Centurion Corp (CENT SP) - Maybank Kim Eng 2016-11-15: Stable Occupancy Rate

Centurion Corp (CENT SP) - Maybank Kim Eng 2016-11-15: Stable Occupancy Rate CENTURION CORPORATION LIMITED OU8.SI

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: 
    1. Westlite Woodlands started in Jul 2015 (76% occ. rate) and 
    2. 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: 
    1. CSL Selegie, started in Oct 2015 
    2. four newly acquired student accommodation assets in UK and 
    3. 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 | http://www.maybank-ke.com.sg/ 2016-11-15
Maybank Kim Eng SGX Stock Analyst Report HOLD Maintain HOLD 0.360 Down 0.370