Leadership takes Centurion from small-cap to mid-cap at the Singapore Corporate Awards

WHEN Centurion’s chief executive, Kong Chee Min, was named Best CEO in the small-cap category of the 2016 Singapore Corporate Awards, he was delighted.

After all, it had been only five years since the company pivoted into the specialised-accommodation business, and it was humming along on a market capitalisation of S$244.2 million.

Four years later, Covid-19 dealt him what he now describes as the biggest challenge in the history of the company. Centurion – one of the biggest workers’ and students’ accommodation operators in Singapore – bore a double whammy of lower occupancy rates in its dorms and added costs incurred to manage the outbreak.

Kong said: “We invested extensively in fittings and equipment, hardware and software, technology as well as human resources, particularly in the Singapore workers’ dorms, to implement (disease) containment measures.”

Safe-living measures included segregating residents based on their Covid-19 test results, as well as enforcing stricter sanitising regimes in the dorms.

With the extra expenses of about S$2 million spent on all that, Centurion swung into the red for the second half of FY2020, posting a net loss of S$3.8 million after factoring fair-value adjustments.

Excluding those adjustments, its net profit from its core business operations for the period would otherwise have been S$20.3 million.

On top of the containment measures, the company was also fielding more requests to review lease terms and for early terminations, rental deferrals, waivers, discounts and rebates. Occupancy rates in its properties fell lower as a result.

While the group’s full-year net profit, excluding fair-value adjustments, rose 9 per cent on the year to S$47.3 million, revenue fell marginally – by 4 per cent year-on-year to S$128.4 million.

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The group attributed the modest decline to Kong’s boldness in seizing opportunities during the pandemic, by working with government bodies; the company bagged a management-service contract from JTC Corporation to manage three factory-converted dormitories.

It also won a second tender from JTC to lease and manage up to 6,400 beds in four quick-build-dorms (QBDs). Those dorms – Westlite Jalan Tukang, Westlite Kranji Way, Westlite Tuas Avenue 2 and Westlite Tuas South Boulevard – were part of the Singapore government’s push to lower worker density in existing dorms during the pandemic.

Kong said: “It was a deliberate attempt for us to enter this space…to use our operational capability to refurbish and manage the dorms.”

The QBDs provided an additional income stream, mainly from facilities management and accommodation-related services.

This helped Centurion’s portfolio grow in Singapore to 34,368 beds, from 28,000 beds before the pandemic.

Apart from seizing opportunities in the workers’ accommodation market, Centurion has been laying the foundation for growth by expanding overseas and diversifying its business.

Recognising synergies with its worker-accommodation business, it has since ventured into student accommodation in Australia, the UK, and the US, to tap into the high demand for rooms from both international and domestic students.

With an enlarged asset size, higher revenue and earnings, Centurion’s share price and market cap improved. As at last December, its market cap was at S$340.5 million.

It now has 32 assets with 66,495 beds in operation in Singapore, Malaysia, Australia, Hong Kong, China, the US and the UK.

Workers’ accommodation accounts for 60 per cent of its revenue, and students’ accommodation, 24 per cent, Kong noted. (The company’s non-core businesses accounted for the remaining revenue.)

In FY2023, Centurion’s top line rose 15 per cent to S$207.2 million. Workers’ accommodation contributed S$156.7 million, and students’ accommodation, S$49.9 million.

Excluding fair-value adjustments and one-off items, net profit from the group’s core business operations attributable to equity holders rose 21 per cent to S$69.2 million, up from S$57.1 million previously.

At this year’s Singapore Corporate Awards, Kong was again named Best CEO – but among mid-cap companies this time – making him the first to win the title twice.

Asked how Centurion distinguishes itself from its peers, he said its ethos is to manage residents with care: “Beyond providing a physical space (for these workers) to call home, we strive to create an environment that nurtures their emotional well-being.”

For their safety, Centurion has furnished them with white goods such as refrigerators and washing machines, he said, so that they do not buy second-hand items that may be faulty.

Residential-life programmes such as movie screenings and overseas excursions are organised for them. Last year, the number of such activities rose 102 per cent to 778.

For instance, during the 2023 Chinese New Year, some residents visited the Batu Caves in Kuala Lumpur, Malaysia; this trip had been a yearly affair for nine years, until the pandemic struck, said Centurion.

In the next phase of growth, Kong said he aims to continue expanding the company by “doing more with less”. To this end, he said, Centurion will continue taking an asset-light approach, which he believes is more sustainable than leveraging the balance sheet.

This strategy, which entails signing master leases with land or property owners, could reduce Centurion’s capital outflow, and plump up its portfolio of revenue-generating assets under management and its return on equity for its shareholders, he said.

Things have been going well for the company on this asset-light track. The dormitory operator’s H1 FY2024 net profit rose 209 per cent to S$118.2 million, from S$38.3 million previously.

To achieve further growth, the CEO believes that “everybody plays a part”. He said: “The board’s direction and their support, as well as the staff who help execute plans, are crucial.

“A successful company is not just about revenue and earnings. It is also about sustainability, governance.”