Centurion Corporation

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kind of Peter Lynch type of play....

9 months ago I  was reading the straits times and I came across this article...

https://www.straitstimes.com/opinion/for...rm-rentals

The 'complaint' enticed me to look at this company and the financials and prospects resulted in me 'swinging my bat at it'

Looking at its FY2022, the PE and price over net operating cash flow then are less than 5. The company will continue to grow as it continues to adjust its rentals. From what I read, the company is charging much lower than what is stated in the straits times forum. Hence room for increased rentals.

Fy2022 result
https://links.sgx.com/1.0.0/corporate-an...d11a3ec090

The negative I can think of is their huge debt level. They are still piling on debts as they are confident of higher demand. Hence building more dormitories.

Their 1h2023 result
https://links.sgx.com/1.0.0/corporate-an...1247752994

For fy2022, they gave a total dividend of 1.5 cents of which 0.5 cents was the interim dividend.

For 1h2023, the company increased the interim dividend to 1 cents.

I expect them to give a higher dividend for 2h2023 (1 cents for fy2022).

Hence total dividend expected for fy2023 should be at least 2.5 cents ( 1 cents for 1h2023, 1.5 cents for 2h2023), about 6% yield.

The company should continue to do well till 2025/2026. There's still a lot of construction going on to make up for the COVID break.

Policy will drive more demand
https://m.youtube.com/watch?v=UwmLTdDIMYk


Anyway the result will be out tomorrow...
https://links.sgx.com/1.0.0/corporate-an...bc050da3ff
You can find more of my postings in http://investideas.net/forum/
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Stripping off the FV gain/losses, Centurion's ROE is ~7% and since it is ~100% geared, effective ROE has to be divided by 2, and it becomes ROE~3%.

Of course, this kind of ROE is typical of companies that hold investment properties and then revalue them on the balance sheet annually. So, maybe this is why Mr Market values it at a low single P/E?

To their credit, I remember they did try to spin off their assets into a REIT but it was rejected by SGX as it was considered a chain listing. If this company decides to go to an "asset light" direction like Keppel is doing, then there is probably some value to be unlocked!
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Centurion reports 114% y-o-y increase in earnings for FY2023 of $153.1 mil
https://www.theedgesingapore.com/capital...3-1531-mil


Fy2023
https://links.sgx.com/1.0.0/corporate-an...597c5de39d


Director's shareholdings
https://links.sgx.com/1.0.0/corporate-an...62dd46c938


Earnings per share for Fy2023 was 18 cents per share due to revaluation of properties. Core earnings was 8.2 cents Vs 6.8 cents the previous year.

Net operating cash flow was $123m or around 15 cents per share.

This year(fy2024)most likely the company will continue to post higher earnings as contracts are renewed at higher rate while for next year their new dormitory will add to capacity for Fy2025 when it is completed in Dec 2024.

So I expect earnings and dividend to continue to go up.

Their market cap is around $330m while cashflow from net operation is $123m and the majority shareholders owned more than 50% of the company. This company will not be undervalued for long.
You can find more of my postings in http://investideas.net/forum/
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(03-03-2024, 11:23 AM)Behappyalways Wrote: Their market cap is around $330m while cashflow from net operation is $123m and the majority shareholders owned more than 50% of the company. This company will not be undervalued for long.

Hi Behappyalways,

I don't think it is fair to use 123mil as the "cashflow representation" here. If we look closer at the cashflow statement, we still need to deduct the interest expenses and lease liabilities (which total ~56mil). So the effective operating cash flow is really just half of what you represented.

That said, with the changes in dorm conditions that will be enforced in the next few years, are operating dorms going to be as profitable going forward?

Concerns over cost and reduced capacity, but operators see need to raise dormitory standards
https://www.straitstimes.com/singapore/c...-standards
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beside lease payment and interest, when the group has large NCI, then a portion of the cashflow does not belong to shareholder. In this case, I would say 22M. positive side will be JV and associate earning or cashflow not included.

next, when rental is based on very short term leases, then earning include high return of capital or ROE/ROC got to be high, else why bother.
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