There has also been a ramp-up in China’s build-to-rent (BTR) segment. Hong Kong’s PBSA properties are also ramping up better than expected, Yeo writes.
With this, the analyst has factored in more positive bed rate assumptions and higher occupancy rates for both Hong Kong and China, resulting in higher earnings estimates for FY2025 to FY2027. In FY2025 and FY2026, Yeo is increasing his earnings estimates by 4% each to $119 million and $138 million, respectively. The analyst has raised his estimates by 5% for FY2027 to $145 million.
“We believe Centurion Corp remains well positioned to yield better rental rates in Singapore from the dormitory supply shortage situation,” says Yeo. “We are positive on Centurion on better PBWA bed rates here, with longer-term growth supported by overseas properties… We are generally more positive on bed rates outperforming our assumptions for PBSAs and PBWAs.”
On May 14, Centurion announced that it made revenue of $69 million for the 1QFY2025, 13% higher y-o-y, thanks to healthy financial occupancies and positive rental revisions in its PBWA and PBSA portfolios. The group’s topline stood within Yeo’s expectations.
See also: OCBC may outperform in near term following removal of GEH overhang: Citi
“This growth was largely driven by the PBWA segment, which grew 15% y-o-y to $53 million. Singapore drove the PBWA segment with 17% y-o-y growth to $49 million, supported by Malaysia’s flat revenue of $5 million,” Yeo notes.
The PBSA segment inched up by 2% y-o-y to $15 million as the 6% growth in the UK was offset by Australia’s 7% decline.
“The UK had healthy rental reversion amid a slight fall in overall occupancy (96%), while Australia had a lower occupancy rate (86%) due to later student bookings and arrivals, which recovered by end March,” Yeo adds.
See also: Fiery feud between US President Trump and Tesla CEO Musk sinks Tesla shares
The analyst’s new target price reflects his new earnings estimates and is based on a blended FY2025 - FY2026 P/E of 10 times.
As at 2.56pm, shares in Centurion are trading 4 cents higher or 2.99% up at $1.38.
