Strong growth in construction demand over the next few years in key market Singapore (69% of revenues) will be favourable for dormitory operators like Centurion. There are value-unlocking opportunities through the capital recycling of mature assets into a potential REIT as Centurion shifts towards an asset-light strategy.
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Valuations remain attractive at 7.9x forward P/E and 0.73x P/B. We raise our target price multiple from 7.1x FY25F P/E to 9.5x in view of expected earnings growth and potential catalysts from asset monetization.
FY24 results slightly above expectations
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Gross profit rose 30% to S$195.6mln, backed by higher rental rates and operational efficiencies.
Excluding net fair value gains of S$219.1mln, core profit for FY24 came in at S$99.3mln, an increase of 43% y-o-y.
Management has increased final dividends to 2.0 cents (FY23: 1.5 cents), bringing FY24 full year Centurion's dividends to 3.5 cents (FY23: 2.5 cents), representing a 30% dividend payout ratio and 3.5% yield.
Value-unlocking on the cards?
Read more at SGinvestors.io.
Above is an excerpt from a report by Lim & Tan Securities Research. Clients of Lim & Tan Securities may be the first to access the full PDF report @ https://www.limtan.com.sg/.
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