Centurion Corp: Riding the Surge in Construction and Student Accommodation Demand

Maybank Research Pte Ltd | March 28, 2025

Centurion Corp: Benefiting from Favorable Industry Dynamics

Centurion Corp (CENT SP) is a leading provider of purpose-built accommodation for workers and students across Singapore, Malaysia, Australia, the United Kingdom, and China. Maybank Research initiates coverage on CENT with a BUY rating and a 12-month target price of SGD1.45, based on a 1.0x FY25E P/B.
Despite the stock’s recent outperformance, Maybank believes the current valuation of around 10x forward P/E is not excessive given CENT’s robust earnings visibility, driven by favorable demand-supply dynamics in its core markets and a clear pipeline of capacity expansion.

Favorable Demand-Supply Dynamics in Singapore and Malaysia

In Singapore, around 9,000 dormitory beds will be taken out of supply in 2Q25 as the lease for one of the larger dorms operated by a competitor expires.
The Ministry of Manpower’s Dormitory Transition Scheme (DTS) is also expected to further squeeze supply by 2027, as existing dorms must meet upgraded interim standards.
CENT’s dorms, particularly Westlite Toh Guan and Westlite Mandai, are well-positioned to serve as ‘swing sites’ during this transition period.
In Malaysia, CENT plans to develop around 7,000 beds in Nusajaya, Iskandar, and Johor, potentially benefiting from the setup of the Johor-Singapore Special Economic Zone.

Growing Portfolio in the UK, Australia, and China

CENT has an expanding portfolio of student accommodation assets in Australia (29% of PBSA revenue in FY24) and the UK (69%), which offer an attractive alternative asset class with strong interest from institutional investors.
The UK is seeing a persistent shortage of PBSA beds, with a projected shortfall of 620,000 beds by 2029. Student demand remains resilient, supported by the new Labour government’s positive stance on international students.
In Australia, there is also an ongoing shortage of beds, and CENT is looking to further increase its footprint in Melbourne and Sydney.
CENT has also established two joint ventures for built-to-rent (BTR) projects in Xiamen, China, a new property development model where buildings are specifically constructed or retrofitted for long-term rental accommodation.

Capital Recycling Initiatives to Drive Stock Re-rating

Driven by healthy occupancies in its core business, CENT continues to see positive rental rate revisions, supporting its recurring earnings visibility.
The company is exploring a transaction involving the establishment of a REIT and considering a dividend in specie of some of the units in the proposed trust to reward shareholders.
CENT will also selectively grow its portfolio through accretive M&As in existing and new markets, as well as an asset-light strategy involving joint ventures and master leases.

Risks and Valuation

Key risks include oversupply of beds leading to higher vacancy rates, lower-than-expected margins from intense competition, and a deterioration in the macroeconomic environment.
Maybank initiates coverage on CENT with a BUY rating and a 12-month target price of SGD1.45, based on a 1.0x FY25E P/B. The current valuation of around 10x forward P/E is seen as reasonable given the company’s favorable demand-supply dynamics and clear growth pipeline.