More room for growth

FACED with a small market and a tightening of foreign labour flows to Singapore, Centurion Corporation is looking abroad to grow its core business of providing worker and student accommodation.

Centurion started life in 2011 with the reverse takeover of Singapore-listed SM Summit Holdings and the injection of a 5,300-bed workers dormitory. Four years on, the company's portfolio now has around 40,000 beds in Singapore, Malaysia and Australia. It has three facilities in Singapore, with a fourth one currently being constructed. The group's overall portfolio is expected to jump to more than 74,000 beds by the end of 2017.

Centurion diversified into student accommodation last year with the acquisition of RMIT Village in Australia in February. It added another four student dormitory assets in United Kingdom in September 2014.

This rapid expansion has helped Centurion chalk up record net profit in its last two financial years. In the year ended Dec 31, 2104, the group hit an all-time high net profit of S$111.2 million, up 21 per cent from S$92.2 million a year ago. Revenue also rose 48 per cent to S$84.4 million compared with a year ago.

"All the expansion plans we put in place two years ago have come to fruition," said Centurion's CEO Kong Chee Min in an interview with The Business Times. The company was a winner of this year's Singapore 1000 Net Profit Growth Excellence Award in the Services category.

He noted that the diversification into student dormitories made sense for the company, as it shared certain synergies with its core workers accommodation business. "Both are stable in terms of cashflow," he explained.

He noted that while the Singapore business has so far been stable, Centurion will be accelerating the pace of its overseas expansion to drive future growth.

"The Singapore market is quite limited, and that's why we will continue go overseas. That's where the growth driver will be," he explained.

Looking ahead, the mainboard-listed company said in a statement last month that the outlook for its accommodation business remains "encouraging", supported by stable demand for both its workers and student accommodations businesses, and contribution from three new accommodation assets that will be completed in 2015.

In Australia, RMIT Village is expected to operate at close to full occupancy in the 2015 academic year, after completing the refurbishment of its rooms in January this year. The company is also looking at other ways of enhancing the property.

Meanwhile, its newly acquired portfolio of four student accommodation assets in the United Kingdom is also expected to operate at close to full occupancy in the 2015 academic year.

On the local front, Mr Kong said that despite an increase in the supply of workers dormitories in Singapore, Centurion has yet to feel any impact, with most of its properties close to full occupancy. Indeed, the company continues to bid for new projects in this space.

A joint venture between Centurion and construction firm Lian Beng Group recently won a tender to build a 7,900-bed foreign worker accommodation and training centre in Jurong East. The facility, in Jalan Papan, will cater to workers in the process, construction and maintenance industry on and around Jurong Island.

The 1.5 ha site will also feature a 3,000 sq m training centre for its residents, and construction will be completed by mid-2016. The project marks the second collaboration between Centurion and Lian Beng. The first joint project was Westlite Mandai, a 6,300-bed site completed in 2013.

The company is also exploring the possibility of setting up a workers accommodation real estate investment trust (Reit). This would allow the group "to unlock value in certain assets as well as to recycle capital to pursue its growth strategies".