Centurion Corp (CENT SP) Stock Analysis: REIT Listing, Revenue Growth, and OUTPERFORM Rating (April 2025)

KGI Securities (Singapore) Pte. Ltd.

April 11, 2025

Centurion Corp Ltd: REIT Listing Exploration and Strong Growth Trajectory

Company Overview

Centurion Corp Ltd (CENT SP/OU8.SI) is exploring a potential REIT structure comprising stabilized Purpose-Built Workers’ Accommodation (PBWA) and Purpose-Built Student Accommodation (PBSA) assets in mature markets like Singapore, Malaysia, and the UK. This move could unlock asset value, enhance capital recycling, and deliver stable income for shareholders via a potential dividend-in-specie. [[1]]

Financial Performance

Centurion has demonstrated stronger than anticipated revenue growth. Total revenue rose 22% YoY to S\$253.6 million, while net profit after tax surged 118% to S\$382.6 million, driven by high financial occupancy and rental rate uplifts across all key markets. [[1]]

• 2H24 Revenue increased 18% YoY to S\$129.2 million from S\$109.3 million in 2H23. [[1]]
• Gross profit grew 27% to S\$101.5 million, underpinned by sustained high occupancy and positive rental revisions. [[1]]

Global Footprint and Expansion

As of 31 December 2024, Centurion operated 69,929 beds across 37 assets with AUM of S\$2.5 billion. It added 2,552 new beds and has 7,662 beds under development for 2025-2026, including a new PBSA in Macquarie Park, Australia. [[1]]

Investment Rating

KGI Securities maintains an OUTPERFORM rating with a raised target price of S\$1.38, driven by resilient occupancy and positive rental revisions, despite foreign exchange fluctuations. [[1]]

Dividend Announcement

Centurion declared a final dividend of 3.5 Scents per share for FY24, representing a 28.6% increase from the 2.5 Scents distributed in FY23. [[1]]

Financial Structure and Debt Management

In FY24, the Group reduced its borrowings from S\$657.4 million to S\$623.5 million, leading to a significant decline in its net gearing ratio from 38% to 29%. It closed the year with a healthy cash position of S\$89 million and access to S\$150.4 million in unutilised committed credit facilities, of which S\$133.9 million remain available beyond the next 12 months. These liquid resources comfortably cover the Group’s net current liabilities of S\$63.4 million. [[1]]

Centurion’s long-term bank financing model supports its income-generating and development assets, with an average debt maturity of six years helping to mitigate refinancing risk. With a strong interest coverage ratio of 4.0x and a well-spread debt profile, Centurion is well-positioned to continue its investment and growth strategy. [[1]]

A proposed share buyback mandate (up to 10% of the total number of issued shares), pending approval, further underscores management’s confidence in the Group’s intrinsic value and ability to deliver earnings-accretive returns. [[1]]

Potential Impact from Tariffs

While Centurion’s core operations are not directly affected by U.S. tariffs, it remains exposed to broader macroeconomic headwinds that could weigh on accommodation demand and investor sentiment. [[1]]

Valuation and Recommendation

KGI Securities maintains an OUTPERFORM rating, raising the target price to S\$1.38, based on a DCF valuation with a WACC of 5.0% and terminal growth of 2.0%. Near-term tailwinds include high occupancy and rental reversion, while the medium-term outlook is bolstered by rising contribution from the BTR, AEI-enhanced portfolio and new properties. [[1]]

Risks

Prolonged elevated interest rates, recessionary fear, policy shifts in key markets, currency volatility and global trade tensions impacting labour and student mobility. [[1]]

Financials & Key Operating Statistics

Key financial data and ratios are summarized below:

Revenue by Geographical Area

A breakdown of revenue by geographical area is as follows:

Strategic REIT Listing

Centurion’s evaluation of a potential REIT listing represents a transformative step in its long-term strategy. By spinning off mature, income-generating PBWA and PBSA assets in Singapore, Malaysia, and the UK, Centurion can unlock embedded asset value, recycle capital efficiently, and offer shareholders with a yield-focused investment vehicle. This REIT initiative would enable the Group to maintain balance sheet efficiency while meeting compliance and governance standards required for listing. [[2]]

A dividend-in-specie distribution of REIT units is under consideration as a shareholder reward, and over time, the REIT could become a platform for third-party asset injections. This mirrors strategies adopted by successful asset-light operators in Singapore and would position Centurion as a long-term REIT sponsor and manager. [[2]]

Structural Demand for Accommodation

Centurion is strategically positioned to capitalize on strong, structural demand for affordable, compliant accommodation across its core segments, Purpose-Built Workers’ Accommodation (PBWA) and Purpose-Built Student Accommodation (PBSA). [[2]]

• In Singapore, ongoing regulatory reforms, including the Dormitory Standards 2040, are accelerating the shift toward high-quality PBWA operators. [[2]]
• In 2024, the Group secured lease extensions for all four of its Quick Build Dormitories (QBDs), reflecting sustained demand amid tight supply. [[2]]
• The Group is also expanding in Malaysia, where stricter enforcement of Act 446 is institutionalizing demand for centralised labour quarters (CLQs). [[2]]

On the PBSA front, student housing remains undersupplied across key markets such as the UK and Australia, where elevated rental prices and housing shortages persist despite tighter student visa controls. [[2]]

In the UK, CBRE projects a shortfall of over 620,000 PBSA beds by 2029, supporting strong rental growth and occupancy. Similar pressures exist in Australia and Hong Kong, where Centurion is actively expanding through new developments and redevelopments. [[2]]

Strategic Expansion and Portfolio Optimization

Centurion continues to evolve into a diversified, multi-segment accommodation provider, with strategic positioning across PBWA, PBSA, and its newest vertical, Build-to-Rent (BTR). In FY24, the Group added 2,552 new beds, including new PBSA capacity in Hong Kong and PBWA expansions in Singapore and Malaysia. Concurrently, it divested 858 beds in the US as part of a capital recycling strategy, allowing reinvestment into higher-growth opportunities. [[3]]

Notably, Centurion entered the BTR segment through two joint ventures in Xiamen, China, in collaboration with City Home Apartments. These projects, particularly Centurion-Cityhome Gaolin, will yield approximately 1,000 apartments, with around 400 units already secured under a 20-year master lease as of December 2024. [[3]]

Financial Discipline and Sustainable Growth

Centurion’s financial resilience and prudent capital management provide a solid foundation for sustainable growth and strategic expansion. In FY24, the Group made substantial progress in strengthening its balance sheet, reducing total borrowings from S\$657.4mn to S\$623.5mn YoY. This strategic deleveraging resulted in a marked improvement in its net gearing ratio to 29%, down significantly from 38% in FY23. [[4]]

The Group also maintained a healthy cash position of S\$89mn, alongside S\$150.4mn in unutilised committed credit facilities, of which S\$133.9mn are available beyond the next 12 months. These resources comfortably cover net current liabilities of S\$63.4mn, reflecting strong liquidity and operational flexibility. [[4]]

With an interest coverage ratio of 4.0x and improving operating metrics, Centurion’s financial discipline supports both growth and shareholder returns. In FY24, the Group increased its total dividend payout by 28.6% to 3.5 Singapore cents per share, delivering a yield of 3.6%. [[4]]

Company Outlook

Centurion’s strong FY24 performance highlights its resilience and solidifies its long-term growth trajectory in the worker and student accommodation sectors. Backed by stable demand drivers, continued expansion into the Build-to-Rent (BTR) segment, and disciplined financial management, the Group is well-positioned to sustain earnings growth. Strategic initiatives such as the potential REIT listing and proposed share buyback further enhance its value proposition, particularly with shares currently trading below NAV. [[5]]

For investors, Centurion presents an attractive opportunity to gain exposure to a defensive, cash-generative asset class with consistent returns. [[5]]

Nonetheless, medium-term macroeconomic uncertainties remain. Heightened global trade tensions and potential tariff escalations may weigh on Singapore’s growth outlook in 2025, with GDP forecasted at 1%-3% by the Ministry of Trade and Industry. [[5]]

Valuation

KGI Securities maintains its OUTPERFORM recommendation with a raised target price of S\$1.38, underpinned by Centurion’s strong FY24 performance, supported by higher-than-expected rental reversions across its PBWA and PBSA segments. The target price is derived from a discounted cash flow (DCF) analysis, using a terminal growth rate of 2.0% and a WACC of 5.0%. Notably, this valuation does not yet reflect potential upside from a successful REIT listing, which could serve as an additional catalyst for re-rating. [[5]]

Centurion Corp Ltd – DCF Model

Appendix: Centurion’s Portfolio

Updated list of properties in Centurion’s Portfolio: