Centurion(OU8)

Draft: 3/8/2017, Price: 0.39, Market cap: $289m.
Source: 2016 unaudited FR and presentation

Updated: 3/9/2017
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Business: Own, develop and manage worker and student accommodation in SG, MY, AU and UK.
(some legacy optical disc business, can be ignored due to insignificant biz vol)

2016('000)	Worker	Student
Segment Rev	85,824	32,276
Segment Profit	47,927	11,716
	56%	36%

Company is controlled by Mr. David Loh Kim Kang(age: 54) with 55% stake, who was former head of UOB Kay Hian dealer team. Public listed company Lian Beng also holds 5%.

Statistics:
22 dormitories, 63k beds(60k workers, 3k students), pipeline 12.7k more beds.

Growth strategy: continuous expansion by acquiring new accommodation assets.

2011	2012	2013	2014	2015	2016	2017F	2018F	2019F	Capacity(# of beds)
5,300	13,900	19,700	23,500	27,600	34,700	34,700	34,700	34,700	SG
	10,900	13,500	14,500	19,800	25,300	25,300	38,000	38,000	MY
			456	456	456	456	456	456	AU
			1,906	1,901	2,420	2,420	2,420	2,420	UK
				315	332	332	332	332	SG(stu)
5,300	24,800	33,200	40,362	50,072	63,208	63,208	75,908	75,908	Total

Demand & Supply:
Foreign worker(excl. domestic helpers) in SG: 2016: 798600; 2015: 789300.
In SG: +57000 new beds, and 28000 beds expired in 2016

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Track records

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Assessment
Since the game of the past is to grow business by, utilizing different financial instruments, invest/inject new accommodation assets into the company, such as: MTN(multi currency term notes/some kinds of bond?), it is obvious that each year we will see revenue and profit growth in financial reports, so make judgement purely based on revenue and profit's annual absolute figures will lead to growth stock impression, this is however not very appropriate. <This indeed seems much aligned with Mr. David Loh's dealer background on financial leveraging, but why would he in the first place have invested heavily into such an industry which doesn't offer kind of "siok" feeling, puzzle to me>

The best way to gauge its operation efficiency is to compare each year's ROIC, but as a retail investor unless I'm willing to do it myself by sieving thru the reports, else without such info at hand, I can try out this quick and non elegant way:
 (caveat:  not all beds are equal, and new additions are not always committed beginning of the year)
I got the followings:

	2,011	2,012	2,013	2,014	2,015	2,016
Rev per bed per mth	204	126	119	158	166	156
Prof per bed per mth	85	46	49	62	59	51
SG GDP growth	7.5%	4.2%	4.8%	3.1%	4.5%	0.5%

With lower revenue from student dormitory than that of workers', it is likely that future NP% will further go south.












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SG GDP info from http://www.singstat.gov.sg

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My plan
One of well known SG bloggers ASSI added a position of Centurion recently. He did that based on his estimation of dividend record and potential, as well as the pattern shown in TA chart.

Although I regretted of missing to add this counter when Mr. David Loh purchased some more shares at 0.30~0.325 from end of 2016 to beginning of 2017 when Centurion price plunged,

For now at 0.39 a piece, I'd rather prefer to stay at side line though, for I feel it is right priced now for a  business that will generally flow in line w/ SG/MY economy growth. One has to get satisfied with the current yield in order to invest.

From its presentation, 2018, 2019 foretasted beds capacity stays the same, a plateau reached by Centurion is that unless SG/MY economy is growing much faster than projection, adding more workers' beds will only cause high financial leverage on balance sheet but lower utilization in operation; while strategy of venturing into students' beds have a lower margin contribution than that of workers' segment. Centurion currently lacks of an'exciting" factor.

Knowing of Mr. David Loh's background, how he will further improve his position could be a good learning lesson for me.

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Tabloid time
Mr. David Loh married to Race Wong (a HK celebrity) recently. 财子配佳人。