Centurion - UOB Kay Hian 2022-03-10: Strong Positive Momentum In 2021 Should Continue Into 2022


Centurion - Strong Positive Momentum In 2021 Should Continue Into 2022

  • Centurion reported a strong set of results for 2021. Importantly, we witnessed robust sequential improvement across its businesses and geographies as countries and economies attempt to normalise.
  • In our view, Centurion should continue to experience a recovery in 2022 now that we are hopefully past the COVID-19 peak.
  • Maintain BUY.

Centurion reported stronger 2021 results.

  • Centurion Corp (SGX:OU8) reported 2021 revenue of S$143m (+11% y-o-y) and PATMI of nearly S$53m, triple that of 2020 and exceeded our estimates. The large increase at the bottom line was the result of a fair value gain on investment properties of S$11.4m in 2H21 (mostly relating to UK assets) vs a loss of S$27.6m in 2H20.
  • Robust sequential recovery – A sign of good things to come. Centurion’s 2H21 revenue and gross profit rose 21% and 17% h-o-h respectively, driven by both an expansion in portfolio capacity in Singapore and Malaysia as well as a steady recovery of occupancy rate in its purpose-built student accommodation (PBSA) in the UK.
  • Looking back to the start of COVID-19 in 1H20, the company’s revenue and gross profit has clearly troughed in 2H20. In our view, Centurion’s profitability and business prospects should continue its pace of recovery in 2022.
  • Dividend resumption. Centurion declared a final dividend of S$0.005 per share for 2021 (2020: no dividend). We believe that this should be a welcome return to dividend payments as Centurion had suspended its dividend due to the financial effects of COVID-19.

Singapore – Helped by volume expansion in 2021.

  • The start-up of two Quick Build Dormitories in the purpose-built workers’ accommodation (PBWA) segment in 1H21 and 4Q21 resulted in Singapore seeing an aggregate 8% y-o-y increase in beds in 2021. Occupancy rates were less than ideal at 85%; however, we forecast this to increase to 88% in 2022 as recovery in the number of migrant workers in the construction, marine and process industries increase.

Malaysia – Ahead of the curve.

  • Centurion continued to expand its Malaysian regarding its Malaysian PBWA portfolio.

UK – Leading the world in easing COVID-19 restrictions.

  • Centurion has benefitted from the UK demand from both international and domestic students.

Slight upgrades earnings forecast for Centurion

Adrian LOH UOB Kay Hian Research | https://research.uobkayhian.com/ 2022-03-10
SGX Stock Analyst Report BUY MAINTAIN BUY 0.45 UP 0.430