KGI Research Singapore

Singapore's leading broker offering Futures, FX, Equities and Wealth Management.

Company Update: Centurion Corp Ltd.

Company Update: 15 March 2024

Centre of excellence

  • Foreign worker dormitories and student accommodations continue to contribute to revenue growth. Total revenue for 2H23 rose by 22% YoY from S$89.9mn to S$109.3mn. Despite revenue growth being partially offset by the cessation of management contracts of two onboard centres in Singapore, 2H23 revenue still managed to grow 22% YoY, showing strength in its rental rate revisions and occupancy rates across its PBWAs and PBSAs. As of FY23, the total asset under management was S$2.0bn with 67,377 operational beds in 34 properties in 15 cities globally.
  • Continued organic growth of portfolio. Centurion is pursuing strategic, scalable growth through partnerships, investment funds, and fee-based management services. This includes selectively acquiring properties in existing and new markets, optimizing existing assets through renovations and reviews, and expanding revenue streams with specialized management services and ancillary income. This comprehensive strategy is expected to significantly increase its portfolio bed count by 4,310 in FY24.

FY23 financial results.

FY23 revenue rose 15% YoY from S$180.5mn to S$207.2mn. The respective FY23 financial occupancy of PBWA and PBSA were 96% and 92%, up from 90% and 86% in FY22. The higher contributions from strong occupancies and improved rental rates across all the PBWAs and PBSAs, alongside an increase of xx number of beds available for rent that came into operation helped boost Centurion’s revenue during the year. However, these positives were partially offset by the weaker British Pound, Malaysian Ringgit, and Australian Dollar against SGD which resulted in lower revenue reported in Singapore dollars. Despite these factors, the positives outweighed the negatives, leading to continued growth in both PBWA and PBSA segmental revenues. Higher rental rates across its properties in these four markets also contributed to the increase in revenue.

Prudent financial structure

The company’s balance sheet shows a healthy financial position with S$74.7m in cash and bank balances. This increase is mainly from operating activities. Current assets have increased due to assets held for sale, while current liabilities increased because of higher rental deposits and advance rentals received from new tenants. The company has enough cash and banking facilities to cover its current liabilities. Non-current liabilities increased due to additional loan drawdowns for asset development and acquisitions, partially offset by lease liability repayments. The average long-term bank debt maturity is 6 years, and the interest cover ratio is well within the threshold at 3.6 times.

Valuation & Action

We maintain our OUTPERFORM recommendation, with an increased target price of S$0.62 for Centurion, based on DCF with a terminal growth rate of 2.0% and a WACC of 5.2%. With expansion plans underway alongside improved revenue growth due to the continued effect of the revision of rental rates upwards, as previously anticipated, we expect the trend to continue in the short run and normalise in the long run due to the upward revision of rental reversion rates in FY23 which will continue to reflect in FY24 revenue figures.


Interest rates remain higher for longer, and profit margins continue to be under pressure due to higher operating costs.

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