Centurion H1 net profit falls 58% to S$8.7 million on fair-value loss, lower student accommodation revenue

Singapore

WHILE mainboard-listed Centurion Corp, which operates purpose-built worker and student accommodation (PBWA and PBSA respectively), continues to face near-term headwinds amid social distancing and lockdown measures, recovery is in sight for some of its assets.

In an earnings call on Wednesday, the company said it believes that as business and travel activities resume and vaccines are rolled out globally, occupancy is expected to pick up.

The group has managed to expand its portfolio to enlarge and diversify revenue streams for its PBWA segment; its PBSA segment is also looking up despite travel restrictions.

On Wednesday, Centurion announced that for the half-year ended June 30, net profit fell 58 per cent to S$8.7 million from the previous year's figure of S$21 million,as it booked a fair-value loss of S$14.5 million on its properties.

Excluding fair-value adjustments, profit from core business operations attributable to equity holders fell 3 per cent to S$20.4 million, from S$21 million the year before.

Overall revenue for the period slipped 3 per cent to S$64.7 million, from S$66.6 million the previous year.

Earnings per share for the company stood at 1.04 Singapore cents, down from 2.5 cents the previous year. Net asset value per share came in at 73.95 cents as at June 30, compared with 72.03 cents as at end-December 2020.

The company's PBSA revenue fell by 25 per cent year on year from S$21.1 million to S$15.7 million, due to travel restrictions in Australia and the United Kingdom, as well as universities pivoting to a mix of in-person and online teaching resulting in decreased demand.

Centurion said: "In our student accommodation where the pressure continues, we are looking at flexible lease terms across the different countries to support students and attract pre-bookings despite the uncertainty, and we are also focused on tapping domestic demand where international travel has been restricted."

That said, its student accommodation assets in the UK have been receiving more enquiries; the group has pre-sold more than half its bed capacity in the UK for the upcoming academic year. The financial occupancy rate in the UK was 66 per cent for H1 2021 versus 74 per cent in the same period last year.

In Australia, the average financial occupancy stood at 27 per cent for first half of 2021, down from 68 per cent the year before. Centurion said that it is turning to other sources of revenue to cushion the impact of lockdown measures there.

It added that it is offering short-term leases - where possible, to non-student residents as well.

"In Melbourne, we have recently received approval to take in non-student residents, and we will aim to drive occupancies in these other areas in the long term," said the firm.

The PBWA segment, on the other hand, fared better. The company posted a 7 per cent rise in revenue year on year to S$48.5 million, from S$45.2 million the previous year.

The average financial occupancy for its Malaysia PBWA strengthened to 88 per cent in the half-year period, up from 80 per cent a year ago. This comes as movement control orders were implemented across the nation, and employers saw increased pressure to provide better living conditions for their workers.

Meanwhile, the average financial occupancy in the half-year ended June 2021 for its Singapore PBWA, excluding its three operational quick-build dormitories, slipped from 99 per cent last year to 82 per cent this year.

"But despite these uncertainties, the group has managed to continue building on our resilient portfolio," said Centurion.

"We have been able to diversify our revenue streams, not only from rental leases, but also from accommodation-related services such as laundry, catering and other services, or what we can call auxiliary services, where we have seen quite a strong growth in revenue."

The fall in financial occupancy in Singapore, for instance, was therefore partially mitigated by new revenue streams such as these.

Other revenue from accommodation business came in at S$5.2 million for H1 2021, more than double of that the previous year.

This was mainly derived from the two migrant worker onboarding centres, which commenced operations in March 2021, as well as income from accommodation-related services delivered in the quick-build dormitories and management fee income from the two factory-converted workers dormitories in Singapore.

Similar to the year before, no dividend was paid out as the company intends to conserve cash resources amid Covid-19 pandemic.

Shares of Centurion closed 3.03 per cent or 1 Singapore cent higher at 34 cents on Wednesday.