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RHB upgrades Centurion Corp to 'buy' as it expects its financial performance to improve further

RHB has upped Centurion's TP to 38 cents, which represents an FY2022 yield of 7%.

RHB Group Research analyst Jarick Seet has upgraded his recommendation on Centurion Corp to “buy” from “neutral” following Centurion’s release of its results for the FY2021 ended December on Feb 24.

During the year, Centurion saw core PATMI increase 13% y-o-y to $46.5 million.

FY2021 revenue grew 11% y-o-y to $143 million mainly thanks to the four quick-build dormitories (QBDs) and two migrant worker onboarding centres (MWOCs) in Singapore, and a purpose-build worker accommodation (PBWA) facility in Selangor, Malaysia, notes Seet. Centurion’s UK student accommodation occupancy rate also rose to 82% in the 2HFY2021, from the 53% in the same period the year before.

In his report dated March 9, Seet says he expects Centurion’s numbers to “point to a continued recovery” in FY2022, as he raises his target price estimate to 38 cents from 36 cents.

“Centurion’s business has been resilient throughout the pandemic, and we expect its financial performance to improve further as Covid-19 infections stabilise and subside. As such, we upgrade our stock recommendation to ‘buy’, and expect PATMI to grow by 12% y-o-y this year,” writes Seet.

The analyst has also given Centurion an environmental, social and governance (ESG) score of 3, which is on par with the median score of the Singapore-listed stocks covered by the brokerage.

In Singapore, Seet says Centurion’s new assets should further boost its revenue streams. At the same time, he expects occupancy rates to recover gradually from the recovery of migrant worker numbers in the construction, marine and processing industries.

In addition, he also expects rental rates from Centurion’s properties to remain resilient in FY2022.

In Malaysia, Seet notes that the demand for “good-quality and well-planned worker accommodations is expected to increase”.

“We [also] expect its business in Malaysia to continue to fare well,” he adds.

Finally, Centurion’s UK student accommodation business is expected to see a further recovery in its occupancy rate, especially when the pandemic stabilises even more, says Seet.

Seet’s new target price represents an FY2022 yield of 7%.

As at 1.56pm, shares in Centurion are trading flat at 33.5 cents.

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