Centurion

Centurion: OSK DMG took some fund managers for a visit to their Toh Guan and Mandai dormitories. In particular, DMG themselves were surprised by the good facilities and comfortable living environment and social activities at the dorm. This affirms the motto “managing with heart” which management prides themselves for having, and isn’t shy to communicate that this is a key differentiating factor between them and and other dorm providers. Occupancy for newer dorms are fast filling up. Toh Guan’s new block which started early this year is now 50% filled, while the Mandai dorm is already 90% filled, with full occupancy achievable over the next 2-3 months. Potential new projects are in Singapore, Penang and Qatar. Specifically, JTC just put up 2 dorm land parcels for tender,: a 6-year, 2,000-bed one in Mandai, and a 20-year 9,200-bed one in Tuas. Centurion is awaiting tender results from a 25,000 bed worker’s village in Penang, and a 20,000 bed worker’s accommodation in Qatar. Dormitory gross margins are good over 50%, and with the closing of its optical business by 2017, gross margins could ramp up to 68%. On top of that, the dorm provider also stands to book 14.4m gain from industrial ramp-up JV project M-space. We like the execution abilities of management, and believe that their “managing with heart” style is sustainable in the dorm business. This is especially key post the Little India riot, where gov’t is now focusing on better living conditions for foreign workers. In this regard, Centurion is best poised to gain given their track record. OSK DMG reiterates Buy on Centurion with TP $0.82.