Brokers’ take: RHB raises Centurion target price to S$0.43 on continued recovery, undemanding valuations

CENTURION Corporation will likely continue to see a rebound in its accommodation business for workers and students, amid a resumption of construction activities as well as a relaxation of Covid-19 restrictions, RHB said.

In a report on Tuesday (Jun 7), RHB analyst Jarick Seet raised his target price on the property manager to S$0.43 from S$0.38, after he increased his FY2022 net profit estimates by 13 per cent to factor in a faster recovery due to loosening Covid-19 restrictions globally.

Seet also said the counter has undemanding valuations, as it trades at just 4.2 times the brokerage’s estimates for FY2022 earnings and at a 54 per cent discount to its net asset value of S$0.785. He has a “buy” call on the stock.

Shares of Centurion : OU8 0% were trading flat at S$0.37 as at 11.45 am on Tuesday.

Earlier in May, Centurion said its group revenue rose 47 per cent on year to S$45.1 million in the first quarter ended Mar 31. This was mainly driven by an enlarged portfolio capacity and new business streams in its purpose-built workers’ accommodation segment across Singapore and Malaysia, as well as recovery in the occupancy of its purpose-built student accommodations in the UK and Australia.

Seet expects the demand for dormitories in Singapore will continue to increase as construction activities resume and the demand for workers surge. Rental rates will likely also remain resilient in 2022.

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He also expects Centurion’s student accommodation business will rebound strongly as it rides on the improvement in occupancy in the UK, Australia, the US, and South Korea.