Wednesday, March 8, 2017


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

Updated: 3/9/2017
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%.

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

Track records

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.

SG GDP info from

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.

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

No comments:

Post a Comment