Centurion Corporation: Unlocking Value Through REIT Listing

Centurion Corporation has announced it is exploring the establishment of a real estate investment trust (REIT) to include its workers’ and student accommodation assets. The proposed REIT, expected to be listed on the SGX Main Board, aligns with Centurion’s asset-light strategy, unlocking value for shareholders.

The company, in collaboration with DBS Bank Ltd. and UBS AG, is also considering a dividend in specie of REIT units to its shareholders. However, the transaction’s timing and terms remain subject to market conditions, commercial negotiations, and regulatory approvals.

Currently trading at S\$0.96, Centurion is capitalized at S\$807 million and trades at 8.7x core forward P/E and 0.86x P/B, with a dividend yield of 3.1%. The company has experienced significant capital appreciation in its accommodation assets due to strong rental reversions and high occupancy rates. Analysts foresee a consensus target price of S\$1.05, representing a 9.4% potential upside. Shareholders are advised to monitor developments closely.

Singapore Post (SingPost): Navigating Governance and Growth Challenges

SingPost finds itself under scrutiny following allegations of data falsification in its international e-commerce operations. The government has issued an advisory to uphold corporate governance and ensure continuity in domestic postal services during this transitional phase.

The company terminated three senior executives, including its former Group CEO Vincent Phang, citing gross negligence in handling whistle-blower investigations. Observers have termed the incident “Parcelgate,” marking it as another lapse in governance since 2005.

Despite these challenges, SingPost’s domestic postal services remain unaffected, and the company continues to meet its quality-of-service standards. Its board has implemented structural changes, including appointing Neo Su Yin as Group COO to oversee both domestic and international operations.

Trading at 18x forward P/E and 1x P/B, SingPost’s market cap stands at S\$1.2 billion. Analysts project a 32% potential upside with a Bloomberg consensus target price of 74 cents. Long-term prospects include the potential monetization of assets to return proceeds to shareholders.

Frasers Logistics Trust and Other Dividend Highlights

Frasers Logistics Trust stands out with a forward dividend yield of 7.64%, making it a top choice for income-focused investors. Other notable dividend-paying entities include Mapletree Pan Asia Commercial Trust (6.64%), Mapletree Logistics Trust (6.28%), and CapitaLand Ascendas REIT (5.73%).

Among companies offering special distributions, Thai Beverage is set to pay a final dividend of THB47 cents, while LHN Ltd will distribute both a final and special dividend in early 2025.

SingPost’s Governance Challenges and Future Outlook

SingPost has faced significant governance issues following a whistleblower complaint regarding falsified e-commerce shipment data. The scandal, termed “Parcelgate,” led to the dismissal of three senior executives. Despite these challenges, domestic postal operations remain unaffected, as confirmed by the Infocomm Media Development Authority (IMDA).

SingPost’s board has implemented measures to strengthen corporate governance, including appointing a new CFO and creating the role of Group COO. Analysts remain optimistic, projecting a 32% upside with a consensus target price of 74 cents.

Acquisitions, Disposals, and Share Buyback Updates

Significant insider transactions were observed across various companies:

• Envictus International: Dato Jaya JB Tan acquired 5 million shares at S\$0.30, increasing his stake to 28.78%.
• Hiap Hoe Ltd: Teo Ho Beng purchased 500,000 shares at S\$0.565, bringing his ownership to 75.4%.
• AEM Holdings Ltd: EPF Board and abrdn plc holdings made significant acquisitions, indicating optimism in the company’s growth prospects.

On the disposal side, Temasek, via DBS Bank, sold shares in Mapletree Pan Asia Commercial Trust, reducing its stake slightly to 56.98%. Several companies also executed share buybacks, including Singtel, DBS, and ST Engineering, signaling confidence in their stock valuations.

Macro Market Insights Affecting US, Hong Kong, and China

Analysts at BCA Research noted cracks emerging in the US economy, with low-income households curtailing spending. They predict an imminent peak in US stock markets, recommending a shift towards government bonds and US dollar cash while underweighting emerging market stocks.

In China, the PBOC reaffirmed its support for the yuan, setting its daily reference rate stronger than 7.2 against the US dollar. With Beijing planning to sell more bills in Hong Kong, analysts expect the yuan to remain under pressure due to economic challenges and capital outflows.

What Lies Ahead in January and February 2025

Several key earnings announcements are on the horizon, including Mapletree Logistics Trust, Suntec REIT, and Keppel DC REIT. Investors are advised to stay informed as these updates could influence market sentiment and stock valuations. February will see updates from Lendlease Global, Keppel Pacific Oak REIT, and CapitaLand China Trust, among others.