CENTURION CORPORATION LIMITED (SGX:OU8)
Centurion Corp - COVID-19 Headwinds Remain
- Despite the high vaccination rates, COVID-19 cases are still actively spreading in Singapore and Malaysia, posing a high risk for Centurion Corp (SGX:OU8). While its 1H21 numbers showed some resilience, we believe headwinds will persist. We keep our rating and await further positive signals and catalysts, as we believe the share price will stay muted for now.
- Maintain NEUTRAL rating on Centurion Corp with new DCF-backed S$0.36 target price from S$0.41, 6% upside, ~3% yield.
Centurion Corp reported 1H21 earnings
- 1H21 core numbers were resilient, with recovery seen in Singapore and the UK, while headwinds continued to pressure financial occupancy in Australia. If not for the S$14.49m fair value loss on its properties, 1H21 would have been fairly decent, despite all the COVID-19-related headwinds.
- Student accommodation likely to still be impacted by travel restrictions and a pivot by universities to deliver courses via a mix of face-to-face and online teaching, due to the pandemic. The average financial occupancy for its UK purpose-built student accommodation (PBSA) was 66% in 1H21, compared to 74% in 1H20. For the upcoming academic year 2021/2022, Centurion Corp has pre-leased over half of its bed capacity.
- Headwinds for workers’ accommodations remain. Lower occupancy in Singapore – from the restricted inflow of migrant workers and availability of interim alternative housing to manage COVID-19 risks – was mitigated by stable occupancy in Malaysia. Average financial occupancy for Singapore dormitories slipped from 99% in 1H20 to 82% in 1H21, while in Malaysia, it rose from 80% to 88% in the same period, due to increasing pressure on employers to provide better living conditions for migrant workers during the MCO. However, with COVID-19 cases recently gaining momentum in Singapore, we expect the low occupancy rates to persist for Centurion Corp.
No immediate rerating catalysts.
- We like Centurion Corp for its resilience, as seen during the ongoing pandemic. However, its student and workers’ accommodation businesses should still be impacted, especially with COVID-19 still spreading actively in certain parts of the world. As a result, we stay NEUTRAL on Centurion Corp, while awaiting rerating catalysts or a positive turn in the global COVID-19 situation, such as the resumption of travel and inflow of migrant workers.
- See
- Key risks: An economic recession and a resurgence of COVID-19 infections.
Jarick Seet
RHB Securities Research
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https://www.rhbinvest.com.sg/
2021-09-16
SGX Stock
Analyst Report
0.36
DOWN
0.410
