Centurion Corporation

[CityFarmer]

I started a new thread on this company...

Centurion to build 4,100-bed dormitory in Woodlands

SINGAPORE — Centurion, a locally-listed dormitory developer, will build a 4,100-bed facility for foreign workers in Woodlands Avenue 10 after winning a land tender by Jurong Town Corp, the company said yesterday.

The site has a 30-year lease and sits on a land area of about 102,700 sq ft. Centurion, through its wholly-owned subsidiary Westlite Dormitory, submitted the top bid of S$80.8 million in the tender, beating 13 other bidders.

Centurion Chief Executive Kong Chee Min said: “It gives us the opportunity to continue growing our workers’ accommodation portfolio in Singapore, especially since sites with long tenures for worker accommodation developments are hard to come by.”

Centurion has about 18,000 beds in Singapore. It said that with the ongoing enhancement of its existing premises, this will grow to about 23,000 by the first quarter of next year.

The successful bid will allow it to further expand the number of beds for foreign workers here to almost 28,000 when the facility is completed in 2015, it said.

The group’s total projected bed count, including those in Malaysia, will be about 54,000 in 2015 from its current 29,000, it added.

Demand for worker accommodation is expected to remain robust,said Centurion, noting that Work Permit holders in the non-domestic sector rose 5.7 per cent from 2011 to 742,500 last year while only 160,000 purpose-built beds were available in the last two years.

After the announcement yesterday, Centurion shares rose 1 per cent to close at 49 cents each.
http://www.todayonline.com/business/prop...-woodlands

[Townboy]

Anyone knows the major risks of dormitory business? Goverment policy change in foreign workers, high project development cost, etc?

[CityFarmer]

Analyst report on Centurion, from The Edge. It gave a good overview on the company, and its new venture.

Centurion offers steady growth for investors

WHILE INVESTORS WORRY about the effects tapering can have on the market, there are the stocks of some companies that seem to remain impervious to what Ben Bernanke says. One such company is Centurion Corporation.

The surging construction demand in Singapore, underpinned by multi-year public sector housing and infrastructure projects, means the armies of foreign workers will not go away anytime soon, even though the government has urged the sector to improve its productivity. Meanwhile, the existing 740,000 foreign workers still need a place to stay.

Today, there are only some 160,000 beds available within so-called purpose-built workers’ dormitories, which has helped driven monthly rental up by 30%, notes DBS Vickers analyst Tan Ai Teng in a Sept 19 report. Centurion, Singapore’s only listed dormitory operator, now manages 18,000 such beds. The company is therefore in a good position to take advantage of this demand, notes Tan. He has initiated coverage on the company with a “buy” call and target price of 77 cents. The company closed 0.5 cent higher to 59 cents on Friday, Sept 20.

Centurion, which earned $16 million on revenues of $65 million in FY12, is projected to grow its earnings to $35 million in the current FY13, on revenues of $64 million. Come FY15, earnings are likely to reach $39 million on revenue of $79 million, according to Tan. The growth will be boosted by not only rental increases, estimated at 5% per year, but also the additional capacity. “Further acquisitions and higher than expected rent rates are potential upsides,” she writes.

Centurion, which was previously known as SM Summit Holdings, traces its history back to 1981 as a manufacturer of data storage products. SM Summit was listed on the SGX in 1995. After a reverse takeover by Westlite Dormitory in 2011 for $85 million, it was transformed into the Centurion of today. Since the RTO, the company has grown the number of dorm beds it has from 5,300 to around 30,000 beds today. There is an additional 25,000 beds planned in total.

Interestingly, Centurion has retained the former core business of making optical disks. However, management has stated it has no further investment plans for this business. Following a one-off $3.9 million write-off of related assets, Tan believes the company will quit the optical disk business by 2016.

Centurion now operates three dormitories in Singapore: Westlite Toh Guan, which has 4,836 beds, located on 60-year leasehold land with 45 years remaining; the 8,600-bed Westlite Tuas, a temporary dormitory with 3.5 years remaining on its lease; and Westlite Mandai, which is a 45%-owned joint venture with construction and property firm, Lian Beng. Ths dormitory, which has 4,750 beds, sits on a freehold site. By early next year, an additional 5,300 beds will be added to the capacity.

Centurion is not only operating within Singapore. Since 2011, the company has expanded across the Causeway, with 11,000 beds across four different dormitories, which are used to house manufacturing industry workers. “The key advantage of Centurion’s Malaysia dormitories is that they are able to house thousands of workers, which allows MNCs to consolidate all their foreign workers in one location, as opposed to housing them in separate smaller dormitories,” writes Tan. The company has plans to double this existing capacity to 23,000 by 2015 as existing developments are completed.

Tan believes that Centurion, given its recurring income nature, should be compared to other local landlords, namely, SingLand and UIC, both of which earns around 80% of their profit from rental income.

SingLand and UIC are now valued by investors at 13.1 times and 13.4 times FY14 earnings respectively, while Centurion, at a slightly higher 14.4 times. Tan says Centurion’s slight premium is justifiable given the company’s better potential for earnings growth. Seen from another metric, Centurion has a price/earnings to growth ratio (PEG) of 0.4 times, compared to 1.1 times for SingLand and same as UIC’s 0.4 times. Tan’s target price of 77 cents implies a PEG of 0.52 times for FY14 – putting Centurion in line with the average ratios of the other two landlord plays.

http://www.theedgesingapore.com/blog-hea...stors.html

[dydx]

Paying the top bid of $80.8m (in a tender contested by 13 bidders) for a 30-year leasehold site in Woodland to build a 4,100-bed dormitory appears to be an aggressive expansion move. This new project will probably end up to a total capex amount of close to $110.0m which is completed in 2015, and a substantial portion of the amount will be financed by new debts.

Before buying into this seemingly promising company, I would advise fellow forumers to review the latest 2Q results announcement carefully.....
http://infopub.sgx.com/FileOpen/Centurio...eID=252113
I find the accounting policies rather aggressive too, especially in booking fair value gains on the group's and its 45%-owned JV's dormitory assets, which warrant closer scrutiny.

[l0nEr]

Paying the top bid of $80.8m (in a tender contested by 13 bidders) for a 30-year leasehold site in Woodland to build a 4,100-bed dormitory appears to be an aggressive expansion move. This new project will probably end up to a total capex amount of close to $110.0m which is completed in 2015, and a substantial portion of the amount will be financed by new debts.

Before buying into this seemingly promising company, I would advise fellow forumers to review the latest 2Q results announcement carefully.....
http://infopub.sgx.com/FileOpen/Centurio...eID=252113
I find the accounting policies rather aggressive too, especially in booking fair value gains on the group's and its 45%-owned JV's dormitory assets, which warrant closer scrutiny.

i think they changed their accounting policy from cost-based to fair value-based for investment properties (FRS 40) in Q2 2013. This should be more or less in line with other developers/REITs.
This should probably be why there was more FV gains in the quarter, and might not see such significant gains anymore in the future.

Think one of the risk though is that the "properties" they have are leasehold and could expire rather soon. have to examine. like their Woodland piece of land is for 30year leasehold, but some other assets have even shorter duration. 8,600-bed Westlite Tuas with only 3.5 years remaining on its lease sounds scary?

[Ben]

SingLand and UIC are now valued by investors at 13.1 times and 13.4 times FY14 earnings respectively, while Centurion, at a slightly higher 14.4 times. Tan says Centurion’s slight premium is justifiable given the company’s better potential for earnings growth. Seen from another metric, Centurion has a price/earnings to growth ratio (PEG) of 0.4 times, compared to 1.1 times for SingLand and same as UIC’s 0.4 times. Tan’s target price of 77 cents implies a PEG of 0.52 times for FY14 – putting Centurion in line with the average ratios of the other two landlord plays.

http://www.theedgesingapore.com/blog-hea...stors.html

If Centurion value is in line with the average ratios of Singland and UIC, I would definitely put my money in the two much established and bigger landlord if I need to make a choice.

[specuvestor]

Paying the top bid of $80.8m (in a tender contested by 13 bidders) for a 30-year leasehold site in Woodland to build a 4,100-bed dormitory appears to be an aggressive expansion move. This new project will probably end up to a total capex amount of close to $110.0m which is completed in 2015, and a substantial portion of the amount will be financed by new debts.

Before buying into this seemingly promising company, I would advise fellow forumers to review the latest 2Q results announcement carefully.....
http://infopub.sgx.com/FileOpen/Centurio...eID=252113
I find the accounting policies rather aggressive too, especially in booking fair value gains on the group's and its 45%-owned JV's dormitory assets, which warrant closer scrutiny.

The company is promoted by famous stock operators which any old forumers would know.

[cyclone]

A journey of a thousand miles begins with a single step.

Centurion makes small ventures into Indonesia. A wise move ? Who is the big players in this business now in Indonesia ?

Singapore, 13 December 2013 - Centurion Corporation Limited has acquired a 7,220 square metre plot of land in Jakarta, Indonesia for the development of worker accommodation. This will be Centurion’s maiden worker accommodation investment in Indonesia. The land and the ensuing worker accommodation asset will be developed, owned and operated by Centurion’s wholly owned subsidiary, PT Westlite Accommodation Cibitung (“PTWAC”), which has just been incorporated in Indonesia.

The total consideration paid for the land was approximately S$0.8 million and was funded by internal resources.

The proposed accommodation is located in the eastern part of Jakarta in Bekasi District, which is approximately 30 km from Central Jakarta. The area comprises several established industrial parks, including Cibitung Industrial Park, which is approximately a seven-minute drive away.

There are more than 200 multi-national companies (“MNCs”) operating in the Cibitung Industrial Park including well-known names like LG Electronics, Panasonic and Sumitomo. The estimated number of workers working in and around Cibitung Industrial Park is approximately 100,000.

Most of these MNCs are manufacturing based and are in need of accommodation services for their workers. Due to adverse traffic conditions in Jakarta, workers and working executives prefer to live close to their workplace which can result in considerable cost savings and reduced travelling times.

The proposed accommodation facility in Cibitung comprising approximately 750 apartment units will target and house workers as well as middle-level executives working in nearby industrial parks. The accommodation is expected to be completed in 2016.

<not vested>

[chialc88]

My friends (mid income engineer type) who is working in JKT told me about his accommodation.
He is from outside of JKT and he is alone in JKT aka no relatives here.

He rented a room in a building.
According to him, the floor has long corridor and rooms and rooms(door) along the corridor.

He is lucky to have a room by himself, single bed, small table etc.

These type of accommodation is quite common ... he says ... to cater for outsider who worked in JKT.


A Life not Reflected is a Life not Worth Living.

[ARC]

Other than assessing the economics of the project, it might be meaningful to think about why Indonesia?

Is Indonesia a better place for worker accomodation than let's say Thailand or Bangladesh? If not, what other benefits did management saw that motivated them to move into Indonesia? How does it fit into the bigger picture/strategy for the company?

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