Centurion

Centurion: 3Q14 core net expanded by a robust 49% y/y to $7.9m (+2.9% q/q), lifting 9M14 net profit to $21.0m (+58% y/y). For the quarter, revenue jumped 46% y/y to $21.0m, driven by the accommodation business which posted revenue growth of 61% to reach $19.4m. The contributions came mainly from the increase in bed capacity at Westlite Toh Guan upon completion of upgrading works in Jan ’14, increase in rental and occupancy rates of its workers accommodation in M’sia, as well as maiden revenue from its student accommodation assets in Australia and the UK. Gearing jumped from 18% to 30%. The Ministry of Manpower introduced the Foreign Employee Dormitories Bill 2014, which outlines regulations for larger dormitories with more than 1,000 beds. This is increases the barrier of entry and is good for Centurion. We expect the Singapore dormitory portfolio occupancy to be ~90%. Management expects demand for beds to outweigh supply. Its Westlite Woodlands dorm, expected to be completed and operational in 3Q15 will add 4,100 beds to the current 23,500 (Singapore). In Malaysia, its portfolio of 14,500 beds has crossed an occupancy rate of 90%. Two more projects with a total of 10,800 beds are under construction and are expected to be operational in 1Q15 and 4Q15 respectively. The student accomodations in UK and Australia are expected to maintain their close to full occupancy rates. Centurion is currently trading at 13x annualized 3Q14 P/E.