Centurion Corp - RHB Invest 2018-03-01: Tuas Lease Expiry Impacts 4Q17 Performance

Centurion Corp - RHB Invest 2018-03-01: Tuas Lease Expiry Impacts 4Q17 Performance CENTURION CORPORATION LIMITED OU8.SI

Centurion Corp - Tuas Lease Expiry Impacts 4Q17 Performance

  • Centurion’s 4Q17 topline declined 4% y-o-y, due to the expiry of its lease for Westlite Tuas on 30 Jan. Meanwhile, its Toh Guan dormitory’s capacity has shrunk by 808 beds. 
  • Going forward, management aims to continue expanding into investment management services, as well as ramp up the occupancy rates in its Woodlands and Papan worker dormitories. However, FY18F earnings would likely be hit, due to the absence of the Tuas facility. 
  • Reiterate NEUTRAL, while our DCF-based Target Price stays at SGD0.47 (10% downside).



Final DPS of SGD0.01 and a special angbao. 

  • Centurion Corp declared a final DPS of SGD0.01, and a special DPS of SGD0.005 to reward shareholders. This brings its FY17 total DPS to SGD0.025..


Impacted by Tuas and Toh Guan facilities. 

  • Centurion’s 4Q17 topline decreased 4% y-o-y, mainly due to the expiry of the lease for Westlite Tuas on 30 Jan. The dormitory was fully vacated by 3 Dec 2017. In the meantime, its Toh Guan facility recorded a lower bed capacity, as the bed count was reduced by 808 units. 
  • 4Q17 PATMI also plunged 27% y-o-y to SGD9.3m. 


Expansion into investment management services. 

  • In 4Q17, the group launched its maiden private fund, the Centurion US Student Housing Fund, and acquired six assets across five states in the US. Management aims to expand the fund and acquire more assets going forward – which would boost the group’s management fee income. 
  • As at 31 Dec 2017, Centurion has an active portfolio of 5,348 student accommodation beds under management across 16 purpose-built student accommodations (PBSA) assets in Australia, Singapore, the UK, and the US. Management has a pipeline of 12,700 beds that will be entering the market by FY20 to meet the long-term demand for quality, purpose-built worker accommodations (PBWA) assets in the region.


RMIT Village enhancement is on track. 

  • Centurion Corp’s asset enhancement programme for the development of a new 160-bed wing at RMIT Village, Australia, remains on track. The enhancement initiative is expected to be completed in 4Q18. 
  • Meanwhile, its development project titled dwell Adelaide, acquired in Mar 2017, is on track to be completed 4Q18.


Maintain NEUTRAL, with a DCF-backed Target Price of SGD0.47. 

  • Going forward, management aims to continue expanding into investment management services as well as to ramp up occupancy in its dormitories in Woodlands and Papan. However, FY18 earnings may likely be impacted by the absence of the Tuas facility’s contributions to its numbers. As such, we maintain NEUTRAL with a DCF-backed Target Price of SGD0.47.
  • Key risks to our call include weakness in rental rates in the dormitory space, and changes in government regulations.






Jarick Seet RHB Invest | http://www.rhbinvest.com.sg/ 2018-03-01
RHB Invest SGX Stock Analyst Report NEUTRAL Maintain NEUTRAL 0.47 Up 0.390



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