Centurion Corp - RHB Invest 2016-08-15: Hanging Tough

Centurion Corp - RHB Invest 2016-08-15: Hanging Tough CENTURION CORPORATION LIMITED OU8.SI

Centurion Corp - Hanging Tough

  • Going forward, we believe brighter prospects await Centurion
  • With clear signals such as the lifting of the hiring freeze in Malaysia and expansion plans in the student accommodation landscape that are all set to boost its occupancy rate. 
  • However, higher finance costs from the SGD65m multi-currency medium-term note (MTN) taken to finance its expansion plans will likely continue to drag down earnings in the short term. 
  • As such, we maintain a NEUTRAL call and its SGD0.39 TP (8% upside). 
  • Its business remained resilient in 2Q16 despite facing headwinds in 1Q16.


Stable growth while there is still room for improvement in the worker’s accommodation scene. 

  • We expect occupancy levels in Malaysia to pick up but the dormitory scene in Singapore will remain challenging going forward.
  • However, for 2Q16, Centurion Corp’s (Centurion) Singapore segment remained resilient with a healthy occupancy rate of 95%, where it charged competitive rates (SGD250-300 per week). 
  • The occupancy rate of its Malaysia facilities stands at 61%, with prices of RM100-130 per week. Ending the freeze on the hiring of foreign workers in Malaysia will raise its occupancy rate in 2H16.


Student accommodation continues to remain steady. 

  • Its student accommodations’ occupancy rate remains close to full capacity in all three countries (the UK, Australia and Singapore) with prices of GBP100-160 in the UK and AUD300 in Australia per week. The landscape is seen to be promising, due to the continued demand for tertiary education in these countries.


Higher finance costs to drag earnings in the short term. 

  • The SGD2.5m increase in finance costs is attributed to additional interest costs for the SGD65m MTN and finance costs incurred due to expansion plans.
  • Maintain NEUTRAL. Our unchanged DCF-backed TP of SGD0.39 also reflects a 8.4x FY16F P/E.




Jarick Seet RHB Invest | http://www.rhbinvest.com.sg/ 2016-08-15
RHB Invest SGX Stock Analyst Report NEUTRAL Maintain NEUTRAL 0.390 Same 0.390


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