Broker: UOB Kay Hian
Date of Report: 24 June 2025

Centurion Corp: Riding the Construction Boom and REIT Prospects for Double-Digit Growth

Overview: Strong Sector Play with Strategic Growth Levers

Centurion Corp (SGX: CENT SP) stands out as a leading provider of purpose-built workers’ accommodation (PBWA) in Singapore and Malaysia, with additional exposure to student accommodation markets in Hong Kong, the United Kingdom, and Australia. The company’s robust positioning in construction-driven real estate and its prudent expansion strategy make it a compelling investment candidate for 2025 and beyond.

Stock Snapshot and Recent Performance

• Share Price: S\$1.55
• Target Price: S\$1.70 (previously S\$1.48), implying a 9.7% upside
• Market Cap: S\$1.3 billion (US\$1.0 billion)
• Shares Issued: 840.8 million
• 52-week range: S\$0.43 – S\$1.27
• Major Shareholders: Centurion Properties (50.6%), Teo Peng Kwang (7.58%), Loh Kim Kang (5.3%)

The stock has delivered stellar returns, with a 169.6% gain over the past year and a year-to-date return of 61.5%.

Business Model: Focused on Essential Accommodation

Centurion generates 77% of its revenue from PBWA assets, with 71% of global revenue sourced from Singapore. The company’s business model provides a stable, recurring income stream, largely insulated from broader economic and geopolitical shifts. Its expansion into student accommodation in developed markets offers diversification and upside potential.

Key Growth Drivers in 2025 and Beyond

Singapore’s Construction Mega Projects Fuel Demand

Demand for workers’ accommodation is underpinned by robust construction activity, supported by major public and private sector projects such as:

• Marina Bay Sands expansion (S\$10.7 billion)
• Resorts World Sentosa expansion (S\$6.8 billion)
• Changi Airport Terminal 5 (S\$11.0 billion)
• North-South Corridor (S\$7.5 billion)

These projects are expected to keep construction spending elevated over the next 2-3 years, directly benefiting Centurion’s PBWA assets.

MAS S\$5 Billion Equity Market Development Program (EQDP)

The Monetary Authority of Singapore’s upcoming equity injection program is set to shine a spotlight on high-quality local companies. Centurion is poised to benefit, as the program will attract greater institutional attention to firms with strong earnings, reliable operations, and defensive business models.

Potential REIT Spin-off to Unlock Shareholder Value

Centurion has submitted a listing application for a proposed REIT IPO, targeting its developed market PBWA and PBSA assets. Expected to proceed in 3Q25, the REIT will be of “reasonable size” and could enhance dividends and broaden the investor base.

Financial Highlights and Upward Revisions

A robust 1Q25 saw revenue of S\$69 million, up 13% year-on-year, driven by positive rental reversions, high occupancy rates, and contributions from new assets. Centurion’s management expects rental growth to moderate but remain positive, given ongoing tight supply-demand dynamics and regulatory mandates for retrofitting existing accommodation.

Earnings Revisions

The company’s 2025-2027 earnings forecasts have been raised by 2-5%, reflecting higher rental reversions in Singapore, Australia, and the UK, as well as continued tight occupancy rates. The 2025 earnings forecast does not yet include potential fair value gains on investment properties.

Geographic and Segmental Revenue Breakdown

• Singapore: 71%
• United Kingdom: 16%
• Malaysia: 7%
• Australia: 5%
• Others (US, HK, etc.): 1%

With Singapore as the main revenue driver, Centurion is also strategically positioned to benefit from the Johor-Singapore Special Economic Zone, which could catalyze PBWA demand in Malaysia.

Operational and Strategic Strengths

• Centurion has developed a robust moat in the PBWA sector, particularly in Singapore, where it would take over two years for new entrants to build competing facilities.
• Retrofitting mandates between 2027 and 2030 will keep supply tight, supporting rental rates and occupancy.
• Management remains optimistic on expansion in Malaysia, with 870 new beds expected by end-2025, and further acquisitions likely.

Valuation and Investment Case

• Target price raised to S\$1.70, reflecting a 15% increase based on a higher target PE multiple (13.3x, 1SD above the long-term average of 8.1x).
• 2025 forward PE of 12.6x and P/B of 1.1x are deemed inexpensive given Centurion’s growth prospects.
• Forecast dividend payout ratio stands at 30%, implying a 2.4% dividend yield for 2025.

Key Share Price Catalysts

• Execution of the REIT spin-off and a potential dividend in specie.
• Successful capital recycling and joint venture expansions for an asset-light business model.
• Institutional interest driven by the MAS EQDP, potentially leading to a re-rating of Centurion’s valuation multiples.

Growth Pipeline and Outlook

Centurion’s forward project pipeline includes new PBWA and PBSA developments across Singapore, Malaysia, Australia, and Hong Kong, with significant contributions expected from 2026 onwards.

Conclusion: Maintain BUY – Attractive Valuation with Compelling Growth

Centurion Corp is positioned to deliver sustained earnings growth and potential upside from strategic corporate actions such as a REIT spin-off. The company’s defensive business model, strong sector tailwinds, and robust financial metrics make it a top pick for investors seeking stable returns and growth in Singapore’s property-related sector. Maintain BUY with a target price of S\$1.70.