Lim & Tan Securities analyst Chan En Jie has kept his “accumulate” call on Centurion Corporation OU8 with a higher target price of 66 cents from 62 cents previously.
In his report dated June 26, Chan notes that the company is “off to a good start”, referring to its business update for the 1QFY2024 ended March 31.
During the quarter, Centurion reported a 30% y-o-y increase in its group revenue of $61.1 million, outperforming the analyst’s estimates at 27.5% of his full-year forecasts.
The revenue increase was mainly attributed to the continued positive rental rate revisions and higher occupancies in Centurion’s purpose-built workers accommodation (PBWA) and purpose-built student accommodation (PBSA) global portfolios.
Other positives, in Chan’s view, include the “healthy pipeline” of 2,570 dormitory beds in Singapore and Malaysia this year.
The recent off-market purchase by David Loh, Centurion’s executive director and joint chairman, also seems to suggest “continued confidence” in the company’s prospects. Loh purchased a total of some 20 million shares at an average price of 54 cents apiece on June 11. Before that, Loh bought 215,400 shares from the market at 53 cents each on June 3.
Another positive is the demand for foreign workers, which should remain high over the short- to mid-term, notes Chan. This is as the Building and Construction Authority (BCA) increased its forecast for Singapore’s construction demand for 2024 to 2028.
In Chan’s view, Centurion’s valuations are “attractive” as it is trading at just 6.3 times its core Fy2024 P/E and 0.6 times P/B.
In addition to his higher target price, the analyst has increased his FY2024 and FY2025 earnings estimates by 7%.
As at 1.59pm, shares in Centurion are trading flat at 58.5 cents.
