This formed over 82% of UOBKH analyst Adrian Loh’s full-year revenue estimate.
Its purpose-built workers' accommodation (PBWA) and purpose-built student accommodation (PBSA) assets saw revenue growth of 27% and 20% y-o-y, respectively.
Centurion should see around 16% volume growth in both PBWA and PBSA segments during 2HFY2024 to 2HFY2026. Based on Loh’s estimates, around 66% of the growth will come from PBWAs in Singapore.
In addition, the company noted that it is currently looking at exploring opportunities for a potential development of around 7,000 beds in Iskandar, Johor, which Loh believes depends on the progress of the Special Economic Zone.
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Centurion has also announced the establishment of a joint venture (JV) with Xiamen City Home Apartment to design, build or convert buildings into long-term professionally managed rental assets.
The consistent buying of shares by Centurion’s CEO and co-chairman is also a positive sign for the company’s near- to medium-term outlook, Loh notes.
Between March and September this year, both men purchased 2.39 million shares at prices ranging from 40 cents to 74 cents apiece.
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For 1HFY2024, Centurion had available cash and banking facilities totalling $91 million. The company continues to lower to its gearing levels, at end 1HFY2024, Centurion has a net gearing of 34% versus 43% in 1HFY2023 and 38% at end-FY2023.
The company’s interest coverage ratio was 4.7 times with an average long-term debt maturity of five years.
Loh notes that there is potential for a higher dividend payout.
During the 1HFY2024 results, Centurion declared a dividend of 1.5 cents, implying a 26% dividend payout based on an earnings per share (EPS) of 5.77 cents from its core business operations.
Loh maintains a current forecast dividend of 3 cents for the full year, but he believes that there is a high likelihood of an upside to 3.5 cents given the better-than-expected earnings, implying a 2024 yield of 3.6% based on the closing share price on Nov 26.
Loh upgrades his 2024 to 2026 EPS by 2% - 11% to account for slightly higher rental reversions as well as volume growth in PBSA for Australia.
Loh’s new target price is based on a P/E multiple of 8.7 times, up from 7 times before. The new P/E multiple is “undemanding”, given Centurion’s earnings growth over the next two years, he says.
“We believe that the company’s current metrics are inexpensive, trading at FY2025 P/E of 8.1 times and 0.8 times P/B,” he adds. “Year to date, Centurion’s 135% share price increase easily outperformed the STI’s total return, and we expect continued outperformance in the next 12 months.”
As at 3.14pm, shares in Centurion are trading 1.5 cents higher or 1.58% up at 96.5 cents.
