CENTURION CORPORATION LIMITED (SGX:OU8)
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
- We have increased our net profit of S$0.43 while our 2022F P/B target multiple of 0.6x (in line with its past 5-year average P/B) is $0.48.
- See
- Catalysts:
- Full resumption of domestic and international flights.
- Faster-than-expected easing of COVID-19 restrictions in Centurion’s key countries.
Adrian LOH
UOB Kay Hian Research
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https://research.uobkayhian.com/
2022-03-10
SGX Stock
Analyst Report
0.45
UP
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