CGS International Securities
August 11, 2025

Centurion Corporation Ltd: Charting the Next Growth Chapter in Singapore’s Purpose-Built Accommodation Market

Introduction: Strong Results Set the Stage for Expansion

Centurion Corporation Ltd (“CENT”) has delivered robust performance for the first half of 2025, marking a pivotal moment as it prepares for its next phase of growth. With a strategic focus on purpose-built worker accommodation (PBWA) and purpose-built student accommodation (PBSA), Centurion is well-positioned to benefit from favorable supply-demand dynamics, regulatory reforms, and a resilient operating environment. The company’s planned REIT listing and continued expansion signal compelling opportunities for investors.

1H25 Financial Highlights: Core Profit Surges, Fair Value Gains Normalize

• 1H25 core PATMI: S\$58 million, up 19% year-on-year and 14% half-on-half, exceeding estimates.
• Reported PATMI: S\$83 million, down 38% year-on-year, impacted by a reduction in net fair value gains on investment properties.
• Rental performance: Broad-based uplift across PBWA and PBSA segments, with Singapore PBWA portfolio occupancy at an impressive 99%.
• PBWA profit: Up 16% year-on-year, driven by rental reversions.
• PBSA profit: Down 1% year-on-year, affected by forex headwinds and lower financial occupancy, especially in Australia (91% vs 94% last year).

CAREIT Listing on Track: Capital Recycling and AUM Growth

Centurion is advancing with the proposed listing of Centurion Accommodation REIT (CAREIT) on the Singapore Exchange Main Board. Management has reaffirmed that the IPO remains on track for FY25 and proceeds will be deployed to support capital recycling and asset under management (AUM) expansion. The next phase will focus on the Australian PBSA segment, with two major Epiisod-branded developments in the pipeline:

• Melbourne City: ~644 beds, targeted completion by 1Q27.
• RMIT University vicinity: ~675 beds, yield-accretive to the PBSA portfolio.

Projects in the UK and Singapore are also expected to be part of Centurion’s expansion pipeline.

Strategic Positioning: Regulatory Tailwinds and Industry Demand

Centurion stands to benefit from regulatory reforms in migrant housing, particularly in Singapore and Malaysia. The Ministry of Manpower’s new dormitory standards (NDS) in Singapore and enhanced requirements in Malaysia favor professional managers like Centurion. The company has proactively upgraded its facilities to comply with these standards, positioning itself ahead of competitors.

Westlite Ubi: Benchmark for New Dormitory Standards

Westlite Ubi, Centurion’s newest purpose-built dormitory in Singapore, is a showcase of compliance with MOM’s new standards, well ahead of the 2040 deadline. Key features include:

• Maximum 12 residents per room, minimum 4.2 sqm living space per resident.
• En-suite toilets, showers, and kitchens equipped with refrigerators and washing machines.
• On-site amenities: minimart, canteen, barber, multi-purpose hall, gym, and privacy corners for residents.
• 100% occupancy across 1,650 beds by April 2025.

Financial Performance and Projections

Earnings Revision and Results Comparison

• FY25–27F core EPS raised by 5–10% due to higher associate/JV contributions, lower tax rates, and inclusion of new beds from Westlite Mandai’s redevelopment in FY27.
• Revenue for 1H25: S\$140.7 million, up 13% year-on-year, in line with expectations.
• Gross Profit Margin: 77.2% for 1H25 vs. 75.7% in 1H24.
• Operating Profit: S\$88.9 million (63.2% margin).
• Effective Tax Rate: 11% in 1H25.
• Core PATMI ahead of forecasts: 54%/52% of internal/Bloomberg estimates.

Asset Valuation and Peer Comparison

Centurion’s target price is set at S\$2.05, based on a 20% discount to RNAV, in line with Singapore hospitality REITs. NPI assumptions for RNAV valuation include:

• PBWA Singapore: S\$149 million NPI, 6.8% cap rate, S\$2,191 million valuation.
• PBWA Malaysia: S\$13 million NPI, 7% cap rate, S\$186 million valuation.
• PBSA UK: S\$27.7 million NPI, 5.8% cap rate, S\$477 million valuation.
• PBSA Australia: S\$15.3 million NPI, 6% cap rate, S\$255 million valuation.
• Other assets: S\$200 million.
• Total RNAV: S\$2,159 million (S\$2.57 per share), with a 20% discount yielding a TP of S\$2.05.

ESG Commitment: Leading the Way in Worker Welfare

Centurion’s centralized accommodation model ensures high standards and systematic arrangements for residents. The company has fully complied with Malaysia’s latest housing standards and is ahead of the curve with Singapore’s new requirements. It also organizes holistic events for migrant workers, focusing on physical, social, and mental well-being.
Key ESG trends:

• Electricity and water intensity remain stable, but further efforts on renewable energy and consumption reduction are encouraged.
• Centurion benefits from growing corporate awareness of migrant welfare and can leverage this for future growth.

Key Ratios and Operational Metrics

• Revenue Growth (2023-2027F): 14.8% to 10.1% annually.
• Operating EBITDA Margin: stable at 61-64%.
• Net Cash Per Share: improving from -S\$0.69 to -S\$0.52.
• Gross Interest Cover: rising to 6.64x by 2027F.
• PBWA Singapore bed capacity: growing from 34,786 in Dec-23A to 39,252 in Dec-27F.
• PBSA Australia bed capacity: projected to increase from 911 to 2,273 by Dec-27F.

Conclusion: Robust Fundamentals and Growth Outlook

Centurion Corporation Ltd continues to demonstrate resilience, growth, and strategic foresight in the PBWA and PBSA sectors. With industry tailwinds, regulatory support, and a strong capital recycling strategy via CAREIT, the company is poised for further expansion. Investors can expect continued dividend growth, robust occupancy, and yield-accretive projects, marking Centurion as a leading player in the accommodation market.

Recommendation Framework

• Add: Total return expected to exceed 10% over the next 12 months.
• Hold: Return between 0% and 10%.
• Reduce: Return below 0%.

Sector and country ratings are also provided, guiding positioning for investors.

Distribution of Ratings and Investment Banking Clients

• Add: 70.6%
• Hold: 20.5%
• Reduce: 8.9%

561 companies under coverage for the quarter ended 30 June 2025.

Disclaimer

This report is provided for informational purposes only and does not constitute an offer, recommendation, or solicitation to buy or sell securities. Recipients should consult their own professional advisors before making investment decisions.