Centurion

Centurion: 2Q13 results. 12-fold increase in net profit to $56.0m, mainly due to one-off items arising from the fair value gain from the change in recognition of investment properties from a cost to a fair value basis, which more than offset the impairment loss of assets of its optical disc business. Excluding the fair value gains, net profit would have been $4.6m, +16% yoy, boosted by higher contribution from the higher margin workers’ accommodation business. Revenue at $16.0m, -6%yoy, despite a 9% qoq growth in the workers’ accommodation business due to a drop in sales in the optical business of ~$2m. Mgt expects the accommodation business to remain robust, underpinned by strong demand in Singapore. Its accommodation at Tuas and Toh Guan are expected to enjoy almost full occupancy rates. Meanwhile, its Mandai JV accommodation (4750 beds) has achieved full occupancy in 3Q13, and expects good ramp up when the additional 1,540 beds under the second phase of devt is completed in 4Q13. The profits on the sale of factory units (currently under devt next door), in which Centurion has a 45% stake, shall be recognized when it receives TOP in 4Q13. In Msia, the group currently has 4 operational workers dorms in Johor, and expects to increase bed capacity by 4,000 when its properties in Senai and Pasir Gudang commence operations in 3Q13. Mgt notes Centurion’s focus on the accommodation business has gained further traction, and is now seeking growth opportunities in other geographical territories as well as other accommodation types, including student, executive and short stay accommodation. Centurion has declared 1 free bonus warrant (ex price $0.50) for every 10 shares held. The stock trades at 19.7x core annualized 2Q13 P/E, 1.4x P/B.