DBS initiates coverage on Centurion Corp with ‘buy’ call on strong bed growth visibility

[SINGAPORE] DBS Group Research initiated coverage on living-sector accommodation provider Centurion Corporation on Wednesday (Jun 10) with a “buy” recommendation and a target price of S$1.86.

In an equity research note, DBS analysts Ng Jia Hui, Geraldine Wong and Derek Tan highlighted that the firm’s “earnings framework has evolved from a purely asset-heavy accommodation operator into a diversified platform with multiple income streams”.

Following the spin-off and listing of Centurion Accommodation Real Estate Investment Trust (CAReit) , the group has also unlocked capital and “significantly strengthened its balance sheet, bringing its net debt to equity down to 12 per cent”, compared with 29 per cent in FY2024, providing firepower for future growth.

Centurion’s restructured earnings framework captures three distinct revenue streams: operating income from owned and operated assets, fee income from management services and investment income from CAReit units.

This creates a “more capital-efficient, scalable, and recurring-income business”, the analysts said.

The brokerage forecasts strong earnings visibility underpinned by a pipeline of over 4,000 new beds scheduled to come online through FY2027, representing around a 5 per cent expansion from Q1 2026 capacities.

In Singapore, which accounted for 72 per cent of the group’s FY2025 revenue, worker accommodation revenue is projected to surge close to 20 per cent in FY2026, DBS said.

This growth is backed by completed asset enhancement initiatives (AEIs) at Westlite Toh Guan and Westlite Mandai, alongside strong demand and tight domestic supply conditions as properties begin retrofitting to comply with upcoming Interim Dormitory Standards by 2030.

Meanwhile, Centurion’s recent strategic entry into the Australian key worker accommodation segment provides exposure to structurally resilient, long-duration demand from the resources sector.

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Centurion’s Australian purpose-built student accommodation (PBSA) segment is also well-positioned to double revenue on capacity expansion, DBS said.

“Australia’s PBSA market remains structurally tight, with about 3.6 international students and 8.5 total students competing for each available bed, underscoring persistent undersupply conditions,” analysts said.

DBS projects Centurion’s revenue to rise to S$356 million in FY2026 from S$296 million in FY2025.

While net profits are expected to face a temporary post-CAReit consolidation dip to S$97 million in FY2026, a 12.4 per cent compound annual growth rate recovery is forecast between FY2026 and FY2028.

Downside risks cited by the brokerage include exposure to short land tenure structures and evolving foreign labour frameworks, which could constrain occupancy levels and limit growth visibility.

The group is also sensitive to changes in student visa regulations, immigration policies and potential caps on foreign student enrolment in key markets.

As at 3.55 pm on Thursday, shares of Centurion were trading at S$1.45, S$0.04 or 2.8 per cent higher.