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Simons Trading Research

Author: simonsg   |   Latest post: Wed, 17 Aug 2022, 10:12 AM

 

Centurion Corp - Positive Outlook Ahead; Keep BUY

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  • Centurion Corp (SGX:OU8) reported encouraging 1Q22 revenue numbers, surging 47% y-o-y, driven by new capacity and business streams from Quick Build Dormitories (QBD) and on-board centres in Singapore, as well as a healthy recovery in occupancy in student accommodation business in the UK and Australia.
  • We raise our FY22F PATMI forecast for Centurion by 13% to factor in a faster recovery due to waning COVID-19 restrictions globally which lifts our DCF-backed target price for Centurion to S$0.43.

Demand for Dormitories Likely to Increase

  • In Singapore, Centurion managed to secure a master lease from JTC Corporation to operate four QBDs adding 6,400 beds in FY2020 with half of them commencing in 2020 while the other two commenced in 2Q21 and 4Q21.
  • Centurion also secured contracts to manage two Migrant Worker Onboarding Centres (MWOC) that commenced operations in 1H 2021 which should further expand its revenue streams. We expect occupancies to recover gradually from the recovery of migrant workers in the construction, marine, and process industries. We also expect rental rates to remain resilient for 2022.

Student Accommodation Rebounded Strongly

  • Centurion's student accommodation business in 1Q22 grew 43% y-o-y to S$11m mainly due to the improvement in occupancy in the UK, Australia, the US, and Korea.
  • Centurion’s portfolio in the US comprises six freehold purpose-build student accommodations (PBSA), which are held under the Centurion US Student Housing Fund of which it holds 28.7% of the units in issue. The fund has commenced the sale process of its US assets, as management continues its strategic review of its portfolio assets to enhance value for shareholders.

Coast Is Clear With Undemanding Valuations

  • With construction it has positive prospects.
  • Using our in-house proprietary methodology, we derive an ESG score of 3.0, which is on par with the country median. As a result, we apply a 0% premium to our target price.
  • Maintain BUY rating on Centurion with a higher DCF-derived target price of S$0.43 from S$0.38, 19% upside and ~7% yield.

Source: RHB Invest Research - 7 Jun 2022

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Labels: Centurion

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Chart Stock Name Last Change Volume 
Centurion 0.385 +0.005 (1.32%) 157,900 

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