26-05-2025
Centurion seen as small-cap ‘jewel' amid demand for dormitory spaces, potential Reit listing
[SINGAPORE] With demand for foreign workers continuing to outpace the supply of dormitory spaces, Centurion Corporation is ramping up capacity and exploring asset monetisation, making it a small-cap property play to watch.
This is according to RHB Bank Singapore, which highlighted Centurion as one of its top stock picks for 2025 among companies with small market capitalisation. Centurion was featured in RHB's Singapore Small Cap Jewels 2025, published on May 16.
The bullish sentiment is echoed by analysts from Maybank Securities and Phillip Securities Research, who cited favourable demand-supply dynamics and a robust pipeline of expansion projects across key markets.
Headquartered in Singapore, Centurion operates purpose-built worker accommodation (PBWA) in Singapore and Malaysia, and student housing in Australia, the UK, and the US.
Phillip Securities analyst Yik Ban Chong noted that the group's first-quarter FY2025 revenue rose 13 per cent year-on-year to S$69 million, driven by higher rental rates for its Singapore dormitories.
Contributing to this growth, said Yik, was the ramp-up of new capacity, including a 1,650-bed facility at Westlite Ubi, which became operational in late 2024 and has already reached near-full occupancy.
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Meanwhile, RHB Singapore's head of small-mid cap research Alfie Yeo said in a separate May 23 note that he anticipates Centurion's earnings to rise by 4 per cent annually for FY2025 and FY2026, and 5 per cent for FY2027, on the back of stronger-than-expected bed rates and occupancy levels across its PBWA and student housing segments.
While concerns linger over US-led reciprocal tariffs, Maybank analysts Eric Ong and Jarick Seet pointed out that Centurion expects minimal disruption to its business operations.
They highlighted a clear capacity expansion roadmap for 2025–2026 spanning Singapore, Malaysia and Australia, aimed at striking a 'strategic balance between occupancy levels and rental rate growth'.
Undemanding valuation
Looking ahead, RHB's Yeo pointed to Centurion's ongoing capacity expansion and asset monetisation plans as key reasons for its positive outlook.
For instance, he said in the Singapore Small Cap Jewels report that the total number of revenue-contributing beds for FY2025, he said, is expected to grow by 5.3 per cent year-on-year to 73,000, and it will be supported by Singapore's new Westlite Ubi Ave 3 and Malaysia's Westlite Johor Tech Park
Centurion has also expanded into Hong Kong and China.
In FY2024, the group entered these markets through two majority-owned partnerships. In China, it will manage and operate build-to-rent properties comprising around 1,500 residential apartments, targeted at fresh graduates and working professionals.
In Hong Kong, it entered the worker housing market with Westlite Sheung Shui, a 539-bed facility catering to foreign workers in sectors such as food and beverage and services.
More value could be unlocked over the mid to longer term, Yeo said. Centurion has previously monetised assets through sale-and-leaseback deals in Malaysia, and is now exploring a potential Reit (real estate investment trust) listing involving some of its student and worker accommodations.
While still at an exploratory stage, Yeo said that the move is aimed at supporting growth, shifting to an asset-light model, and generating fee-based income. RHB also flagged the possibility of special dividends, depending on how any proceeds are used.
Centurion's net gearing stood at 0.4 times in FY2024, and the business has generated over S$75 million in operating cash flow annually for the past five years, according to RHB.
While it uses debt to fund property developments, the group has remained cash-generative, said Yeo. He also noted that Centurion typically pays a sustainable dividend, with a payout of S$0.025 per share in FY2023, representing around 30 per cent of earnings.
This payout ratio is expected to be maintained, with occasional special dividends possible if more assets are unlocked and excess cash is not reinvested, said Yeo.
Still, Yeo cautioned that RHB's earnings forecasts are premised on stronger occupancy and improved bed rates at Centurion's student accommodation assets.
Any shortfall in these areas could pose downside risks to its estimates, he added.
That said, Yeo said that Centurion remains a leading dormitory operator in Singapore, where a shortage of beds continues to support both occupancy and rental growth.
With opportunities for further capacity expansion, he added that the stock is trading at an 'undemanding valuation' of nine times FY2025 forecast earnings, and offers a dividend yield of around 3 per cent.
RHB has set a target price of S$1.50 for shares of Centurion – implying a potential upside of 11.9 per cent from its closing price of S$1.34 on Friday (May 23).
In the year to date, the counter has generated a total return – with dividends reinvested – of 41.8 per cent.
In comparison, the benchmark Straits Times Index has a total return of 5 per cent over the same period.
