexible spaces such as those provided by JustCo to optimise their real estate portfolios dynamically.
The broader regional market is forecast to clock a compound annual growth rate of about 14 per cent over the next two years.
DBS forecast that FY26 will serve as an operational turning point for JustCo as it deploys a calibrated “three-pillar expansion strategy” to launch 28 new locations, stretching its global footprint to about 78 centres by the close of 2026.
A core component of this campaign will focus on expanding footprint density in Japan. Beyond current strongholds, the group has concrete plans to break ground in several high-growth target addressable markets, including Hong Kong, India, Malaysia and the Philippines, which are slated to add about 3,900 workstations to the ecosystem.
The analysts also pointed out that JustCo will execute this roll-out using a dual operational structure. While it will maintain traditional leases to capture outright occupancy upside, it is increasingly pivoting towards capital-light management contracts.
Under management models, landlords bankroll the underlying fit-out capital expenditure, allowing JustCo to scale rapidly, lower balance sheet risk and capture predictable, fee-based revenue.
Operational turnaround
On the financial front, JustCo’s disciplined deployment model stands out against historical industry trends, said DBS. Backed by proprietary technology and in-house architectural design, new centres achieve cash earnings breakeven within a five months on average, yielding complete capital expenditure payback within about 16 months.
DBS noted that this efficiency has allowed the firm to record three-fold growth in its cash earnings margin, climbing from 3 per cent in 2023 to 9.2 per cent in 2025.
JustCo has also not drawn on third-party bank loans since its founding and operates with zero outstanding bank debt, boasting a cash pile of US$104 million at the close of 2025.
DBS said it expects the upcoming FY26-FY27 expansion capital requirements of roughly US$130 million to be entirely self-funded via cash reserves and a S$100 million capital injection from its recent public listing.
Downside risks to JustCo’s investment thesis include potential delays in the delivery of the 28 planned pipeline centres, said DBS.
This is on top of possibly slower-than-anticipated corporate ramp-up cycles, inflationary pressures on refurbishment materials and localised customer concentration risks across volatile tech sectors.
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