
Centurion Corp (CENT SP) - Stable Occupancy Rate
3Q16 results in line; occupancy rate remains stable
- 3Q16 earnings were in line with our expectation and grew 6% YoY.
- 9M16 core earnings met 72% of our FY16E.
- Occupancy rate across all the established dormitories in Singapore remain stable at around 95%, while four-month-old ASPRI-Westlite Papan has reached 40%. Bed rates also remain stable.
- Malaysia recorded mild improvement as the government relaxed the hiring freeze of foreign workers. Also, student dormitories in UK and Australia remain robust.
- Due to the unsuccessful appeal over bed capacity in Westlite Toh Guan, c.800 beds have to be reduced. We therefore cut FY17-18E EPS and our DCF-based TP by 3% to SGD0.36 (WACC 6.8%, LTG 1.5%). Maintain HOLD.
Workers accommodation business holding up
- 3Q16 workers’ accommodation segment posted 18% YoY revenue growth, mainly lifted by two new dormitories in Singapore:
- Westlite Woodlands started in Jul 2015 (76% occ. rate) and
- ASPRI-Westlite Papan started in May 2016 (c.40% occ. rate).
- In Malaysia, revenue declined slightly YoY due to lower occupancy rates of > 65% in 3Q16 (including Westlite Senai II, which commenced operations in Jan 2016); however, occupancy rates improved QoQ, from 61% in 2Q16.
Student accommodation still expanding
- Student accommodation business continued to grow and contributed 23% of total revenue in 3Q16. The growth was largely attributed to:
- CSL Selegie, started in Oct 2015
- four newly acquired student accommodation assets in UK and
- positive rental reversions from business in Australia and the United Kingdom.
Lacklustre outlook; maintain HOLD
- Outlook in the workers accommodation sector in Singapore remains unexciting, on lower foreign workers growth and ample supply of beds.
- On the other hand, the student dormitory segment should remain stable.
- Maintain HOLD with lowered DCF based TP of SGD0.36.
John Cheong CFA
Maybank Kim Eng
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http://www.maybank-ke.com.sg/
2016-11-15
Maybank Kim Eng
SGX Stock
Analyst Report
0.360
Down
0.370