"We remain positive on Centurion Corp’s prospects, as the group focuses on property development, acquisitions, and being CAREIT's manager post spin-off of its assets to the latter," states Yeo in his Jan 22 note.
There is another reason to stay positive on this stock. "Shareholders may receive another dividend in specie when Centurion pares down its stake further in CAREIT next year," says Yeo.
Recently, Centurion sold the 732-bed EPIISOD Macquarie Park student accommodation in Sydney for A$345 million, or $280 million.
This asset, recently completed, was already earmarked to be part of CAREIT's portfolio even before its listing last year and thus Yeo had already accounted for this divestment in his valuations.
See also: OCBC raises target price for ST Engineering to $10.90 on 'intact re-rating' story
Going forward, with the REIT in place, Centurion's own growth strategy will be shifted to property development.
While the remaining assets not yet sold to CAREIT will continue to drive growth, Centurion will be focusing on strategic acquisitions in areas including the Middle East.
At the same time, it will be receiving management fees from the REIT and other assets.
See also: Lim & Tan Securities ups CNMC Goldmine’s TP to $1.53; says it’s a ‘great time’ to be a ‘gold digger’
On top of existing projects in Australia and the UK, Centurion is eyeing Saudi Arabia and the United Arab Emirates for new worker accommodation development projects.
"Management is progressing cautiously due to the higher risks involved. We, therefore, should not expect a hasty entry into the Middle East, for now," says Yeo.
Centurion is also looking at providing other accommodation types with the exception of hotels, such as built-to-rent properties in China for tenant profiles other than students, for growth purposes, he adds.
Centuron shares traded at $1.50 as at 9.42 am, up 0.67%.
