CENTURION CORPORATION
OU8.SI
Good 2Q from Student Dorms
- 2Q15 core EPS in line, with 6M15 at 52% of our FY15F.
- Growth largely from student accommodation in UK, acquired in Sep 2014. Lower FY15-17 EPS by 1-6% for higher financing costs after recent MTN issue of SGD65m.
- Maintain BUY with DCF TP down to SGD0.68 from SGD0.70 after EPS revisions.
- Expect catalysts from further expansion and possible acquisitions, with cash raised from recent MTN.
Growth from student dorms; healthy occupancy
- 2Q15 core PATMI and operating cash flow grew 30% and 27% YoY respectively – in line.
- The bulk of its revenue growth came from expansion into the UK’s student-accommodation market in September last year. New bed capacity at Westlite Toh Guan in Singapore also helped.
- Occupancy remained high in all markets. Singapore, the UK and Australia operated near full capacity.
- Malaysia’s occupancy was about 90%.
- Worker-dorm expansion on track The completion of 4,100 beds in Westlite Woodlands in Jul 2015 should produce another leg of growth.
- So should 12,900/6,000 new beds due in FY16/17, in Singapore and Malaysia respectively.
- Net gearing increased from 95% to 124% to finance its new projects.
- Still, net operating cash flow was positive, at SGD0.5m, after interest and principal repayments.
Maintain BUY; catalysts from successful expansion
- Maintain BUY.
- We reduce our DCF TP to SGD0.68 from SGD0.70 (WACC 6.2%) after cutting EPS for higher financing costs and housekeeping adjustments.
- Our TP implies 14.0x FY15 fully-diluted EPS, against a 14.1% EPS CAGR forecast for FY14-17.
- We expect catalysts from further successful expansion and possible acquisitions, with cash raised from recent MTN.
John Cheong | http://www.maybank-ke.com.sg/ Maybank KE 2015-08-07
0.68
Down
0.70
