Centurion - KGI Securities 2023-12-08: Lighter Is Better

• We reiterate an OUTPERFORM rating on Centurion (SGX:OU8) with a target price of S$ S$0.56 due to a lower discount rate based on rate cut expectations in 2024. Centurion's performance aligns with our expectations, demonstrating rental rates and occupancy resilience against foreign exchange fluctuations.
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3Q23/9M23 financials update:

Growing revenue from foreign worker dormitories and student accommodations.

• Centurion's total revenue for 3Q23 rose by 15% y-o-y from S$44.3mil to S$51.1mil. The growth is attributable to the increase in occupancy and rental rates across its PBWAs and PBSAs.
• As of 3Q23, the total asset under management was S$1.9bn with 66,607 operational beds in 34 properties in 15 cities globally.

Improving occupancy and rental rates.

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• The higher contributions from strong occupancies and improved rental rates across all the PBWAs and PBSAs, alongside new managing contracts of five Community Recovery Facilities that came into operation helped boost Centurion’s revenue last quarter.
• However, these positives were partially offset by the cessation of the management contract of two Onboard Centres in Singapore and weaker British Pound, Malaysian Ringgit and Australian Dollar against S$ 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 and debt management.

• Read more at SGinvestors.io.

Alyssa Tee KGI Securities Research | https://www.kgieworld.sg/ 2023-12-08 SGinvestors.io

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