Centurion: According to news sources, Ong Beng Seng, MD of Hotel Properties, is negotiating to sell a privately-owned foreign workers' dormitory in Kaki Bukit for ~$125m.
The price tag for the dormitory, which has about 6,000 beds and spans over 200,000 sf of land with a lease term until 2029, works out to be $20,800 per bed, giving yield of 14.4% based on average bed rental of $250/month.
Applying a similar cost per bed to Centurion's current Singapore portfolio of 23,500 beds (3Q15: 27,600), this works out to $488.8m, which includes two freehold plots of land at Westlite Mandai and Woodlands across a land area of ~188,000 sf.
The current price of $0.555 implies a market cap of $420.1m for Centurion, which means investors are sitting on a surplus of $68.7m ($0.09/share), in addition to zero cost for:
1) 14,500 beds in Malaysia, 25,300 by end-FY15
2) 456 student accommodation beds in RMIT Village, Australia
3) 1,906 student accommodation bed in UK by end-FY15
4) A legacy optical disk manufacturing business (FY14e: $10m revenue).
We reiterate a Buy on Centurion, which sits in Market Insight's Growth portfolio.
Bloomberg consensus has three straight Buys, with consensus TP of $0.84.
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