Centurion - Lim & Tan Securities 2024-03-04: Dormitory Beds In High Demand; ACCUMULATE With Higher Target Price

• Centurion (SGX:OU8)s FY23 results came in slightly above expectations with overall revenue and core profit coming in at 105%/107% of our forecast.
• Revenue rose 14.8% y-o-y to S$207.2mln from high financial occupancies and positive rental reversions across all segments. Gross profit rose 21.4% to S$150.0mln, backed by higher rental rates and operational efficiencies.
• - Read this at SGinvestors.io -

2H23 performance

• Centurion reported 2H23 revenue growth of 22% to S$109.3mln due to increased revenue contribution from both its purpose-built workers accommodation (PBWA) and purpose-built student accommodation (PBSA) in all markets (SG: +25% / MY: +7% / AU: +26% / UK: +21%). As a result, gross profit and gross profit margins improved 27% y-o-y and 3pp y-o-y accordingly.
• - Read this at SGinvestors.io -
• Despite net gearing being reduced to 38% in FY23 (FY22: 43%), interest expense has risen by 31%. However, we think this is not a cause for concern as operating cash flow remains strong at S$122.8mln vs short term debt of S$58.9mln. In view of the peak interest rates and possible dovish environment ahead, Centurion might see reduced interest expense in FY24.

Operating metrics

• Read more at SGinvestors.io.

Chan En Jie Lim & Tan Securities Research | https://www.limtan.com.sg/ 2024-03-04 SGinvestors.io

---