Towards Financial Freedom
Centurion Corp - Checking Out The Competition
Centurion has completed its acquisition of RMIT Village as well as added new beds to its students dormitories. By FY15, its workers dormitory portfolio is expected to expand 60% to an estimated 54,000 beds. Recently, its rival MES Group opened a new dormitory in Singapore called The Leo. Our channel checks reveal that demand has been robust and The Leo may be fully taken up by month-end. Maintain BUY, with a SGD0.82 TP.
- The Leo likely to be fully taken up by end-February. MES Group has launched a new workers dormitory in Kaki Bukit called The Leo, which has a capacity of over 3,600 beds and a rate of SGD320 per bed/month ->10% higher than Centurion's current average bed rate. The new dormitory has seen robust demand and is expected to hit 100% occupancy at the end of February - merely 2-3 weeks after its launch. This further highlights the acute shortage of supply as well as the strong demand for workers dormitories in Singapore - which will benefit dormitory owners like CENT.
- Completes RMIT Village acquisition. On 10 Feb, Centurion officially completed its acquisition of RMIT Village, which is expected to contribute about SGD7.5m - or 9% - of the group's FY14 revenue. The revenue to be derived would be similar to that from its dormitory business, which contributes a consistent monthly cash flow. The company's management is also actively seeking opportunities in other parts of Australia and the UK with the aim of expanding its student accommodation business.
- Maintain BUY, with DCF-derived TP of SGD0.82. Based on our DCF valuation and assuming a WACC of 7.5%, we derive a TP of SGD0.82, which provides a potential upside of 40%. With Centurion management actively looking for new acquisitions and the company having allocated SGD260m in capex for its expansion plans, we anticipate its growth to increase further from hereon.
SWOT Analysis
Company Profile
Centurion Corporation is the only listed dormitory operator in Singapore. Upon completion of upgrading and development works, the group's accommodation portfolio will grow to a total of about 54,000 beds. It also recently ventured into the student accommodation
business via the acquisition of RMIT Village.
Centurion Corporation is the only listed dormitory operator in Singapore. Upon completion of upgrading and development works, the group's accommodation portfolio will grow to a total of about 54,000 beds. It also recently ventured into the student accommodation
business via the acquisition of RMIT Village.
Recommendation Chart
Source: OSK
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
