CENT SP / OU8.SI
Building today for the next growth cycle
Real Estate
Revenue rose 31% YoY to S$184.9mn and core NPAT increased 34% to S$87.7mn, while core PATMI fell 16% to S$48.8mn following the increase in earnings attributable to NCI post-CAREIT. Management guides for c.S$190mn of 2H26 revenue; our FY26F revenue forecast is S$382mn.
New Singapore PBWA capacity at Westlite Ubi, Kranji Close and Lok Yang Way, the 7,974-bed Pasir Gudang acquisition, new Australian PBSA projects, entry into Pilbara key worker accommodation and additional Hong Kong rental housing enlarge Centurion’s medium-term earnings base. Following the subsequently announced projects and acquisitions, our forecasts point to c.108,000 operational beds by FY28F.
About S$680mn has been committed since Aug-26, funded mainly with debt, and we forecast net gearing peaking at c.37% in FY27F (Jun-26: 24%). Operating and financing costs rise before the new capacity contributes in full, so earnings should be less linear than capacity, with operating leverage building as projects stabilise from FY28F. We forecast PATMI rising from S$60mn in FY26F to S$174mn by FY30F.
We maintain OUTPERFORM with a DCF-based TP of S$1.90 (from S$1.85), implying 38.7% price upside and c.42% total return including our 4.0 Scts FY26F DPS assumption. Our valuation applies a 6.7% WACC and 2.0% terminal growth. Following the recent share-price pullback, we believe the market is underpricing the earnings uplift from the enlarged development pipeline as capacity begins to stabilise from FY28F.
Key downside risks include (i) execution and funding risk on the enlarged development pipeline; (ii) higher-for-longer interest rates; (iii) slower lease-up amid new Singapore supply; (iv) regulatory and policy changes; (v) cyclical key worker accommodation demand; (vi) related-party JV and asset-recycling risks; and (vii) FX and macroeconomic volatility.
