- We initiate a BUY rating on Centurion Corp (SGX:OU8) with a target price of S$0.55, pegged to 7.5x core FY23F P/E (5-year average), representing a potential upside of 37.5%. Centurion remains the largest purpose-built workers accommodation provider in Singapore and Malaysia backed by favourable demand and positive rental reversions.
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Huge demand for dormitory beds in Singapore.
- Growing demand and an undersupply of dormitory beds have led to positive rental reversions and sky-high occupancy rates of close to 100%. Centurion’s workers accommodation business in Singapore accounts for two-thirds of revenue and we estimate monthly rates have increased from S$280 pre-COVID to >S$400 currently. Employers of worker residents are price-takers fighting for the limited number of beds in this demand-supply mismatch.
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Resilient business model amid uncertain economic outlook.
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