SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

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Equity Bottom-Up

Capitaland Integrated Commercial Trust / Equity Bottom-Up

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<p>For the 5 trading sessions that spanned May 20 to 26, the Straits Times Index (STI) gained 0.6 per cent, with the FTSE China A50 Index declining 1.1 per cent, the Hang Seng Index dipping 0.5 per cent and the FTSE Bursa Malaysia KLCI sliding 0.8 per cent. </p>

<p>Overall, institutions were net sellers of Singapore stocks over the 5 sessions with S$109 million of net outflow, following the S$3.4 million of net inflow for the preceding 5 sessions. DBS Group Holdings, OCBC, Ascendas Reit, CapitaLand Integrated Commercial Trust and Suntec Reit led the net institutional outflows for the 5 sessions through to May 26.<br><br><strong>Share buybacks</strong></p>

<p>There were 20 primary-listed stocks conducting share buybacks over the 5 sessions ended May 26, with a total consideration of S$51,483,484, down from the S$67,410,124 million for the preceding 5 sessions.<br><br>
Keppel Corporation led the consideration tally with 3,644,000 shares bought at an average price of S$6.80 per share. This brought the total amount of shares purchased on its current mandate to 0.86 per cent of its issued shares (excluding treasury shares).</p>

<p>The preceding mandate saw Keppel buy back 1.52 per cent of its issued shares.</p>

<p>On May 24, the company announced that Keppel Offshore &amp; Marine had, through its wholly owned subsidiaries, signed contracts for the bareboat charter of another 2 KFELS B Class rigs to be deployed in the Middle East.<br><br>
The rigs will be chartered to an established drilling company in the Middle East for deployment in Q4 2022 for a period of 3 years, with options for a year’s extension.</p>

<p>Total revenue from the charters, including the options and modification works by Keppel O&amp;M to prepare the rigs for on-site operations, is expected to be up to S$120 million.</p>

<p>Hong Fok Corporation : H30 0% led the buyback consideration tally for the non-STI stocks over the 5 sessions, purchasing 1,328,000 shares at an average price of 90.1 cents per share.</p>

<p>This brought the total amount of shares purchased on the current mandate to 0.82 per cent of its issued shares (excluding treasury shares).</p>

<p>At the Apr 27 AGM, the chairman of Hong Fok reported that the group had made a good recovery from the effects of the Covid-19 pandemic with an increase in revenue mainly from the sale of more residential units in Concourse Skyline, the sale of the last unit at Jewel of Balmoral, higher property management income and dividend income.<br><br><strong>Director and substantial shareholder transactions</strong></p>

<p>The 5 trading sessions saw fewer than 70 changes to director interests and substantial shareholdings filed for just over 30 primary-listed stocks.</p>

<p>This included 7 company director acquisitions with 3 disposals filed, while substantial shareholders filed 3 acquisitions and 4 disposals.</p>

<p><strong>Centurion Corporation</strong></p>

<p>Between May 20 and 25, Centurion Corporation executive director and joint chairman David Loh Kim Kang acquired 1,831,300 shares of the purpose-built accommodation developer and manager for a consideration of S$640,955.</p>

<p>At 35.0 cents per share, this took his total interest in from 55.18 per cent to 55.40 per cent.</p>

<p>Loh’s preceding acquisition was in October 2020 with 200,000 shares acquired at 33.5 cents per share. He is responsible for the formulation of corporate and business strategies of the company and leads the execution of strategic growth plans of the group.</p>

<p>He has over 20 years of experience in the investment and brokerage industry and has been a principal and director of Centurion Global Ltd, a controlling shareholder of the company from April 2008 to the present.</p>

<p>On May 10, Centurion provided a business update, highlighting a 47 per cent year-on-year increase in Q1 2022 revenue.</p>

<p>This was attributed to higher contributions mainly from new purpose-built worker accommodation (PBWA) capacity and revenue streams, improved performance in Singapore PBWA accommodation assets, and recovery of occupancies in the UK and Australia purpose-built student accommodation portfolio.</p>

<p>These higher contributions were partly offset by the cessation of operations of dwell Selegie and the conclusion of management contracst for 2 factory-converted workers dormitories in Singapore.</p>

<p>Looking ahead, the company noted that as economies recover from Covid-19, and international travel resuming, populations of migrant workers and international students continue to expand across the geographies where Centurion operates.<br><br><strong>ABR Holdings</strong></p>

<p>Between May 23 and 24, ABR Holdings managing director Ang Yee Lim acquired 301,700 shares of the company for a consideration of S$142,721 at an average price of 47.3 cents per share.</p>

<p>This took Ang’s interest in the restaurant operator from 51.71 per cent to 51.86 per cent. His preceding acquisition was on Dec 21 with 120,000 shares acquired at 46.0 cents per share.</p>

<p>ABR Holdings traces its roots to 1979 with the establishment of the 200-seater Swensen’s at Thomson Plaza, the first full-service ice-cream restaurant in Singapore.</p>

<p>Today, ABR operates more than 25 restaurant outlets and the Swensen’s brand has become synonymous with family friendly dining.</p>

<p>Ang was appointed to the board as an executive director in May 2004, and subsequently appointed managing director in July 2004.</p>

<p>He has over 20 years of experience in the food and beverage business and more than 30 years of experience in property development and investment in Singapore, Malaysia, Indonesia and Thailand.<br><br><strong>AnnAik</strong></p>

<p>Between May 24 and 25, Low Kheng, spouse of AnnAik executive chairman cum CEO, Ow Chin Seng, purchased 1,794,900 shares of the company for a consideration of $155,292.</p>

<p>At an average price of 8.7 cents per share, this increased Ow’s total interest in the manufacturer and distributor of stainless-steel products from 38.34 per cent to 38.96 per cent.</p>

<p>Ow is primarily responsible for the business and strategic development of the group. With over 40 years of experience in the hardware and steel industry, he has been instrumental in the strategic direction and development of the group.</p>

<p>With last year’s hike in steel prices, strong demand of steel products and contribution of the environmental division, AnnAik achieved an attributable profit in 2021 of S$3.09 million, compared to S$177,000 in 2020.<br><br><strong>Dyna-Mac Holdings</strong></p>

<p>On May 26, Dyna-Mac Holdings independent non-executive director Henry Tan Song Kok acquired 500,000 shares of the company at 15.7 cents per share.</p>

<p>With a consideration of S$78,600 this took his direct interest in the global multi-disciplinary contractor to 0.05 per cent.</p>

<p>Tan is also an independent director, on the boards of Asia Vets Holdings, BH Global Corporation, Penguin International and Trans-China Automotive Holdings.<br><br><strong>LHT Holdings</strong></p>

<p>On May 24, LHT Holdings managing director, Yap Mui Kee, acquired 49,500 shares of the company for a consideration of S$34,719.</p>

<p>At an average price of 70.1 cents per share, this took her direct interest in the manufacturer of high-quality wooden pallets, boxes, and crates from 14.89 per cent to 14.99 per cent.</p>

<p>Preceding acquisitions saw Yap buy 52,100 shares at 71.0 cents per share on Mar 25, 17,700 shares at 70.0 cents per share on Mar 18 and 24,600 shares of at 69.1 cents per share on Mar 7.</p>

<p>Yap has over 35 years of experience in sales and marketing and plays a key role in exploring opportunities in new markets.</p>

<p>Part of her responsibility is also to monitor market developments and streamline the company’s product development efforts according to market demands.</p>

<p>Yap spearheads the group’s RFID (Radio Frequency Identification) ECR Pallet Tracking System and is actively involved in its ECR (Efficient Consumer Response) pallet rental business in Singapore and Malaysia.<br><br><strong>Oxley Holdings</strong></p>

<p>On May 25, Oxley Holdings executive director and deputy CEO Eric Low See Ching acquired 50,000 shares of the company at an average price of 17.7 cents per share, at a consideration of S$8,850.</p>

<p>Low maintains a 28.13 per cent direct interest in Oxley Holdings and is responsible for the operation of the group, including sales and marketing, project development, business development and financial management.</p>

<p>Low also assists the CEO in charting and executing the strategic plans for the group.<br><br><strong><em>Inside Insights is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/centurions-david-loh-raises-stake-keppel-leads-buyback-tally"> read </a>the original version.</em></strong></p>
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    Share buyback


For the 5 trading sessions that spanned May 20 to 26, the Straits Times Index (STI) gained 0.6 per cent, with the FTSE China A50 Index declining 1.1 per cent, the Hang Seng Index dipping 0.5 per cent and the FTSE Bursa Malaysia KLCI sliding 0.8 per cent. 

Overall, institutions were net sellers of Singapore stocks over the 5 sessions with S$109 million of net outflow, following the S$3.4 million of net inflow for the preceding 5 sessions. DBS Group Holdings, OCBC, Ascendas Reit, CapitaLand Integrated Commercial Trust and Suntec Reit led the net institutional outflows for the 5 sessions through to May 26.  Share buybacks

There were 20 primary-listed stocks conducting share buybacks over the 5 sessions ended May 26, with a total consideration of S$51,483,484, down from the S$67,410,124 million for the preceding 5 sessions.  
Keppel Corporation led the consideration tally with 3,644,000 shares bought at an average price of S$6.80 per share. This brought the total amount of shares purchased on its current mandate to 0.86 per cent of its issued shares (excluding treasury shares).

The preceding mandate saw Keppel buy back 1.52 per cent of its issued shares.

On May 24, the company announced that Keppel Offshore &amp; Marine had, through its wholly owned subsidiaries, signed contracts for the bareboat charter of another 2 KFELS B Class rigs to be deployed in the Middle East.  
The rigs will be chartered to an established drilling company in the Middle East for deployment in Q4 2022 for a period of 3 years, with options for a year’s extension.

Total revenue from the charters, including the options and modification works by Keppel O&amp;M to prepare the rigs for on-site operations, is expected to be up to S$120 million.

Hong Fok Corporation : H30 0% led the buyback consideration tally for the non-STI stocks over the 5 sessions, purchasing 1,328,000 shares at an average price of 90.1 cents per share.

This brought the total amount of shares purchased on the current mandate to 0.82 per cent of its issued shares (excluding treasury shares).

At the Apr 27 AGM, the chairman of Hong Fok reported that the group had made a good recovery from the effects of the Covid-19 pandemic with an increase in revenue mainly from the sale of more residential units in Concourse Skyline, the sale of the last unit at Jewel of Balmoral, higher property management income and dividend income.  Director and substantial shareholder transactions

The 5 trading sessions saw fewer than 70 changes to director interests and substantial shareholdings filed for just over 30 primary-listed stocks.

This included 7 company director acquisitions with 3 disposals filed, while substantial shareholders filed 3 acquisitions and 4 disposals.

Centurion Corporation

Between May 20 and 25, Centurion Corporation executive director and joint chairman David Loh Kim Kang acquired 1,831,300 shares of the purpose-built accommodation developer and manager for a consideration of S$640,955.

At 35.0 cents per share, this took his total interest in from 55.18 per cent to 55.40 per cent.

Loh’s preceding acquisition was in October 2020 with 200,000 shares acquired at 33.5 cents per share. He is responsible for the formulation of corporate and business strategies of the company and leads the execution of strategic growth plans of the group.

He has over 20 years of experience in the investment and brokerage industry and has been a principal and director of Centurion Global Ltd, a controlling shareholder of the company from April 2008 to the present.

On May 10, Centurion provided a business update, highlighting a 47 per cent year-on-year increase in Q1 2022 revenue.

This was attributed to higher contributions mainly from new purpose-built worker accommodation (PBWA) capacity and revenue streams, improved performance in Singapore PBWA accommodation assets, and recovery of occupancies in the UK and Australia purpose-built student accommodation portfolio.

These higher contributions were partly offset by the cessation of operations of dwell Selegie and the conclusion of management contracst for 2 factory-converted workers dormitories in Singapore.

Looking ahead, the company noted that as economies recover from Covid-19, and international travel resuming, populations of migrant workers and international students continue to expand across the geographies where Centurion operates.  ABR Holdings

Between May 23 and 24, ABR Holdings managing director Ang Yee Lim acquired 301,700 shares of the company for a consideration of S$142,721 at an average price of 47.3 cents per share.

This took Ang’s interest in the restaurant operator from 51.71 per cent to 51.86 per cent. His preceding acquisition was on Dec 21 with 120,000 shares acquired at 46.0 cents per share.

ABR Holdings traces its roots to 1979 with the establishment of the 200-seater Swensen’s at Thomson Plaza, the first full-service ice-cream restaurant in Singapore.

Today, ABR operates more than 25 restaurant outlets and the Swensen’s brand has become synonymous with family friendly dining.

Ang was appointed to the board as an executive director in May 2004, and subsequently appointed managing director in July 2004.

He has over 20 years of experience in the food and beverage business and more than 30 years of experience in property development and investment in Singapore, Malaysia, Indonesia and Thailand.  AnnAik

Between May 24 and 25, Low Kheng, spouse of AnnAik executive chairman cum CEO, Ow Chin Seng, purchased 1,794,900 shares of the company for a consideration of $155,292.

At an average price of 8.7 cents per share, this increased Ow’s total interest in the manufacturer and distributor of stainless-steel products from 38.34 per cent to 38.96 per cent.

Ow is primarily responsible for the business and strategic development of the group. With over 40 years of experience in the hardware and steel industry, he has been instrumental in the strategic direction and development of the group.

With last year’s hike in steel prices, strong demand of steel products and contribution of the environmental division, AnnAik achieved an attributable profit in 2021 of S$3.09 million, compared to S$177,000 in 2020.  Dyna-Mac Holdings

On May 26, Dyna-Mac Holdings independent non-executive director Henry Tan Song Kok acquired 500,000 shares of the company at 15.7 cents per share.

With a consideration of S$78,600 this took his direct interest in the global multi-disciplinary contractor to 0.05 per cent.

Tan is also an independent director, on the boards of Asia Vets Holdings, BH Global Corporation, Penguin International and Trans-China Automotive Holdings.  LHT Holdings

On May 24, LHT Holdings managing director, Yap Mui Kee, acquired 49,500 shares of the company for a consideration of S$34,719.

At an average price of 70.1 cents per share, this took her direct interest in the manufacturer of high-quality wooden pallets, boxes, and crates from 14.89 per cent to 14.99 per cent.

Preceding acquisitions saw Yap buy 52,100 shares at 71.0 cents per share on Mar 25, 17,700 shares at 70.0 cents per share on Mar 18 and 24,600 shares of at 69.1 cents per share on Mar 7.

Yap has over 35 years of experience in sales and marketing and plays a key role in exploring opportunities in new markets.

Part of her responsibility is also to monitor market developments and streamline the company’s product development efforts according to market demands.

Yap spearheads the group’s RFID (Radio Frequency Identification) ECR Pallet Tracking System and is actively involved in its ECR (Efficient Consumer Response) pallet rental business in Singapore and Malaysia.  Oxley Holdings

On May 25, Oxley Holdings executive director and deputy CEO Eric Low See Ching acquired 50,000 shares of the company at an average price of 17.7 cents per share, at a consideration of S$8,850.

Low maintains a 28.13 per cent direct interest in Oxley Holdings and is responsible for the operation of the group, including sales and marketing, project development, business development and financial management.

Low also assists the CEO in charting and executing the strategic plans for the group.  Inside Insights is a weekly column on The Business Times, read the original version.



Centurion’s David Loh raises stake; Keppel leads buyback tally

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<p>ASCOTT Residence Trust Ascott Trust: HMN -0.51% (ART) announced last week that it will acquire a student accommodation property in Texas, in the United States, which will be its third student accommodation asset investment this year.</p>

<p>While ART may be the first Singapore-listed trust to venture into student housing as S-Reits continue to diversify across property sub-segments, there are other Singapore-listed companies such as Singapore Press Holdings SPH: T39 +1.03% , Far East Orchard Far East Orchard: O10 -3.64% , Centurion Corporation Centurion: OU8 0% , Wee Hur Wee Hur: E3B 0% , and Metro Holdings Metro: M01 0% that invest, own, and manage purpose built student accommodation assets (PBSA).</p>

<p>According to Knight Frank, global investments in PBSA reached a record US$16.3 billion in 2018.</p>

<p>Savills considers the PBSA sector to be counter-cyclical and notes in a report that it was one of the few asset classes that showed resilience during the global financial crisis in 2008.</p>

<p>In addition, data collated by Jones Lang Lasalle (JLL) has shown that over a third of deals for student housing in 2021 so far have been by private equity firms, as investors continue to seek exposure to alternative real estate sectors.</p>

<p>ART's most recent acquisition is a freehold 1,005-bed student accommodation asset in Lubbock, Texas, for S$93.8 million. Wildwood Lubbock is a cottage-style property that is fully leased for the 2021 academic year and serves over 40,000 students from Texas Tech University.</p>

<p>The trust expects the acquisition to increase its pro forma FY2020 distribution per stapled security by approximately 1.5 per cent.</p>

<p>It also notes the longer average leases of student housing at one year, versus hotel stays.</p>

<p>ART has acquired four longer-stay accommodation assets this year, after expanding its strategy and diversifying its portfolio from traditional hospitality assets, further increasing its resilience and stable income.</p>

<p>Its two other student housing assets are in Atlanta (acquired in February 2021 for S$126.3 million) and South Carolina (acquired in June 2021 for S$73.4 million), both in the US.</p>

<p>In June 2021, ART also acquired three rental housing properties in Sapporo, Japan for S$85.2 million.</p>

<p>Following the acquisitions, ART's rental housing and student accommodation properties will comprise about 11 per cent of its portfolio value, up from 5 per cent in end 2020. It has a medium-term target to expand it to 15 to 20 per cent.</p>

<p>CDL Hospitality Trust CDL HTrust: J85 -0.85% (CDLHT) in July this year has announced that it is revising its principal investment strategy to include rental housing, student accommodation and senior housing assets.</p>

<p>The trust sees the revision of its strategy as a way to bring more diversification to its portfolio, enhance income stability as tenants typically have longer lengths of stay compared to hotels, and expand its range of investment opportunities given its broader mandate.</p>

<p>Singapore Press Holdings (SPH) has a portfolio of 28 PBSA assets in the UK with a total of 7,723 beds under its brands Capitol Students, Student Castle, and Galileo Residenz.</p>

<p>Far East Orchard owns a PBSA portfolio in the UK comprising over 3,500 beds in the cities of Brighton, Bristol, Leeds, Liverpool, Newcastle-upon-Tyne and Sheffield.</p>

<p>Centurion Corporation has a PBSA segment with 19 assets in Australia, South Korea, the UK and US that accounted for 25 per cent of its revenue in H12021.</p>

<p>Wee Hur Holdings' PBSA business is undertaken via two of its funds which manage two operational assets, one asset pending operations and the rest at various stages of development.</p>

<p>Metro Holdings' PBSA portfolio consists of two properties in Warwick and Bristol, in the UK, and a 7.3 per cent investment in the Mapletree Global Student Accommodation Private Trust. </p>

<p><strong><em>REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/ascott-joins-trend-of-hospitality-reits-pivoting-to-student-housing">read</a><a href="https://www.businesstimes.com.sg/companies-markets/10-s-reits-yielding-long-term-annualised-returns"> </a>the original version.</em></strong></p>
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ASCOTT Residence Trust Ascott Trust: HMN -0.51% (ART) announced last week that it will acquire a student accommodation property in Texas, in the United States, which will be its third student accommodation asset investment this year.

While ART may be the first Singapore-listed trust to venture into student housing as S-Reits continue to diversify across property sub-segments, there are other Singapore-listed companies such as Singapore Press Holdings SPH: T39 +1.03% , Far East Orchard Far East Orchard: O10 -3.64% , Centurion Corporation Centurion: OU8 0% , Wee Hur Wee Hur: E3B 0% , and Metro Holdings Metro: M01 0% that invest, own, and manage purpose built student accommodation assets (PBSA).

According to Knight Frank, global investments in PBSA reached a record US$16.3 billion in 2018.

Savills considers the PBSA sector to be counter-cyclical and notes in a report that it was one of the few asset classes that showed resilience during the global financial crisis in 2008.

In addition, data collated by Jones Lang Lasalle (JLL) has shown that over a third of deals for student housing in 2021 so far have been by private equity firms, as investors continue to seek exposure to alternative real estate sectors.

ART's most recent acquisition is a freehold 1,005-bed student accommodation asset in Lubbock, Texas, for S$93.8 million. Wildwood Lubbock is a cottage-style property that is fully leased for the 2021 academic year and serves over 40,000 students from Texas Tech University.

The trust expects the acquisition to increase its pro forma FY2020 distribution per stapled security by approximately 1.5 per cent.

It also notes the longer average leases of student housing at one year, versus hotel stays.

ART has acquired four longer-stay accommodation assets this year, after expanding its strategy and diversifying its portfolio from traditional hospitality assets, further increasing its resilience and stable income.

Its two other student housing assets are in Atlanta (acquired in February 2021 for S$126.3 million) and South Carolina (acquired in June 2021 for S$73.4 million), both in the US.

In June 2021, ART also acquired three rental housing properties in Sapporo, Japan for S$85.2 million.

Following the acquisitions, ART's rental housing and student accommodation properties will comprise about 11 per cent of its portfolio value, up from 5 per cent in end 2020. It has a medium-term target to expand it to 15 to 20 per cent.

CDL Hospitality Trust CDL HTrust: J85 -0.85% (CDLHT) in July this year has announced that it is revising its principal investment strategy to include rental housing, student accommodation and senior housing assets.

The trust sees the revision of its strategy as a way to bring more diversification to its portfolio, enhance income stability as tenants typically have longer lengths of stay compared to hotels, and expand its range of investment opportunities given its broader mandate.

Singapore Press Holdings (SPH) has a portfolio of 28 PBSA assets in the UK with a total of 7,723 beds under its brands Capitol Students, Student Castle, and Galileo Residenz.

Far East Orchard owns a PBSA portfolio in the UK comprising over 3,500 beds in the cities of Brighton, Bristol, Leeds, Liverpool, Newcastle-upon-Tyne and Sheffield.

Centurion Corporation has a PBSA segment with 19 assets in Australia, South Korea, the UK and US that accounted for 25 per cent of its revenue in H12021.

Wee Hur Holdings' PBSA business is undertaken via two of its funds which manage two operational assets, one asset pending operations and the rest at various stages of development.

Metro Holdings' PBSA portfolio consists of two properties in Warwick and Bristol, in the UK, and a 7.3 per cent investment in the Mapletree Global Student Accommodation Private Trust. 

REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Ascott joins trend of hospitality Reits pivoting to student housing

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<div><em><strong>Non- SGX Report: These equity research reports are not written by the SGX</strong>.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></div>
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<p>Singapore Company Update</p>
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<h2>Centurion Corporation</h2>
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<h3>Regulatory clarity needed</h3>
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<p><strong>Investment Thesis:</strong></p>
<p><strong>Current low valuation justified given regulatory headwinds and absence of dividends in FY20.</strong> No interim dividend expected in 1H21 as business operations are not expected to improve. The stock is trading at 7.1x FY21F PE, close to - 1SD of its 4-year mean. Relatively high net-debt-to-equity of 1x is also a concern, especially if interest rates spike up.</p>
<p><strong>Revenue and earnings downside risk from pilot PBWA regulations.</strong> New regulations for workers dormitories could reduce capacity at workers dormitories by half in the worst case. Still, these regulations are currently at a pilot stage and may yet still be adjusted. Share price is likely to remain capped until more clarity emerges on this front.</p>
<p><strong>Key catalyst</strong> – Relaxation of restrictions in UK and Australia. PBSAs could receive boost on earlier than expected reopening of borders to international students, which could increase Centurion’s share price.</p>
<p><strong>Valuation</strong>:<br>Maintain HOLD with slightly lower DCF-based TP of S$0.38based on a WACC of 6.0% and terminal growth rate of 1.0%. Our TP implies 7.9x FY21F PE, which is close to -1SD of Centurion’s 4-year average forward PE of 7.7x.</p>
<p><strong>Where we differ:</strong><br>We have factored in the impact on Centurion’s PBSA occupancies based on movement restrictions for foreigners extending into 2Q21.</p>
<p><strong>Key Risks to Our View:</strong><br>Unfavourable changes in regulatory environment; foreign exchange volatility; sustained deterioration in economic outlook for Singapore and Malaysia affecting foreign worker demand; worsening or extended COVID-19 outbreak.</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.

Singapore Company Update



Centurion Corporation



Regulatory clarity needed




Investment Thesis:
Current low valuation justified given regulatory headwinds and absence of dividends in FY20. No interim dividend expected in 1H21 as business operations are not expected to improve. The stock is trading at 7.1x FY21F PE, close to - 1SD of its 4-year mean. Relatively high net-debt-to-equity of 1x is also a concern, especially if interest rates spike up.
Revenue and earnings downside risk from pilot PBWA regulations. New regulations for workers dormitories could reduce capacity at workers dormitories by half in the worst case. Still, these regulations are currently at a pilot stage and may yet still be adjusted. Share price is likely to remain capped until more clarity emerges on this front.
Key catalyst – Relaxation of restrictions in UK and Australia. PBSAs could receive boost on earlier than expected reopening of borders to international students, which could increase Centurion’s share price.
Valuation: Maintain HOLD with slightly lower DCF-based TP of S$0.38based on a WACC of 6.0% and terminal growth rate of 1.0%. Our TP implies 7.9x FY21F PE, which is close to -1SD of Centurion’s 4-year average forward PE of 7.7x.
Where we differ: We have factored in the impact on Centurion’s PBSA occupancies based on movement restrictions for foreigners extending into 2Q21.
Key Risks to Our View: Unfavourable changes in regulatory environment; foreign exchange volatility; sustained deterioration in economic outlook for Singapore and Malaysia affecting foreign worker demand; worsening or extended COVID-19 outbreak.













(Non-SGX Report) Centurion Corporation: Regulatory Clarity Needed

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;</strong>SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
<p>INITIATE COVERAGE</p>
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<h2>Centurion Corporation (CENT SP)</h2>
<h3>Strong Performance Amid COVID-19 Impact</h3>
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<p><strong>As one of the largest workers’ dormitory operators in Singapore, Centurion offers good earnings visibility with its resilient business model and favourable long-term supply- demand dynamics following the COVID-19 trough. Its shares currently trade at a trough of 0.47x 2020F P/B– providing for an opportune time to buy into the stock, given the increased likelihood of a vaccine discovery. Initiate coverage on Centurion with a BUY and target price of S$0.44 - implying 30.7% upside.</strong></p>
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<p><strong>Resilient business model for workers’ accommodations</strong>. Centurion Corporation (Centurion) is one of the largest providers of purpose-built workers accommodations (PBWA) in Singapore and Malaysia. Its business model provides good earnings visibility, with contracts typically being 12 months long and with rent payments collected in advance. With 1-2 months’ of rental deposits collected in advance, the risk of non- collection is low. Two-thirds of its revenue is derived from the higher-margin PBWA segment with the remaining one-third coming from purpose-built student accommodations (PBSA). For student accommodations, the countries where Centurion has a presence in have experienced chronic undersupply of available beds relative to growing student populations.</p>
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<p><strong>Stable revenues from PBWA despite COVID-19</strong>. Centurion’s PBWA segment has a proven track record, with occupancy not falling below 84% since 2011. As Singapore also remains heavily reliant on migrant workers in many sectors (eg construction and O&amp;G), we believe that the company will be relatively less affected by the current COVID-19- induced recession vs other sectors.</p>
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<p><strong>PBSA segment expected to remain defensive.</strong> While demand for PBSAs has been affected due to COVID-19 travel restrictions affecting international students, we expect an increase in UK and Australian domestic demand in the medium term to bridge this demand gap. According to multiple higher-education industry sources, student enrolment numbers are expected to remain high - given that seeking higher education is deemed as a viable choice against the backdrop of dim employment prospects.</p>
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<p><strong>New opportunities available for Centurion.</strong> Given that the government has been piloting new specifications for migrant workers in PBWA and is planning to develop 60,000 new beds within an accelerated timeline, Centurion’s market leading position provides opportunities for them to further expand their PBWA portfolio.</p>
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<p>I<strong>nitiate coverage with a BUY.</strong> Our target price of S$0.44 is based on DCF (WACC 5.5%, terminal growth: 1.0%), implying a 11.1x 2020F P/E and 0.63x 2020F P/B as we have factored in bed capacity growth and a gradual recovery in occupancies.</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
INITIATE COVERAGE

Centurion Corporation (CENT SP)
Strong Performance Amid COVID-19 Impact




As one of the largest workers’ dormitory operators in Singapore, Centurion offers good earnings visibility with its resilient business model and favourable long-term supply- demand dynamics following the COVID-19 trough. Its shares currently trade at a trough of 0.47x 2020F P/B– providing for an opportune time to buy into the stock, given the increased likelihood of a vaccine discovery. Initiate coverage on Centurion with a BUY and target price of S$0.44 - implying 30.7% upside.






Resilient business model for workers’ accommodations. Centurion Corporation (Centurion) is one of the largest providers of purpose-built workers accommodations (PBWA) in Singapore and Malaysia. Its business model provides good earnings visibility, with contracts typically being 12 months long and with rent payments collected in advance. With 1-2 months’ of rental deposits collected in advance, the risk of non- collection is low. Two-thirds of its revenue is derived from the higher-margin PBWA segment with the remaining one-third coming from purpose-built student accommodations (PBSA). For student accommodations, the countries where Centurion has a presence in have experienced chronic undersupply of available beds relative to growing student populations.


Stable revenues from PBWA despite COVID-19. Centurion’s PBWA segment has a proven track record, with occupancy not falling below 84% since 2011. As Singapore also remains heavily reliant on migrant workers in many sectors (eg construction and O&amp;G), we believe that the company will be relatively less affected by the current COVID-19- induced recession vs other sectors.


PBSA segment expected to remain defensive. While demand for PBSAs has been affected due to COVID-19 travel restrictions affecting international students, we expect an increase in UK and Australian domestic demand in the medium term to bridge this demand gap. According to multiple higher-education industry sources, student enrolment numbers are expected to remain high - given that seeking higher education is deemed as a viable choice against the backdrop of dim employment prospects.


New opportunities available for Centurion. Given that the government has been piloting new specifications for migrant workers in PBWA and is planning to develop 60,000 new beds within an accelerated timeline, Centurion’s market leading position provides opportunities for them to further expand their PBWA portfolio.


Initiate coverage with a BUY. Our target price of S$0.44 is based on DCF (WACC 5.5%, terminal growth: 1.0%), implying a 11.1x 2020F P/E and 0.63x 2020F P/B as we have factored in bed capacity growth and a gradual recovery in occupancies.











Non-SGX Report: Centurion Corporation: Strong Performance Amid COVID-19 Impact

<h2>10 Questions for Centurion Corporation</h2>
<p><strong>Company Overview</strong><br>Centurion Corporation owns, develops and manages quality, specialised accommodation assets globally, including purpose-built workers accommodation assets (PBWA) under the Westlite brand, and purpose-built student accommodation assets (PBSA) under dwell. As at 31 December 2019, the Group owns and manages a strong portfolio of 33 operational accommodation assets totalling 65,133 beds.<br><a href="https://www.sgx.com/securities/equities/OU8" target="_blank" rel="noopener">Link to StockFacts company page</a></p>
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<li><strong>Centurion Corp is in the business of accommodation assets. Describe the Group’s portfolio mix.</strong></li>
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<li>As at 1H20, our workers accommodation (under the <strong><em>Westlite</em> </strong>brand) accounts for 90% of total bed count while student accommodations (under the <em><strong>dwell</strong> </em>brand) accounts for the remaining 10%. We have a total of 12 workers accommodation assets and 21 student accommodation assets.</li>
<li>We believe that our strategic diversification to build workers and student accommodation assets in 6 geographic markets has provided stability and resilience, as well as wider growth opportunities. We will continue to grow both segments, to ensure a more balanced portfolio mix.</li>
</ul>
<p><strong>Centurion Corp manages 33 accommodation assets across 6 countries worldwide – (SG, AU, MY, UK, US, S. Korea)</strong></p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/762/original/image_23271484121599559270905.png?1599559272" class="editor-image img-responsive" data-smartkarma-image-id="157762"></figure>

10 Questions for Centurion Corporation
Company Overview Centurion Corporation owns, develops and manages quality, specialised accommodation assets globally, including purpose-built workers accommodation assets (PBWA) under the Westlite brand, and purpose-built student accommodation assets (PBSA) under dwell. As at 31 December 2019, the Group owns and manages a strong portfolio of 33 operational accommodation assets totalling 65,133 beds. Link to StockFacts company page

Centurion Corp is in the business of accommodation assets. Describe the Group’s portfolio mix.


As at 1H20, our workers accommodation (under the Westlite brand) accounts for 90% of total bed count while student accommodations (under the dwell brand) accounts for the remaining 10%. We have a total of 12 workers accommodation assets and 21 student accommodation assets.
We believe that our strategic diversification to build workers and student accommodation assets in 6 geographic markets has provided stability and resilience, as well as wider growth opportunities. We will continue to grow both segments, to ensure a more balanced portfolio mix.

Centurion Corp manages 33 accommodation assets across 6 countries worldwide – (SG, AU, MY, UK, US, S. Korea)


10 in 10 with Centurion Corporation - Specialised Dormitory Play

Singapore

Centurion Corporation Limited owns, develops and manages quality, purpose-built workers accommodation assets in Singapore and Malaysia, and student accommodation assets in Australia, South Korea, the United Kingdom and the United States.

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10 in 10 with Centurion Corporation - Specialised Dormitory Play

10 Questions for Centurion Corporation Company OverviewCenturion Corporation owns, develops and manages quality, specialised accommodation assets...

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