Centurion Corporation

[cyclone]

Centurion Corp Grows UK Portfolio with Acquisition of Premium Manchester Accommodation Asset

Highlights :
1. Premium accommodation asset offering high-quality housing primarily for students within the Manchester city centre
2. The accommodation asset is located at 121 Princess Street in central Manchester, United Kingdom
3. The Property is a newly refurbished, premium-built freehold asset comprising 127 beds
4. Enlarges UK accommodation portfolio to 9 assets, broadening reach of dwell Student Living brand
5. Capitalises on undersupply of purpose-built accommodation in key university city of Manchester
6. The Property will be acquired for a purchase consideration of £18.7 million (S$33.66 million)
7. The proposed acquisition increases Centurion’s total student and workers accommodation portfolio to 27 assets, bringing the total number of beds to c.55,274.

More details in :
1. http://infopub.sgx.com/FileOpen/CCL-Prop...eID=508534
2. http://infopub.sgx.com/FileOpen/CCL-Pres...eID=508536

[noobinvestors]

One of my friends really like this stock and forms as his bulk portfolio. So I write it for him.

https://writingofinvestingnoob.com/2019/...iend-mr-m/

I am not vested and not really a fan due to its leverage

[karlmarx]

Most of the concerns that investors should note are already highlighted in the thread:

1. Track record of majority owners.
2. Aggressive accounting.
3. Heavy leverage.

Removing all the fair value gains -- including those on the JVs and Associates -- ROA averages slightly less than 3%. This is the expected return for a well-managed hotel/hospitality business. So operationally, Centurion is doing fine. But its heavy leverage leaves it exposed to numerous risks. Decreasing property values, even for a short period of less than a year, can trigger credit events that lead to eventual catastrophe.

https://www.businesstimes.com.sg/compani...res-jan-18

Who are the "major noteholders who want to extend their bond investment"?

[weijian]

Based on some of the reasons for the appalling conditions of S11 dorm residents after lock down (note it is not Centurion's Westlite though), it suggests that operators or the residents' employers are squeezing out savings, by assuming that all workers will not be physically present at the same time in the same place due to day/night shifts or doing OT etc. So whether is it the infrastructure (common areas like kitchen, toilet cubicles) or house keeping schedules, all of them are found to be lacking when the lock down happened.

It is no wonder that we see many of our FT workers at their local enclaves instead during their off days, rather than staying in the dorm for a good rest (like i normally do on weekends).

MOM Minister Teo has "given her word" that something has to be done and Sporeans also have to be ready to foot the bill as well. The dorm business in Spore started from been "very good" economics to "fair" economics. Moving on, it is probably going to get harder.

CENTURION CORPORATION: DON’T KEEP SHAREHOLDERS IN THE DARK

On April 7, news broke about S11 Dormitory @ Punggol and Westlite Toh Guan Dormitories being gazetted as isolation areas following a spike in COVID-19 cases.  Nearly 20,000 workers across the two dormitories have been placed on quarantine for 14 days. The news reports also shone the spotlight on living conditions in the dormitories.

Centurion Corporation, which is listed on SGX, is the owner-operator of the Westlite Toh Guan dormitory. Its 2019 annual report said that it is the “owner-operator of 12 quality, purpose-built workers accommodation assets in Singapore and Malaysia with consistently high average occupancy rates for FY2019” under its Westlite brand. Two others are being developed in Malaysia.

https://governanceforstakeholders.com/20...-the-dark/

[weijian]

I remember Centurion once touted that the market for foreign workers accommodation in Malaysia was ripe for large scale purpose-built facilities. The market in Malaysia is fragmented with foreign workers (legal and illegal, and there are probably more illegal than legal workers) living in make-shift huts deep in oil palm/timber plantations, dilapidated shophouses in suburban areas and old apartment blocks in the outskirts.

Covid-19 probably burst this business opportunity in Malaysia with the newly recognized risk for large scale purpose-built workers' accommodation.

TERMINATION OF PURCHASE AND DEVELOPMENT AGREEMENT, FIRST SUPPLEMENTAL AGREEMENT AND SECOND SUPPLEMENTAL AGREEMENT IN RELATION TO WORKERS ACCOMMODATION PROJECT AT JURU PENANG, MALAYSIA

https://links.sgx.com/FileOpen/CCL-Penan...eID=608011

[¯|_(ツ)_/¯]

1H Result as at 30 Jun 2020
Rev $66m (vs 64m)
GP  $48m (vs 46m)
NP  $23m (vs 20m)
Div NIL (vs 1cts)

Even as countries start to relax pandemic management measures, the effects on local economies are increasingly being felt. Across the markets, the Group has received requests for review of lease terms, pre-terminations, rental deferrals, waivers, discounts or rebates. With legislation of temporary rent protection for tenants being enacted in various jurisdictions, delinquencies in receivables have risen and are expected to increase further in the coming months considering economic uncertainties.

To mitigate the impact, the Group is tapping relief packages rolled out by the various governments in the different countries where the Group operates. Additionally, the Group has approached its bankers to provide moratoria on principal repayments and grant additional working capital facilities. These requests have generally been well-supported by the banks.

At the same time, Centurion is taking proactive steps to conserve cash by implementing stricter cost management measures and deferring capital expenditure, where sensible. Expansion plans and non-essential development projects have been put on hold, and the Group will wait for the COVID-19 pandemic situation to stabilise, before re-evaluating expansion plans and recalibrating them according to market situations.

As at 30 June 2020, The Group has a gearing ratio of 50% and a well staggered debt maturity profile of average 7 years. 

Stay home and stay healthy, valuebuddies.

[weijian]

Leverage cuts both ways - on the way up and on the way down. Due to low interest rates, Centurion has been enjoying the party on the way up. Unfortunately, Covid-19 has affected its workers accommodation business in Singapore and disrupted its worldwide student accommodation business. They will probably still survive due to the help from the government but I suspect may not be totally unscathed (will have to cut off an arm or something, or a severely diluted share/rights issue)

[¯|_(ツ)_/¯]

JTC Award, 6,400 bed, 3+1 year lease
1. Kranji Way Dormitory (approximately 1,300 beds), located at 18A Kranji Way;
2. Tuas Crescent Dormitory (approximately 1,020 beds), located at Tuas Avenue 2;
3. Tuas South Boulevard Dormitory (approximately 628 beds), located at Tuas South Boulevard; and
4. Jalan Tukang Dormitory (approximately 3,420 beds), located at Jalan Tukang.
https://links.sgx.com/FileOpen/CCL-Award...eID=630316

The aforementioned dormitories are among the new Quick Build Dormitories (QBDs) whose development was announced by the Singapore Government in June 20201 , which are expected to have a total bed capacity of 25,000. The QBDs will be introduced alongside other short- to medium-term arrangements to develop about 60,000 beds for migrant workers in Singapore. 
The additional 6,400 beds will expand the Group’s purpose-built workers accommodation (PBWA) portfolio in Singapore by 22.9%, bringing its Singapore PBWA bed capacity to 34,400.

Stay home and stay safe, everyone.

[weijian]

A 0.25% increase in rates for these new 005 notes to replace the 004 notes (004 notes were at 5% and 8% step-up). While this increase isn't big, but in current super low interest rate environment, it looks like the company isn't issuing them from a "position of strength".

Centurion prices S$9.8m notes due 2024

WORKER and student accommodation provider Centurion Corporation has priced about S$9.8 million in fixed-rate notes due 2024.

These notes are on top of the company's previously announced invitation to holders of its existing S$60 million notes due 2022 to exchange them for new 3.5 year notes at a premium and/or to sell them for cash at par.

https://www.businesstimes.com.sg/compani...s-due-2024

SGX announcement: https://links.sgx.com/FileOpen/CCL-Prici...eID=634173

[weijian]

From 1H23 results, the borrowing profile show that only ~26mil out of 688mil borrowings denoted in RM - so there is a good chance that Centurion borrowed SGD to fund much of the Msian PBWA properties. There may probably be some realized translation losses as a result of this transaction.

But when your share price is ~0.5-0.6x NAV, value is always unlocked if one is able to sell their investment assets at NAV. They may have also gotten themselves a financially-strong local "partner" who willing to pay for the asset and have someone operate it for them. Transiting to an asset light model makes a lot of sense when low/zero interest rates may not come back for some time..

SALE AND LEASEBACK OF WESTLITE BUKIT MINYAK AND WESTLITE TAMPOI

The market value of the Properties is RM 227.0 million (approximately SGD 65.2 million)2 which was derived from a valuation report by Savills (Malaysia) Sdn Bhd, commissioned by CDSB on 16 November 2023 and is based on the Income Approach (Investment Method of Valuation) taking into account the 15-year master lease of the Properties.

The Consideration, being RM 227.0 million, was arrived at on a negotiated arm’s length basis taking into consideration the valuation of the Properties and is higher than the net tangible asset value of the Properties of RM 224.3 million (approximately SGD 64.9 million)3 as at 30 June 2023. The Consideration will be paid by KWAP to WDBMSB and WDTSB in cash. The aggregate rent payable under the Lease Agreements was also arrived at on a negotiated arm’s length basis.

https://links.sgx.com/FileOpen/CCL-Sale%...eID=779878