Maybank Kim Eng 2015-08-13: Centurion Corporation Ltd - Good 2Q from Student Dorms. Maintain BUY.

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
BUY Maintain BUY 0.68 Down 0.70


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