“Our target P/B multiple of 0.6x is in line with Centurion’s past five-year average P/B of 0.61x, which we view as fair,” he notes. The stock is currently trading at a 2022 P/B of 0.44x or less than 1.5 standard deviation below its five-year average.
At Loh’s target, Centurion would trade at 9.0x 2022 P/E.
His ‘buy’ move follows a 20% y-o-y jump in the group’s revenue for 3Q2021 ended September, that came thanks to healthier occupancy levels at its Purpose-Built Workers’ Accommodation (PBWA) facilities.
The segment – which accounted for 63% of Centurion’s FY2020 revenue – saw a 19% q-o-q rise in its income.
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This came on the back of the commencement of operations of three Quick Build Dormitories (QBDs) which now have healthy occupancy levels. Further revenue from two migrant worker onboarding centres and fee income from accommodation-related or ancillary services also boosted the segment’s performance, notes Loh.
Meanwhile, Centurion’s Purpose-Built Student Accommodation (PBSA) segment saw a 55% q-o-q pickup in revenue earned from its facilities in the UK. This followed improving Covid-19 restrictions on international travel as well as a lifting of restrictions on-campus programmes.
However, occupancy levels at the group’s facilities in Australia continued to take a hit from tighter border controls. Loh reckons that a recovery should come as more Australians become fully vaccinated and the states of Victoria and South Australia gradually reopen to international students.
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Going forward, he notes that the signs for a recovery in Centurion’s PBSA segment are encouraging.
The group’s PBSA capacity in the UK is 86% pre-leased for the 2021/22 academic year, while that in the US is “similarly healthy”.
“UK and US student accommodation drove segment growth for the quarter with the former continuing to be a preferred tertiary-education destination with demand from international students expected to remain strong,” explains Loh.
The outlook for Centurion’s PBWA segment is similarly robust, especially with the resumption of arrivals of migrant workers from South Asia.
Shares in Centurion closed flat at 33 cents on Nov 29.
Cover image: Centurion Corp
