Tuesday, 18 March 2014

Centurion Corporation

DBS Group Research, March 17
WE visited two of Centurion's Singapore dormitories on March 14: the 8,600-bed Westlite Toh Guan permanent dormitory and the 8,600-bed Westlite Tuas temporary dormitory. We visited several units, and viewed some of the amenities each dormitory provides for its residents.
Many of the features suggested in the news regarding worker welfare, such as money-remittance kiosks and in-house social activities, had already been implemented, making Centurion stand out as a welfare- and safety-minded dormitory operator, in contrast to other factory-converted or purpose-built dormitories which merely provide sleeping areas and minimal ancillary facilities for residents.
We also viewed Toh Guan Phase 2, which opened earlier this year. The dormitory block has already achieved 50 per cent occupancy, and is expected to fill up within the next two months, said its management.
We like Centurion for its strong income visibility and growth over the next two years - we have forecasted 70 per cent growth in core earnings for FY2014, attributable to income contribution from the recent completions of Phase 2 of Westlite Toh Guan and Westlite Mandai, contribution from RMIT Village in Australia, which was acquired last month, the ramp-up of dormitory operations in Malaysia, as well as organic rental reversions for dormitory beds. Furthermore, FY2014 will see a one-off contribution of S$16 million from the sale of industrial land in Mandai.
We maintain our "buy" call, with target price of S$0.86.

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