Centurion - UOB Kay Hian 2023-11-17: Outlook Undimmed – Strong Performance In 3Q23 To Extend Into 2024

• Centurion’s 3Q23 performance was better than expected, driven by strong rental reversions across workers’ and students’ accommodations.
• The macro backdrop of migrant workers returning to Singapore and Malaysia as well as international students heading back to universities in the UK and Australia will continue to play out as supply of assets lags demand. New government regulations for PBWAs may also help rental reversions in the medium term.
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Better-than-expected performance in 3Q23.

• Centurion Corp (SGX:OU8) reported that its 3Q23 revenue rose 15% y-o-y. Importantly, its 9M23 revenue grew 11% y-o-y, coming in slightly better than expected as it made up 78% of our full-year revenue estimates.
• We highlight that Centurion’s revenue accelerated in 3Q23 given that 1H23 saw a lower 8% y-o-y increase. We understand from the company that it has managed to maintain its profit margins at both of its key business segments in 3Q23. Recall that its 1H23 gross margin was 72% (+4.6ppt y-o-y) while its PATMI margin was 39% (+2.8ppt y-o-y).

Strong rental reversions at CENT’s PBWA assets.

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• By our estimates, Centurion’s PBWA assets should continue to see solid revenue growth as its annual leases roll off and new leases are signed at higher rates.

Revenue for its PBSA business should accelerate into 4Q23.

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Adrian LOH UOB Kay Hian Research | https://research.uobkayhian.com/ 2023-11-17 SGinvestors.io

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