Centurion - RHB Invest 2022-03-09: Recovery On Track; Upgrade To BUY

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CENTURION CORPORATION LIMITED (SGX:OU8)

Centurion - Recovery On Track; Upgrade To BUY

• Centurion Corp (SGX:OU8)’s core PATMI rose by 13% y-o-y to S$46.5m in FY22, and revenue grew 11% y-o-y to S$143m – mainly on the addition of four quick-build dormitories (QBDs) and two migrant worker onboarding centres (MWOCs) in Singapore, and a purpose-build worker accommodation (PBWA) facility in Selangor, Malaysia. Its UK student accommodation occupancy rate also rose to 82%.
• We expect its numbers to point to a continued recovery in FY22. Upgrade Centurion to BUY from Neutral.

Dormitory landscape is improving.

• In Singapore, Centurion secured a master lease from JTC Corp to operate four QBDs, and added 6,400 beds in FY20. Two QBDs were occupied by end-2020, and the remaining facilities began operating in 2Q21 and 4Q21. Centurion also secured contracts to manage two MWOCs, which began operating in 1H21. These new assets should further boost its revenue streams.
• In the meantime, we expect occupancy rates to recover gradually from the recovery of migrant worker numbers in the construction, marine and processing industries. We also expect rental rates to remain resilient this year.
• In Malaysia, retrofitting works at two acquired blocks adjacent to Westlite Pasir Gudang have been completed, along with the development works on three additional blocks in Tampoi – all these blocks are in Johor. The demand for good-quality and well-planned worker accommodations is expected to increase, and we expect Centurion's business in Malaysia to continue to fare well.

Recovery in its UK student accommodation business.

• The average occupancy rate in Centurion’s pandemic conditions stabilise even more.

Brighter outlook

• Upgrade Centurion to BUY from grow by 12% y-o-y this year.
• See
  • Centurion Corp's Share Price,
  • Centurion Corp's Target Price,
  • Centurion Corp's Analyst Reports,
  • Centurion Corp's Dividend History,
  • Centurion Corp's Announcements,
  • Centurion Corp's Latest News.
• Using our in-house proprietary methodology, we derived an ESG score of 3 for Centurion, which is on par with the median score of our coverage universe of Singapore stocks. As a result, we do not apply any discount or premium to our target price.

Jarick Seet RHB Securities Research | https://www.rhbinvest.com.sg/ 2022-03-09

SGX Stock Analyst Report BUY UPGRADE NEUTRAL 0.38 UP 0.360