Jan-19 Apr-19 Jul-19 Oct-19 INITIATION - Singapore Exchange...2020/01/07 · Company Note Property Investment Singapore January 7, 2020 IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED

Company Note Property Investment │ Singapore │ January 7, 2020

IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. IF THIS REPORT IS DISTRIBUTED IN THE UNITED STATES IT IS DISTRIBUTED BY CGS-CIMB SECURITIES (USA), INC. AND IS CONSIDERED THIRD-PARTY AFFILIATED RESEARCH.

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INITIATION

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Centurion Corporation Ltd Don’t sleep on this

■ FY20-21F PATMI growth of 7.7-13.8% likely to be driven by 15.2% growth in bed capacity and gross margin expansion from high operating leverage.

■ Shift to asset-light model offers opportunity to scale up quickly, unlock value and recycle capital towards a possible REIT spin-off in the long term.

■ Initiate with an Add rating and TP of S$0.61, implying a 12.8x FY20F P/E and 5.4% yield.

Leading international worker and student accommodation provider Centurion Corporation Ltd (CENT) is a provider of purpose-built worker accommodation

(PBWA) and purpose-built student accommodation (PBSA) with 64,956 beds over 32

properties in six countries as of 3Q19. In FY18, PBWA contributed 67.1% of revenue and

PBSA formed 31.4%. It has consistently grown its bed capacity via developments and

acquisitions. We think the under-supply in PBWA and PBSA segments could continue

due to tighter regulations and enforcement in PBWA and growth in university enrollment.

PBWA growth underpinning FY20-21F PATMI growth of 7.7-13.8% We expect CENT to achieve PATMI growth of 7.7-13.8% for FY20-21F due to a 15.2%

growth in capacity of 3,600/177 beds at Tampoi II/Archer House in FY20F and 6,100

beds at Juru in FY21F. Going forward, we think there is strong potential for further growth

of PBWA in Malaysia due to regulations relating to a minimum standard of housing for

workers that reduce non-PBWA accommodation supply, as well as strong construction

and manufacturing activity growth that should translate into stronger tenant demand.

Asset-light strategies offer scale and capital recycling options We think CENT’s asset-light fund management platforms provide an opportunity to scale

up quickly and recycle capital. The option of seeding existing assets into the funds could

alleviate its high gearing of c.127% as of end-FY18, in our view. CENT currently has two

PBSA funds with a total of c.S$200m commitments and seven assets. While a portfolio

size of c.S$450m precludes CENT from listing a REIT at this juncture, in the long term,

we think CENT could continue building up its portfolio via its funds and work towards a

REIT spin-off of its PBSA assets due to strong investor interest in the asset class.

Initiate with Add and a DCF-based TP of S$0.61 We initiate coverage on CENT with an Add rating and a DCF-based TP of S$0.61

(WACC: 4.86%). This TP implies 12.8x FY20F P/E, 1 s.d. above the average of its

historical trading band (Jan 2012 to Nov 2019) and 0.9x FY20F P/BV, i.e. at the average

of its historical trading band (Jan 2012 to Nov 2019). We think this reflects the strong

growth in bed capacity and favourable industry dynamics. At its current price, we

estimate CENT offers 39% upside potential with a FY20F dividend yield of 5.4%.

Potential re-rating catalysts include major acquisitions, capital recycling via its fund

management platforms and greater trading liquidity. Downside risks include a significant

slowdown in construction and O&G sectors.

SOURCES: CGS-CIMB RESEARCH, COMPANY REPORTS

Singapore

ADD (previously NOT RATED)

Consensus ratings*: Buy 1 Hold 1 Sell 0

Current price: S$0.44

Target price: S$0.61

Previous target: S$

Up/downside: 38.5%

CGS-CIMB / Consensus: 23.1%

Reuters: CNCL.SI

Bloomberg: CENT SP

Market cap: US$274.2m

S$369.9m

Average daily turnover: US$0.07m

S$0.10m

Current shares o/s: 840.8m

Free float: 26.5% *Source: Bloomberg

Key changes in this note

N/A

Source: Bloomberg

Price performance 1M 3M 12M Absolute (%) 0 10 7.3

Relative (%) -0.8 5.4 2.1

Major shareholders % held Centurion Properties Pte Ltd 53.0

Teo Peng Kwang 7.6

Lian Beng Group Ltd 4.5

Insert

Analyst(s)

Ervin SEOW

T (65) 6210 8671 E [email protected]

NGOH Yi Sin T (65) 6210 8604 E [email protected]

Caleb PANG Huan Zhong T (65) 6210 8678 E [email protected]

Financial Summary Dec-17A Dec-18A Dec-19F Dec-20F Dec-21F

Total Net Revenues (S$m) 137.1 120.1 133.1 144.1 149.9

Operating EBITDA (S$m) 69.7 115.8 73.2 79.2 83.0

Net Profit (S$m) 31.72 79.33 35.23 40.10 43.18

Normalised EPS (S$) 0.043 0.037 0.042 0.048 0.051

Normalised EPS Growth 3.0% (15.5%) 14.5% 13.8% 7.7%

FD Normalised P/E (x) 10.16 12.02 10.50 9.23 8.57

DPS (S$) 0.025 0.020 0.021 0.024 0.026

Dividend Yield 5.68% 4.55% 4.76% 5.42% 5.84%

EV/EBITDA (x) 11.44 14.07 12.74 12.18 11.35

P/FCFE (x) NA 9.67 7.47 15.56 6.07

Net Gearing 121% 129% 120% 121% 112%

P/BV (x) 0.80 0.73 0.70 0.68 0.65

ROE 7.70% 6.34% 6.83% 7.50% 7.77%

% Change In Normalised EPS Estimates

Normalised EPS/consensus EPS (x) 1.10 1.22 1.25

88.0

93.6

99.1

104.7

0.300

0.350

0.400

0.450

Price Close Relative to FSSTI (RHS)

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Jan-19 Apr-19 Jul-19 Oct-19

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Property Investment │ Singapore

Centurion Corporation Ltd │ January 7, 2020

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Don’t sleep on this

COMPANY OVERVIEW

Centurion Corporation Ltd (CENT) is a global property investor, developer and

owner of quality, purpose-built workers accommodation assets (PBWA) and

purpose-built student accommodation (PBSA) assets in Singapore, Malaysia,

Australia, the United Kingdom, the United States and South Korea. The

company was established in 1981 and formerly known as SM Summit Holdings

Limited, which was an audio cassette tape manufacturer.

In 2011, a reverse takeover occurred during which the group was renamed

Centurion Corporation Limited and diversified into the accommodation business.

In 2015, Centurion explored a potential REIT listing to unlock value in certain

assets as well as to recycle capital to pursue its growth strategies. This was

rejected by the Singapore Exchange (SGX) on the grounds of being a chain

listing under the Listing Rule 210(6) of the Listing Manual of the SGX-ST. A

chain listing refers to a scenario whereby the assets and operations of the listing

applicant are substantially the same as those of the existing issuer.

CENT embarked on a dual primary listing in Dec 2017 on the main board of the

Hong Kong Stock Exchange (SEHK: 6090), raising total net proceeds of

S$11,859,248. 90% of the proceeds was used to fund the development of

student accommodation in Adelaide, Australia and the remaining 10% was used

for general working capital. The proceeds have since been fully utilised.

Figure 1: Company milestones as at 30 Sep 2019




3

Business overview

CENT focuses on two specialised accommodation asset classes: PBWA and

PBSA. As of Sep 2019, CENT owns and manages a portfolio of 32

accommodation assets with a total bed count of 64,956. The workers

accommodation assets are managed under the “Westlite” brand and accounted

for c.67% of FY18 revenue while the student accommodation assets are

managed under the “dwell” brand and made up c.31% of FY18 revenue. Other

revenue refers to the group’s optical storage business, which accounted for

1.4% of the group’s total revenue in FY18.

Figure 2: Revenue split by business segment Figure 3: Segment profit by business segment

SOURCES: CGS-CIMB RESEARCH, COMPANY REPORTS SOURCES: CGS-CIMB RESEARCH, COMPANY REPORTS

Workers accommodation business

CENT started its PBWA business in Singapore in 2011, and the group has

grown to become one of the largest PBWA owner-operators in Singapore and

Malaysia. CENT was ranked as the largest PBWA provider in Singapore and

Malaysia by Euromonitor in 2017. As of Sep 2019, the group has a total of 12

workers dormitories: five in Singapore and seven in Malaysia. PBWA accounts

for around 2/3 of the group’s revenue (67.1% of FY18 revenue).

Figure 4: Workers accommodation portfolio – bed capacity

SOURCES: CGS-CIMB RESEARCH ESTIMATES, COMPANY REPORTS

Based on FY18 results, Singapore and Malaysia accounted for c.88%/12% of

PBWA revenue respectively. Centurion collects a 1-2 months deposit from the

Title:

Source:

Please fill in the values above to have them entered in your report

73.3% 69.0% 71.2% 73.2%67.1%

17.2% 26.2% 26.8% 25.5%31.4%

9.5% 4.8% 2.0% 1.3% 1.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2014 2015 2016 2017 2018

Workers Accomodation (%) Student Accomodation (%) Others (%)

Title:

Source:


83.4%76.3% 80.6% 81.9% 77.7%

15.5%22.5% 19.7% 17.6% 21.3%

1.1% 1.2%

-0.3%

0.5% 1.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

2014 2015 2016 2017 2018

Workers Accomodation (%) Student Accomodation (%) Others (%)

Title: Chart Title

Source: SOURCES: CGS-CIMB RESEARCH, COMPANY REPORTS


5,300

13,90019,700

23,50027,600

34,700 34,700

26,100 28,000 28,000 28,000

10,900

13,500

14,500

19,800

25,300 23,700

23,700

30,70034,300

40,400

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F

Singapore Malaysia

Total beds 5,300 24,800 33,200 38,000 47,400 60,000 58,400 49,800 58,700 62,300 68,400



4

employer, contracts are typically 12 months and rent is paid in advance, on a

monthly basis.

Figure 5: Worker's accommodation portfolio (as at 30 Sep 2019)


CENT continues to grow its PBWA portfolio in Singapore and Malaysia with a

visible growth pipeline in FY19-21F.

Singapore – Westlite Juniper (1,900 beds) in Sep 2019

Malaysia – Westlite Bukit Minyak (6,600 beds) in FY19F

Malaysia – Westlite Pasir Gudang (400 beds) in FY19F

Malaysia – Westlite Tampoi II (3,600 beds) in FY20F

Malaysia – Westlite Juru (6,100 beds) in FY21F

Well-diversified customer base. Customers come from a wide range of

sectors from construction to marine, oil and gas to manufacturing, logistics and

services. Customers are typically established multinational corporations that

seek to house their workers in a more structured PBWA, in accordance with

corporate ethical compliance.

Figure 6: Segmentation by industry (as at 30 Sep 2019)


Country Facility/Location Capacity - beds Land lease tenure

(years)

Start of

land lease

(year)

Aspri-Westlite Papan 7,900 23 2015

Westlite Toh Guan 7,800 60 1997

Westlite Mandai 6,300 Freehold

Westlite Woodlands 4,100 30 2013

Westlite Juniper 1,900 10 + 5 2019

Total in Singapore 28,000

Westlite Bukit Minyak 6,600 Freehold

Westlite Senai 2,600 Freehold

Westlite Senai II 5,900 Freehold

Westlite Tampoi 5,300 Freehold

Westlite Johor Tech Park 5,800 99 2013

Westlite Pasir Gudang 2,400 99 1986

Westlite Tebrau 2,100 60 2000

Total in Malaysia 30,700

Total no. of beds 58,700

Country Occupancy rates (FY18)

Singapore 96%

Malaysia 94%

Total 95%

Singapore

Malaysia

Title:

Source:


Construction, 43.3%

Oil & Gas, 27.2%

Manufacturing, 12.4%

Marine, 6.9%

Service, 5.5%

Engineering, 4.4%Others, 0.3%



5

Dominant market share. The PBWA industry in Singapore is fragmented with

the top 5 players taking c.50% market share in terms of bed capacity and

revenue in 2016, according to Euromonitor. In the same Euromonitor report, it

was mentioned that CENT has the biggest market share in Singapore with

11.0% share of industry revenue receipts and 13.5% of bed capacity in 2016. In

Malaysia, CENT is also the biggest player with 50% market share of industry

revenue receipts and 54.1% of bed capacity according to Euromonitor.

With such dominance in PBWA, we think that this allows CENT, as a market

leader, to have a certain amount of pricing power and also allows its Westlite

brand to set the benchmark for PBWA operations. Its first-mover advantage in

Malaysia has allowed it to lead the way in partnering with authorities and non-

governmental organisations. Its reputation and relationships have led to CENT

establishing the first PBWA dormitory in Penang at Westlite Bukit Minyak in

2018.

Strategically located near major industrial zones and multinational corporations.

Zooming in on two examples in Singapore (Figure 7), Westlite Woodlands is

within close proximity to Woodlands Industrial Hub and caters to workers from

the marine and manufacturing industries. Similarly, Westlite Papan is

strategically located near Jurong Island, home to more than 100 global energy

and chemical companies. In Malaysia (Figure 8), Westlite Tampoi is located

within a key industrial zone in Iskandar Malaysia, within close proximity to the

manufacturing facilities of several renowned Japanese brands and major

multinational electronics manufacturers. Good locations tend to lead to higher

occupancy rates and higher pre-commitment levels as employers prefer housing

their workers as close as possible to their worksite.

Figure 7: Locations of PBWA assets in Singapore (as at 30 Sep 2019)




6

Figure 8: Locations of PBWA assets in Malaysia (as at 30 Sep 2019)


Location, facilities and intangibles make the difference. We visited CENT’s

Westlite Woodlands dormitory in the evening to get a sense of the crowd after

work, see the facilities being used and interact with residents there. Compared

to a day visit, the evening visit allowed us to gauge the utilisation of amenities

like the canteen, the gym and the games room.

During our visit, we also had the opportunity to interact with five residents from

various backgrounds about their experience staying in the dormitory. The

residents were from India, Bangladesh and Malaysia. They work in companies

located in the vicinity in industries like construction, marine and services. With

their workplaces nearby, residents either walked or cycled to work.

Figure 9: Dormitory gym at Westlite Papan (as at 18 Nov 2019) Figure 10: Dormitory canteen (as at 18 Nov 2019)

SOURCES: CGS-CIMB RESEARCH SOURCES: CGS-CIMB RESEARCH



7

The residents were generally very happy with the amenities provided and

particularly liked the cooking facilities, gym and the games room. Despite being

in blue-collar/physically-demanding roles, many residents were seen in the gym

lifting weights and running on the treadmill.

Being fairly cost-conscious, residents we spoke to generally preferred to cook

their own meals as opposed to paying for ready-made meals at the dormitory

canteen. Due to this, we found the dormitory supermarket packed during our

visit. To ensure affordability and relevance of items, the supermarket operator

directly sources goods from residents’ home countries like India and Bangladesh.

Being in an industrial estate, the convenience of having a supermarket within the

same building as the dormitory was also greatly appreciated by residents.

Figure 11: Facial recognition security

gantries (as at 18 Nov 2019)

Figure 12: Well-stocked dormitory

supermarket (as at 18 Nov 2019)

Figure 13: Cooking facilities within each

unit (as at 18 Nov 2019)

SOURCES: CGS-CIMB RESEARCH SOURCES: CGS-CIMB RESEARCH SOURCES: CGS-CIMB RESEARCH

Apart from facilities, CENT also has provisions to ensure the psychological well-

being and morale of residents are kept up as counselling sessions are provided

free of charge. Activities organised by CENT for the residents are well received,

and residents participate in festival celebrations, the inter-dormitory cricket

tournament and other sporting activities.

For residents who have stayed in other dormitories before, they preferred

Westlite Woodlands due to the facilities and the security, which is in the form of

a facial recognition gantry. Interestingly, one resident felt that the dormitory

setting allowed him to mix with residents from other countries. This cultural

exchange extended to cooking and sharing food with one another, which he was

not able to experience in his previous accommodation, which was a private

apartment provided by his employer.

The visit and interactions with residents further reaffirm our view that CENT is

able to differentiate itself from its peers by adopting a holistic approach to

resident welfare, taking care of physical needs as well as the psychological and

social well-being of residents.



8

Student accommodation business

CENT ventured into the student accommodation business in Feb 2014, with the

acquisition of RMIT (Royal Melbourne Institute of Technology) Village in

Melbourne. Subsequently, CENT expanded to the UK in Sep 2014, Singapore in

May 2015, the US in Nov 2017 and South Korea in Nov 2018. Based on FY18,

PBSA contributes 31.4% of revenue and 21.3% of segment profits as disclosed

by CENT.

Figure 14: Bed capacity of PBSA portfolio


As of Sep 2019, the group’s portfolio has grown to a total of 20 student

accommodation assets: 10 in the United Kingdom, six in the United States, two

in Australia, one in Korea and one in Singapore. The figure below summarises

Centurion’s portfolio of student accommodation assets.

Title:

Source:


456 456 456 456 456896 896 896

1,906 1,9012,420 2,420 2,675

2,675 2,852 2,852315

332 332332

332332 332

2,1402,145

2,1452,145 2,145

208 208 208

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2014 2015 2016 2017 2018 2019F 2020F 2021F

Australia United Kingdom Singapore United States South Korea

Total beds 2,362 2,672 3,208 5,348 5,608 6,256 6,433 6,433



9

Figure 15: Student accommodation portfolio (as at Sep 2019)


On 6 Dec 2019, CENT announced the proposed acquisition of Archer House in

Nottingham, UK at a purchase price of S$26.98m. Archer House is a student

accommodation asset with 177 beds and is in close proximity to the University of

Nottingham and Nottingham Trent University. According to CENT, the property

was completed in late Sep 2018 and has full occupancy for the academic year

2019F/20F.

Student accommodation features

CENT’s PBSA properties are located within walking distance or close proximity

to university campuses and city centres. Resident mix is well-balanced between

domestic students in each country and international students from China, SEA,

Europe, India, etc. CENT’s student accommodation properties are typically in

the mid-range category, catering to a variety of students.

Earnings seasonality in PBSA

CENT’s PBSA revenue is subject to seasonality with 3Q showing dips in

revenue as occupancy tends to decline during the school holidays in the months

of Jun, Jul and Aug as out-of-state students return home. In line with this,

CENT’s PBSA leases are also structured based on the academic year and

vacancies during the long summer breaks are supplanted by leases from

students on summer school/exchange programmes. To reduce the impact of this

seasonality, CENT has continued to increase its bed count in Australia which

has its summer break in a different quarter from the UK. This was done via the

Country Facility/Location Ownership Capacity -

beds

Land lease

tenure

(years)

Start of

land

lease

(year)

dwell Garth Heads 100.0% 185 125 1995

dwell Cathedral Campus 100.0% 384 250 2007

dwell Hotwells House 100.0% 157 125 2009

dwell MSV 100.0% 1,017 Freehold

dwell The Grafton 100.0% 145 Freehold

dwell MSV South 100.0% 355 Freehold

dwell Weston Court 100.0% 140 125 2008

dwell Beechwood House 100.0% 37 125 2009

dwell Princess Street 100.0% 127 Freehold

dwell Castle Gate Haus, Nottingham 14.3% 133 Freehold

Total in UK 2,680

dwell Logan Square 28.7% 639 Freehold

dwell College & Crown 28.7% 204 Freehold

dwell Tenn Street 28.7% 624 Freehold

dwell Stadium View 28.7% 216 Freehold

dwel Statesider 28.7% 226 Freehold

dwell Towers on State 28.7% 231 Freehold

Total in US 2,140

dwell Adelaide 100.0% 280 Freehold

RMIT Village 100.0% 616 Freehold

Total in Australia 896

Korea dwell Dongdaemun 55.0% 208 Freehold

Total in Korea 208

Singapore dwell Selegie 100.0% 332 2+2+3 2015

Total in Singapore 332

Total no. of beds 6,256

Country Occupancy (FY18)

Singapore 89%

United Kingdom 93%

Australia 84%

United States na

South Korea na

United Kingdom

United States

Australia



10

development of dwell East End Adelaide and the asset enhancement

programme at RMIT Village; these initiatives almost doubled its bed capacity

from 456 beds in FY18 to 896 beds in FY19F.

Figure 16: PBSA seasonally weaker in 3Q due to school holidays


Asset-light strategy

To capture further opportunities and to scale, CENT has embarked on an asset-

light strategy by launching two funds. In this strategy, CENT functions as both

the general partner and the limited partner. As a general partner, CENT is

responsible for portfolio management and earns a management fee. As a limited

partner, CENT commits its own capital and benefits from investment returns of

the fund.

CENT closed its first private fund in Nov 2017, the Centurion US Student

Housing Fund (CUSSHF or Fund 1), raising US$89.5m, which was used to

acquire six PBSA properties in the US. CENT holds c.28.7% in Fund 1. The fund

has a lifespan of five years with an option to extend for an additional year. The

portfolio assets will be managed under CENT’s student accommodation brand,

dwell and operations will be managed through a JV with a local student

accommodation manager in the US.

CENT launched its second private fund, the Centurion Student Accommodation

Fund (CSAF or Fund 2), to invest in PBSA globally. The first closing of Fund 2

was in Dec 2018, with an aggregate committed capital of S$70m. A reputable

educational institution was the cornerstone investor for Fund 2, committing

S$60m of capital into the fund; CENT holds c.14.29% of Fund 2. The fund has a

lifespan of six years. The fund currently holds one UK property, dwell Castle

Gate Haus Nottingham. Asset-light strategies enable fast-paced portfolio growth

and expansion of the group’s management services to generate recurring

income through asset and property management services.

Title:

Source:


-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19

Beds Revenue (S$ '000)



11

Figure 17: CENT PBSA funds overview


While CENT does not rule out a REIT as a possible exit strategy for the two

funds, we think that the current size of the two PBSA portfolios together with the

PBSA properties it directly owns (c.S$450m as of end-FY18) precludes CENT

from using such a strategy. In our opinion, a REIT would be more viable with a

total asset value of at least S$1bn to enjoy economies of scale and attract

investor interest. Another REIT option could be combining its portfolios with

other PBSA portfolios. A portfolio sale to another strategic investor is also a

likely exit strategy.

Going forward, we think CENT can also utilise this asset-light strategy to lower

its gearing by seeding its existing PBSA assets into Fund 2 or new funds once

they are stabilised.

Largest and most focused exposure to PBSA

Compared to its Singapore-listed peers, CENT has the largest number of PBSA

beds under management across a more diversified range of five countries as at

30 Sep 2019. Based on publicly-disclosed information, CENT also has the

largest exposure to PBSA based on contribution to most recent financial year

revenue. Therefore, we think CENT would be the best Singapore-listed proxy to

the growing PBSA segment.

Figure 18: Singapore-listed companies with PBSA exposure (as at 15 Nov 2019)


Optical disc business

The optical disc business was a holdover from the pre-reverse takeover days.

As of FY18, it contributed S$1.7m (1.4%) of revenue and has experienced a

declining trend over the past five years. Despite the decline in the use of optical

discs, the business remains profit making and cashflow generative. According to

CENT, while the business could continue to see weakness, it has no plans to

shut down this segment until it turns loss-making.

CUSSHF CSAF

Vintage year 2017 2018

Fund life 5+1 6

Commitments US$89.5m S$100m

Assets 1. dwell Logan Square

2. dwell College & Crown

3. dwell Tenn Street

4. dwell Stadium View

5. dwell Statesider

6. dwell Towers on State

1. dwell Castle Gate Haus (UK)

Status Closed Open

Mandate US Global ex-US

Company

Property

count

Number of

beds Countries

Entry

Year

AUM

(S$m) Cap rate

Average

Occupancy

Rate (FY18)

Revenue

contribution of

PBSA (FY18)

Centurion Corp 20 6,252 Singapore, UK, USA, Australia, South Korea 2014 449 5.5% - 8.5% 90% 31%

Singapore Press Holdings 21 5,343 UK, Germany 2018 637 3.6% - 6.0% Over 90% na*

Wee Hur Holdings 3 2,350 Australia 2018 486 na* 82% 1%

Far East Orchard 11 3,260 UK 2015 404 5.3% - 6.6% na* na*

na* = not seperately disclosed



12

Figure 19: Revenue and contribution trend of the optical disc segment


Title:

Source:


0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2014 2015 2016 2017 2018

LHS: Revenue (S$'000) RHS: Revenue Contribution (%)



13

Industry outlook

Workers accommodation in Singapore

Construction sector recovery to drive increase in the number of foreign

workers. Construction demand in Singapore registered a 23% increase yoy in

2018 based on statistics from the Building and Construction Authority (BCA).

According to our construction analyst, we think this signals a turn in the

construction sector after three consecutive years of decline in 2014-17. BCA

expects Singapore construction demand to be S$27bn-32bn in 2019F; S$27bn-

34bn in 2020-21F and S$28bn-34bn in 2022-23F. This is supported by major

infrastructure spending in public projects like Changi Airport Terminal 5, the

rejuvenation of the Greater Southern Waterfront, the North-South Corridor and

the extension of the Integrated Resorts at Marina Bay Sands and Resorts World

Sentosa.

With a typical 12-18 month time lag between the award of new contracts and

actual rollout of projects, we think the uptick can flow through to an increase in

the number of non-domestic foreign workers from 2019F onwards, which then

translates into stronger demand for PBWA beds. With construction being the

largest industry that CENT's PBWA is exposed to, we think CENT will be a

beneficiary from this recovery.

Figure 20: Construction demand and estimates from URA (value of contracts awarded

- S$ m)

SOURCES: CGS-CIMB RESEARCH, URA

Based on statistics from the Ministry of Manpower, the population of non-

domestic foreign workers stands at 725,200 as of Jun 2019. In the past 10 years

since 2008, the total number of non-domestic foreign workers has largely

followed the trend of progress payments from construction projects. Going

forward, we think that the population of non-domestic foreign workers will hold

steady as Singapore continues to depend on a large pool of blue-collar migrant

workers for local construction projects.

Title:

Source:


38.8

27.0 26.424.8

30.532.0

0

5

10

15

20

25

30

35

40

45

2014 2015 2016 2017 2018 2019F

S$ m



14

Figure 21: Non-domestic foreign workers vs. progress payments Figure 22: PBWA revenue vs. progress payments

SOURCES: CGS-CIMB RESEARCH, URA, Ministry of Manpower SOURCES: CGS-CIMB RESEARCH, URA

According to a Euromonitor market report on the workers’ accommodation

services market in Singapore, industry revenue receipts accrued by PBWA

providers in Singapore are expected to grow by a 1.7% CAGR during 2017-

2021F to reach c.S$800m in 2021F. This is due to a decline in bed capacity as

short-term leases for dormitories expire; in CENT’s case, this was the expiry of

the lease at Westlite Tuas in 2017.

Government regulations. Demand for PBWA is driven by government

regulations. The Singapore government has increasingly favoured PBWA as the

foreign worker housing of choice, with the purpose of drawing migrant workers

away from Singapore’s heartlands and housing foreign workers in gated

communities and enclaves. The government regulates foreign workers housing

standards, conducts proactive inspections and takes enforcement actions

against breaches. In 2015, the Foreign Employee Dormitory Act (FEDA) was

passed, a comprehensive act which sets consistent standards for foreign worker

housing. Standards include having adequate ventilation, sanitation, the number

of persons per room, access to healthcare and cooking/laundry facilities. The

government is also striving for better accommodation for workers, to protect the

wellbeing of workers.

Apart from FEDA, the Housing Development Board (HDB) in Singapore revised

subletting conditions for HDBs in Jun 2016, disallowing non-Malaysians from

renting entire HDB flats – only individual rooms, pushing them towards PBWA.

Government regulations have led to 1) PBWA being the norm for housing

foreign workers, and 2) closure of alternative forms of living quarters which do

not meet the minimum FEDA standards.

Title:

Source:

Please fill in the values above to have them entered in your report26.2

30.9

27.428.9

31.6

33.735.9 36.4

35.2

27.9

26.6

0

5

10

15

20

25

30

35

40

600,000

620,000

640,000

660,000

680,000

700,000

720,000

740,000

760,000

780,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

LHS: Total non domestic foreign workers

RHS: Output (progress payments - S$m)

S$ m

Title:

Source:


47 62 72 86 100 81

33.7

35.9 36.435.2

27.9

26.6

0

5

10

15

20

25

30

35

40

0

20

40

60

80

100

120

2013 2014 2015 2016 2017 2018

LHS: PBWA revenue (S$m) RHS: Output (progress payments - S$m)



15

Figure 23: Comparison of worker accommodation alternatives (as at 3 Dec 2019)

SOURCES: CGS-CIMB RESEARCH, FEDA, URA

Shortage of quality and well-managed PBWA. CENT estimates that there is a

supply of 222,600 beds and a demand pool of 725,200 non-domestic work

permit holders as at 30 Sep 2019. Based on our understanding from CENT,

supply remains thin as at 30 Sep 2019; the land lease for Westlite Tuas housing

8,600 beds expired in 2018. CENT estimates that land leases on another 19,500

beds in the Singapore market could expire in 2019. Key competitors include ST

Lodge (Unlisted) (25,000 beds), MES Group (Unlisted) (24,000 beds), Averic

Capital Management (Unlisted) (23,000 beds) and Vobis (Unlisted) (21,000

beds). Notably, MES Group was recently prosecuted under FEDA on 4 Jul 2019

for having dormitories with unsatisfactory living conditions and poorly maintained

PBWA.

Figure 24: Dormitory operators in Singapore – channel checks (as at Sep 2019)

SOURCES: CGS-CIMB RESEARCH

We conducted channel checks by contacting the various major dormitory

operators in Singapore. These operators are licenced by the Ministry of

Manpower in accordance with the Foreign Employee Dormitory Act (FEDA). We

found that all operators have the same basic provisions like security, sick-bays

and Wi-Fi. Bed rates are S$250-400 per bed per month, depending on whether

the employer is booking an individual bed or an entire room.

Notably, only Vobis Enterprise and CENT have dormitories with an in-house

training centre. The ASPRI-Westlite Papan dormitory under CENT is co-located

with the ASPRI Integrated Training Centre, which supports workers in the

process industry at Jurong Island. The co-location of the training centre with the

dormitory and its close proximity to Jurong Island have helped save more than

three million man-hours according to Mr Charles Quek, President of the ASPRI

Housing Type Description Allowed to house Regulation

Purpose-built workers accomodation

Specially designed and built with

amenities, services and recreational

facilities

All foreign employees

Licensed in accordance with the

Foreign Employee Dormitories Act

(FEDA)

Factory-converted dormitories

Industrial or warehouse developments

which have been partially converted to

dormitories


Obtain clearance from MOM, NEA,

PUB, LTA, written permission from

URA to house the employees in the

industrial premises

Construction temporary quarters

Any structure used for housing

employees within a construction site that

will be eventually demolished

Foreign employees working in the construction sector

only

Obtain approval from MOM, NEA,

PUB.

HDB flats

Public housing flats managed by the

HDB, which may be rented out as a

whole flat or by rooms, subject to HDB's

approval

Worker permit holders who are Malaysian/work in the

services sectors. Non-Malaysian WP holders from the

manufacturing sector are allowed to rent bedrooms, but

not the whole flats

The HDB flat owner needs to register

employees as tenants with HDB

before they move in.

Private residential premises

Private properties such as

condominiums, landed residential

properties, terrace houses, semi-

detached, residential units in shop

houses, etc.


Allowed to house a maximum of 6

occupants per unit, regardless of the

unit size.

OperatorNumber of

beds

Number of

locations

Price of loose

beds (per

bed/month)

Price of whole

units (per

bed/month)

Security Gym Supermarket Sick-bay Kitchen TV Room Wifi Inhouse training centre

Westlite (Centurion) 28,000 5 $379 $309

Sungei Tengah (ST) Lodge 25,000 1 $360 $280

MES Group (Labourtel Management) 24,000 3 na na

Averic Capital Management 23,000 4 $400 $250

Vobis Enterprise 21,000 3 na na

Capital Development Pte Ltd 19,968 2 na $280

TS Management Services Pte Ltd 16,800 1 $320 $270



16

11th Executive Council during the official opening of the dormitory. In addition, as

foreign workers complete training courses, employers may be able to apply for

workers to be considered higher-skilled, which then lowers the levy that

employers are required to pay to the Ministry of Manpower (MOM). We think

such developments are positive for companies and help to increase demand for

dormitories.

Workers accommodation in Malaysia

Construction and manufacturing growth to boost foreign worker

population. According to CEIC, the value of construction work done in Malaysia

has grown more than two-fold since 2010 and we think this can continue due to

major infrastructure projects. Growth in infrastructure spending in Malaysia is

expected to be among the fastest in the world in the future, averaging 15.5% in

nominal terms until 2021F according to Timetric’s Infrastructure Intelligence

Centre (IIC) as Malaysia has set a goal to achieve advanced economy status by

2025.

Figure 25: Construction Work Done (RM m)

SOURCES: CGS-CIMB RESEARCH, CEIC

According to IHS Markit, despite a slight dip in Malaysia’s industrial production,

Malaysia’s manufacturers recorded a six-month high in new orders in Oct 2019.

This could have been due to supply chain diversions arising from the US-China

trade war according to TheEdge. The higher new orders and plans for

infrastructure spending are positive for the number of foreign workers, in our

view, as the majority of workers in construction and manufacturing are foreigners

according to the Labour Force Survey by the Department of Statistics Malaysia.

Title:

Source:


-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

03

/201

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06

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06

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12

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2

12

/201

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03

/201

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06

/201

3

09

/201

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12

/201

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03

/201

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06

/201

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12

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06

/201

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09

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12

/201

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03

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06

/201

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09

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12

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03

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17

Figure 26: Industrial Production Index (IPI) of Malaysia Figure 27: Manufacturing (Mfg) Sales in Malaysia (RM m)

SOURCES: CGS-CIMB RESEARCH, CEIC SOURCES: CGS-CIMB RESEARCH, CEIC

Government regulation. Compared to Singapore, Malaysia is a less regulated

market and PBWA remains a nascent market, with dormitory operators starting

to take interest due to recent government legislations.

In Jul 2019, the Malaysian government passed the Worker’s Minimum

Standards of Housing and Amenities (Amendment) Bill 2019. This makes it

mandatory for employers across all sectors to provide better housing conditions

for their foreign workers and this legislative change bodes well for the group, in

our view. While this reduces the alternative supply from makeshift housing and

illegal factory converted dormitories, we further think CENT could benefit from

increased demand driven by ethical compliance requirements from employers

under the Responsible Business Alliance as well as regulatory control with

continued efforts from the Malaysia government to ensure proper housing for

foreign workers.

Challenges in determining foreign workforce population. According to the

Labour Force Surveys by the Department of Statistics Malaysia, the foreign

workforce has been hovering around 15% of total labour force in recent years.

The Ministry of Home Affairs Malaysia has reported that 4 out of 10 foreign

workers are undocumented foreign workers based on its enforcement and

amnesty programmes. Due to loose enforcement of regulations, there is a large

number of undocumented foreign workers in Malaysia. This is evidenced by the

wide range of estimates provided by different government sources: 1.8m in 2017

by the Ministry of Home Affairs, 2.26m by the Labour Force Survey and 3.3m by

the Population and Demography Department.

Title:

Source:


90.0

95.0

100.0

105.0

110.0

115.0

120.0

01

/201

5

03

/201

5

05

/201

5

07

/201

5

09

/201

5

11

/201

5

01

/201

6

03

/201

6

05

/201

6

07

/201

6

09

/201

6

11

/201

6

01

/201

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03

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/201

7

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09

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9

Title:

Source:


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45,000

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55,000

60,000

65,000

70,000

75,000

80,000

01

/201

3

04

/201

3

07

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3

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04

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4

07

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10

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4

01

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04

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5

07

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5

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5

01

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6

04

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6

07

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6

10

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6

01

/201

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04

/201

7

07

/201

7

10

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7

01

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8

04

/201

8

07

/201

8

10

/201

8

01

/201

9

04

/201

9

07

/201

9



18

Student accommodation

Healthy and supportive industry fundamentals. The global provision of PBSA

remains low and the student accommodation sector is still structurally

undersupplied, with the count of full-time higher education students exceeding

the bed counts in all the key education hubs according to Knight Frank, a global

property consultancy, in their 2019 Global Student Property Report. The outlook

for CENT’s PBSA remains positive, in our view, given their attractive locations

close to major universities, and the general strong demand and undersupply of

PBSA beds. Provision rates refer to the ratio of beds to full-time higher

education students.

Figure 28: Provision rate (2018)

SOURCES: KNIGHT FRANK, SAVILLS, ANKF MULTIFAMILY CAPITAL MARKETS

United Kingdom. Based on the 2019 global student property report by Knight

Frank, the UK’s PBSA market is undersupplied with full-time student numbers

outnumbering current PBSA bed space 3:1. There are almost 1.9m students

studying in the UK either part-time or full-time, with only 615,000 operational

beds.

There is a positive long-term outlook for student numbers in the UK according to

Knight Frank in their 2019 Global Student Property Report. Application numbers

remain strong, with data from Universities and Colleges Admissions Service

(UCAS) showing a 6% yoy rise in the number of applications from international

students for 2019. The UK government seeks to increase international student

numbers in the UK by more than 30% to 600,000 by 2030F, and generate £35bn

through education exports. The Knight Frank analysis on Office for National

Statistics (ONS) population projection, along with entry rates from UCAS, points

to a 15% increase in full-time undergraduate numbers between 2019 and 2030,

representing an increase of 220,000 students.

While the uncertainty of Brexit remains, we think that the UK’s appeal as a key

tertiary education market is unlikely to diminish as the UK boasts 11 of the

world’s top 100 universities, and these draw the increasingly mobile global

student body. The prospect of Brexit has also weakened the British pound by

more than 10% since the Brexit vote in Jun 2016, leading to the increased

affordability of a British education for foreign students.

Title:

Source:


13%

32%

10%

0%

5%

10%

15%

20%

25%

30%

35%

United States United Kingdom Australia

Full time highereducation students: 19.8m

PBSA beds: 2.6m

Full time highereducation students: 1.9m

PBSA beds: 615k

Full time highereducation students: 917k

PBSA beds: 87.5k



19

Figure 29: UK applicant numbers by domicile / index 100 = 2009 Figure 30: Projection of full-time UK undergraduates (according

to Knight Frank)

SOURCES: KNIGHT FRANK, UCAS SOURCES: KNIGHT FRANK RESEARCH, ONS, UCAS, HIGHER EDUCATION STATISTICS

AGENCY

Australia. Solid growth in international and domestic students fuels

development of PBSA. Based on Savills 2019 global student housing investment

reports, key urban locations in Australia remain significantly undersupplied, with

917,000 full time students and only 87,500 beds as at April 2019. There has

been steady growth in the number of full-time students in Australia, with

Australia’s greater capital cities recording a 4.3% CAGR over the past five years

and a 4.5% CAGR over the past 10 years. In light of this structural undersupply,

Savills expects this growing student count to drive PBSA beds from 87,052 beds

in the first semester of 2019 to 114,755 operational beds by the end of 2022F, a

32% uplift. Savills expects the national provision rate in Australia to reach 27%

by 2022F. The Australian government is aiming for 40% of 25 to 34 year-olds to

hold a degree by 2025F, up from 27% currently. The underlying dynamics of the

Australian higher education market continue to drive enrollment figures for

Australian universities and is positive for PBSA development, in our view.

Figure 31: Growth in full time students in Australia (2018) Figure 32: Australian PBSA supply (beds)

SOURCES: SAVILLS, DEPARTMENT OF EDUCATION AND TRAINING SOURCES: SAVILLS ESTIMATES



20

United States. Based on the 2019 global student property report by Knight

Frank, the US has the largest undergraduate student population in the world, at

a 19.8m count as of May 2019. Knight Frank expects student enrolment

numbers to remain robust, and to set new records from 2020F to 2026F. There

are c.2.6m of PBSA beds in the US as of 2018 (Figure 34), which equates to a

national provision rate of c.13%. CENT is confident that demand for quality

PBSA in the US will continue as the country remains the first choice for many

international students seeking a quality education.

Figure 33: Purpose-built student housing supply in the US by Knight Frank; estimates by ANKF Multifamily Capital Markets (total

bed spaces)

SOURCES: ANKF MULTIFAMILY CAPITAL MARKETS, KNIGHT FRANK

The imbalance between supply and demand is a major tailwind for the PBSA

market and we think that the student accommodation market continues to be an

attractive market.



21

FINANCIALS

Growth from a stable base and visible pipeline of new beds

CENT experienced a 12.4% yoy decline in revenue for FY18 due to the expiry of

Westlite Tuas, but this was slightly offset by stronger performance of PBWA in

Malaysia and PBSA in the UK. We expect CENT to experience a 10.8%

improvement in revenue in FY19F due to full contributions from the multiple

acquisitions and completions made in FY18:

Jul 2018: Acquisition of 100% interest in dwell Princess Street with 127 beds

Oct 2018: Completion of dwell East End Adelaide with 280 beds

Nov 2018: Acquisition of 14.29% interest in dwell Castle Gate Haus with 133

beds

Nov 2018: Acquisition of dwell Dongdaemun with 208 beds

For FY19F, we expect CENT to benefit from additional growth drivers secured

during the year:

Jan 2019: Completed Westlite Bukit Minyak with 6,600 beds

Jun 2019: Completed majority of asset enhancement programme for 160 new

beds at dwell RMIT Village

Jun 2019: Secured 9-year lease at adjacent block to Westlite Pasir Gudang

to add 400 beds

Sep 2019: Secured 10-year lease at Westlite Juniper for 1,900 beds

We expect 4Q19F to perform better than 3Q19 as a result of the seasonally low

PBSA revenue from the UK summer break in 3Q, and a full quarter’s

contribution from Westlite Juniper; CENT’s lease at Westlite Juniper started in

Sep 2019 representing one month of contribution to 3Q19.

Looking further ahead, 3,777 beds could be added with the expected completion

of Westlite Tampoi II and the acquisition of Archer House in FY20F, according to

CENT, and another 6,100 beds could be added at Westlite Juru with expected

completion in FY21F. We expect CENT’s revenue to grow by 8.3%/4.0% in

FY20F/21F as a result of the growth in beds.

Figure 34: CENT revenue and bed capacity forecasts


Margin expansion as PBWA grows

While some of CENT’s new PBSA assets have been seeded into its funds and

contribute to earnings via share of associate/JV profits, income from CENT’s

Title:

Source:


-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

20

40

60

80

100

120

140

160

2013 2014 2015 2016 2017 2018 2019F 2020F 2021F

Revenue (S$m) (LHS) Number of beds (RHS)



22

PBWA assets tend to be consolidated. Hence, the proportion of PBWA in the

consolidated revenue and gross profit could gradually increase if CENT

continues with this strategy, in our view. As PBWA tends to have a higher gross

margin due to the advantages of scale vis-a-vis PBSA, as fixed overheads are

spread over a larger base, we think that the larger proportion of PBWA could

lead to an expansion in gross margins from 71.9% in FY18 to 72.2% in FY19F

and 72.9% in FY20F.

In addition, due to the high level of operating leverage on its distribution and

administrative expenses, we expect this expansion in gross margins to flow

down to an improvement in core PATMI margins from 25.6% in FY18 to 26.7%

in FY19F and 28.0% in FY20F.

Figure 35: Gross and core PATMI margins for CENT


NOTE: CORE PATMI EXCLUDES REVALUATION GAIN/LOSS FROM INVESTMENT PROPERTIES

5.4% FY20F dividend yield to reward shareholders

While CENT does not have a fixed dividend policy, in FY18, CENT declared a

total dividend of 2.0 Scts comprising an interim and final dividend of 1.0 Sct each;

this represented a c.55% payout ratio. For 1H19, CENT declared an interim

dividend of 1.0 Sct which implies a c.50% payout ratio.

Going forward, while there has been no specific guidance on dividend payouts,

we think a 50% payout ratio continues to be a reasonable guideline for CENT as

it strikes a balance between rewarding shareholders and retaining cash for

future acquisitions/developments and to pare down debt. For FY20F, a c.50%

payout ratio translates into a 2.4 Scts dividend per share, implying a 5.4% yield.

Title:

Source:


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

2015 2016 2017 2018 2019F 2020F 2021F

GP margin Core PATMI margin



23

Figure 36: Historical dividend trend


Figure 37: SWOT Analysis


Title:

Source:


0.5 0.5

1.0 1.0 1.0

1.0 1.0

1.0 1.0 1.0

0.516.0%

36.8% 46.5%62.4%

54.6%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

0.0

0.5

1.0

1.5

2.0

2.5

2014 2015 2016 2017 2018

Interim DPS (Scts) (LHS) Final DPS (Scts) (LHS)

Special DPS (Scts) (LHS) Dividend Payout (%) (RHS)

Strengths:

1. Strong brand, deep management expertise and

experience in handling workers dormitories

2. High occupancy rates alongside top tier building

facilities (especially in dormitories), diversified customer

base

3. Stabilised operational portfolio which generates

steady operating cash flow

Opportunities:

1. Asset-light investment fund management platform via

collaboration with third party investors

2. Exploratory stage to invest in other non-traditional

assets like retirement homes/senior living

Weakness:

1. Growing debt profile

2. Exposed to FX risk

3. Slow upward rental reversion growth

Threats:

1. Unfavourable changes in government regulations

could reduce foreign workers' population and student

population numbers

2. Economic slowdown may have adverse impact,

especially on the construction sector



24

VALUATION AND RECOMMENDATION

Initiate with Add at S$0.61

We initiate coverage on CENT with an Add rating and a target price of S$0.61.

We like CENT due to its proven track record of growing bed capacity at a 14.7%

CAGR from 2012 to 2018 via developments and acquisitions; we think there are

indications that this will continue due to the visible pipeline of new beds and

additional acquisition capacity via its funds. Organically, its PBWA and PBSA

rents are helped by being in under-supplied markets with tightening supply of

PBWA in Singapore and Malaysia. Dividend yield forecast of 5.4% for FY20F is

supported by strong positive operating cash flow generation.

Our target price was derived based on the DCF valuation methodology

assuming a blended terminal growth rate of 0.99%, risk-free rate of 1.92% and

WACC of 4.86%. We included capex for the PBWA developments of Tampoi II

and Juru assuming they were 50% debt-funded and the rest with internal cash

balances. Our TP of S$0.61 implies 12.8x FY20F P/E and 0.9x FY20F P/BV.

These multiples are between its average and 1 SD above its historical mean

since 2012, which was after the addition of the accommodation business from

the reverse takeover. We think these levels are justified due to the visible growth

profile in bed capacity, potential in Malaysia PBWA and possible expansion of

asset-light strategies in PBSA. We continue to expect CENT to trade below its

peers due to their larger market cap and trading liquidity.

We think key re-rating catalysts would be major acquisitions, especially in PBSA,

as this could increase its AUM and make a future REIT spin-off more viable.

Stronger project rollouts in the construction and oil & gas industries could also

boost demand for PBWA beds if the non-domestic foreign worker workforce is

expanded. Key risks include a significant slowdown in the aforementioned

sectors leading to higher vacancies or lower bed rates.

Figure 38: DCF valuation

SOURCES: CGS-CIMB RESEARCH

2020F 2021F 2022F 2023F 2024F

Terminal Value

(Gordon Growth

Model)

PATMI 40.34 43.61 45.37 47.14 48.81

Add: Depreciation & amortization 2.63 2.45 2.32 2.23 2.17

Less: Capex -55.98 -2.00 -2.00 -2.00 -2.00

Less: Change in working capital 1.28 0.96 0.76 0.78 0.78

FCFF -11.73 45.02 46.45 48.15 49.76 1297.96

PV of FCFF -11.18 40.94 40.29 39.82 39.25

Terminal Growth 0.99%

Risk-free rate 1.92%

Market risk premium 7.24%

Beta 0.7

Cost of equity 6.99%

Cost of debt 3.90%

Tax rate 20%

After-tax cost of debt 3.12%

WACC 4.86% Assumed debt to equity ratio of 45:55

Sum of PV of FCFF 149.12

PV of Terminal Value 1023.74

Enterprise Value (S$m) 1172.86

Add/(Less): Net (Debt)/Cash (S$m) -659.61

Equity value (S$m) 513.25

Number of shares (m) 840.78

TP (S$) 0.61



25

Figure 39: 12 month forward P/E (x) Figure 40: P/BV (x)

SOURCES: CGS-CIMB RESEARCH, BLOOMBERG SOURCES: CGS-CIMB RESEARCH, BLOOMBERG

Figure 41: Peer comparison

NOTE: FORECASTS FOR NOT RATED (NR) COMPANIES ARE ALL BLOOMBERG CONSENSUS ESTIMATES

SOURCES: CGS-CIMB RESEARCH, COMPANY REPORTS, BLOOMBERG

DATA AS AT 07 JAN 2020

NO BLOOMBERG ESTIMATES AVAILABLE FOR WHUR SP AND FEOR SP

0

2

4

6

8

10

12

14

16

18

20

Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Jan-2020

Ave: 7.99x

+1sd: 12.41x

-1sd: 3.56x

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Jan-2012 Jan-2013 Jan-2014 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Jan-2020

Ave: 0.93x

+1sd: 1.21x

-1sd: 0.65x

Bloomberg Price

Target

Price

Market

Cap 3-year EPS

Company Ticker Recom. (lcl curr) (lcl curr) (US$ m) CY20F CY21F CAGR (%) CY20F CY21F CY20F CY21F CY20F CY21F CY20F CY21F

Centurion Corporation Ltd CENT SP ADD 0.44 0.61 274 9.2 8.6 9.0% 0.7 0.7 7.5% 7.8% 12.2 11.3 5.4% 5.8%

PBSA/PBWA

Wee Hur Holdings Ltd WHUR SP NR 0.22 na 147 na na na na na na na na na na na

Singapore Press Holdings SPH SP Hold 2.14 2.19 2,529 22.4 21.4 na 1.0 1.0 4.4% 4.7% 20.3 20.0 5.1% 5.1%

Far East Orchard Ltd FEOR SP NR 1.18 na 384 na na na na na na na na na na na

American Campus Communities In ACC US NR 46.14 na 6,340 58.9 51.3 na 2.0 2.1 7.8% 4.4% 21.0 20.3 4.2% 4.3%

UNITE Group PLC/The UTG LN NR 1241.00 na 5,943 27.7 24.5 na 1.3 1.2 5.0% 4.8% 21.1 18.9 3.1% 3.5%

Empiric Student Property PLC ESP LN NR 96.90 na 770 20.0 19.1 na na na na na 21.0 20.2 5.2% 5.3%

GCP Student Living PLC DIGS LN NR 196.60 na 1,178 29.1 26.0 -35.5% na na na na 29.3 25.8 3.3% 3.4%

Watkin Jones PLC WJG LN NR 244.00 na 821 13.0 11.6 na na na na na 10.1 9.0 3.8% 4.3%

Simple average (excludes Centurion) 28.5 25.6 -35.5% 1.4 1.4 5.7% 4.6% 20.5 19.0 4.1% 4.3%

Dividend Yield

(%)EV/EBITDA (x)Recurring ROE (%)P/BV (x)Core P/E (x)



26

Key risks

Changes in regulatory environment

Demand for CENT’s dormitory and student accommodation beds is derived from

the transient population of foreign workers and students in the various countries

CENT has a presence in. This transient population is subject to policies (i.e. on

granting work permits and student visas) imposed by government agencies. Any

changes in regulations, for example higher foreign worker levies or lower ratio of

foreign to domestic workers, could result in a decline in demand for such

accommodation thereby affecting CENT’s occupancy and/or rental rates. Apart

from demand side factors, government regulations on minimum standards of

housing and land use could affect the supply of beds.

University reputational risk

Any decline in the reputation or ranking of the universities within the vicinity of

CENT’s PBSA properties could lead to a shift in student enrolment to other

universities not in the immediate areas of CENT’s PBSA properties. As the

PBSA industry is dependent on having a sufficient number of students to fill its

rooms, any decline in student numbers could have a negative impact on PBSA

demand.

Depreciation of foreign currency exchange rate

In FY18, c.37% of revenue was derived outside of Singapore with contributions

from Australia, Malaysia, South Korea, the UK and the US while CENT’s

borrowings are largely denominated in Singapore dollars. Any depreciation in

foreign currency could negatively impact CENT’s financial position.

Brexit could make the UK less attractive

In 2016, the UK voted to leave the European Union (EU) and as a result,

students from EU member countries may no longer receive tuition fee subsidies

for higher education in the UK. This may make higher education in the UK less

financially attractive for these students. A reduction in student enrollment

numbers may affect the occupancy rate at CENT’s PBSA properties in the UK

and could negatively affect business and financial performance.



27

Appendix

Management team profile

Figure 42: Senior management team


Name Title Description

Mr Kong Chee Min Chief Executive

Officer

Mr. Kong Chee Min (“Mr. Kong”), aged 53, was appointed as the Chief Executive Officer of the Group in August 2011 and is

responsible for overall management of the Group’s operations and the implementation of business strategies and the long

term growth objectives approved by the Board. Mr. Kong joined the Group in March 1996 and was appointed a member of the

Board on 28 March 2000 until he stepped down on 8 May 2015.

Ms Foo Ai Huey Chief Financial

Officer

Ms. Foo Ai Huey (“Ms. Foo”), aged 50, was appointed as the chief financial officer after the Group enlarged its principal

business activities to include the Accommodation Business. She was previously the Group’s Finance Manager when she

joined in April 2000. Currently, she heads the finance team and manages the full spectrum of finance and management

reporting requirements.

Mr Teo Peng Kwang Kelvin Executive

Director and

Chief Operating

Officer

(Accomodation

Business)

Mr. Teo Peng Kwang (“Mr. Teo”), aged 59, was appointed as Chief Operating Officer of the Group’s accommodation business

in August 2011. He was last re-elected an Executive Director of the Company on 25 April 2019.He is presently responsible

for the day-to-day operations and expansion of the Group’s accommodation business. He also assists the Managing Director

– Accommodation Business in growth and strategic planning.

Mr Ho Lip Chin Chief Investment

Officer

(Accommodation

Business)

Mr. Ho Lip Chin (“Mr. Ho”), aged 50, joined the Group in January 2012 as Director, Investments before his appointment as

Chief Investment Officer of accommodation business in 2015. He is responsible for growing the Group’s Accommodation

Business and assists in the Group’s strategic planning activities. Mr. Ho has over 20 years of experience in the real estate

and hospitality industries across the Asia Pacific.

Mr Leong Siew Fatt Head, Student

Accommodation

Business

Mr. Leong Siew Fatt (“Mr. Leong”), aged 52, joined the Group in 1993 as an engineer and is currently Head of Student

Accommodation Business. He is responsible for the overall management of the Group’s Student Accommodation Business

across the United Kingdom, United States, South Korea, Australia and Singapore.

Mr Yeo Boon Hing David Director of

Corporate

Research and

Innovation

Mr. Yeo Boon Hing, David (“Mr. Yeo”), aged 65, is the Director of Corporate Research and Innovation. He is responsible for

the research and identification of new business models, market trends, innovative technologies and opportunities for the

Group’s workers and student accommodation business in existing and new markets. He is also tasked to research and

make recommendations to venture into any new businesses that align with the growth of the Group.

Ms Lee Geok Ing Janice HR & Admin

Manager

Ms. Lee Geok Ing (“Ms. Lee”), aged 57, was appointed a member of the Board on 11 August 1994 and became the Human

Resources and Administration Manager in January 1995. She stepped down from the Board on 18 May 2007 and remains as

Human Resource and Admin Manager. She currently oversees the Group’s human resource development and administration.

Ms. Lee is equipped with over 33 years of accounting, human resource and administrative experience.

Mr Lim Choon Kwang Director of

Security

Mr. Lim Choon Kwang (“Mr. Lim”), aged 50, joined the Group in October 2016 as Director of Security, and is responsible for

providing strategic leadership to the Group on security management and business continuity. Mr. Lim has more than 26

years of experience in security and law enforcement in both the public and private sectors, where he last held a regional

position as Security Operations Manager with Apple South Asia Pte. Ltd., a company principally engaged in the manufacture

and distribution of electronic products from July 2015 to April 2016.



28

Corporate structure

Figure 43: Corporate structure as at end 3Q19




29

Substantial shareholder transactions

Figure 44: Substantial shareholder transactions on CENT as at 03 Dec 2019


MARKET CAP AS AT 03 Dec 2019

Quarter Substantial shareholder Currency

Average

price

(HK$/S$)

Shares

purchased

Value of

transaction (S$)

3Q19 Han Seng Juan HKD 2.36 1,400,000 573,694

2Q19 Low Kim Kang David SGD 0.41 199,800 80,979

1Q19 Han Seng Juan HKD 2.41 44,000 18,437

1Q19 Low Kim Kang David HKD 2.39 2,302,000 956,604

SGD 0.41 2,068,400 842,955

HKD 2.35 511,000 208,783


SGD 0.43 2,790,400 1,212,307

HKD 2.49 1,215,000 525,601


2Q18 Han Seng Juan HKD 2.86 3,450,000 1,712,736

SGD 0.48 1,215,800 579,654

HKD 2.88 276,000 138,180

SGD 0.50 1,084,400 541,777

HKD 3.01 1,703,000 891,010

SGD 0.53 1,128,300 600,028

HKD 3.12 2,000,000 1,084,968

SGD 0.53 2,104,300 1,122,701

HKD 3.14 144,000 78,613

Total 11,743,214

Market cap 369,942,595

% 3.2%

4Q18 Han Seng Juan

3Q18 Han Seng Juan

2Q18 Low Kim Kang David

1Q18 Han Seng Juan

4Q17 Han Seng Juan

4Q17 Low Kim Kang David



30

BY THE NUMBERS


6.00%

6.36%

6.71%

7.07%

7.43%

7.79%

8.14%

8.50%

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

Jan-15A Jan-16A Jan-17A Jan-18A Jan-19F Jan-20F

P/BV vs ROE

Rolling P/BV (x) (lhs) ROE (rhs)

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

6.6

7.6

8.6

9.6

10.6

11.6

12.6

13.6

14.6

15.6

Jan-15A Jan-16A Jan-17A Jan-18A Jan-19F Jan-20F

12-mth Fwd FD Normalised P/E vs FD Normalised EPS Growth

12-mth Fwd Rolling FD Normalised P/E (x) (lhs)

Diluted Normalised EPS Growth (rhs)

Profit & Loss

(S$m) Dec-17A Dec-18A Dec-19F Dec-20F Dec-21F

Total Net Revenues 137.1 120.1 133.1 144.1 149.9

Gross Profit 94.2 86.3 95.7 104.8 109.0

Operating EBITDA 69.7 115.8 73.2 79.2 83.0

Depreciation And Amortisation (4.8) (3.1) (2.6) (2.4) (2.3)

Operating EBIT 65.0 112.7 70.6 76.8 80.7

Financial Income/(Expense) (21.5) (23.9) (28.5) (28.5) (28.5)

Pretax Income/(Loss) from Assoc. 4.6 6.6 7.3 7.4 7.5

Non-Operating Income/(Expense) 1.4 1.2 1.1 1.0 0.8

Profit Before Tax (pre-EI) 50.6 48.0 50.5 56.6 60.5

Exceptional Items

Pre-tax Profit 49.4 96.6 50.5 56.6 60.5

Taxation (11.7) (12.4) (10.1) (11.3) (12.1)

Exceptional Income - post-tax 0.0 0.0 0.0 0.0 0.0

Profit After Tax 37.6 84.2 40.4 45.3 48.4

Minority Interests (5.9) (4.8) (5.1) (5.2) (5.2)

Pref. & Special Div 0.0 0.0 0.0 0.0 0.0

FX Gain/(Loss) - post tax

Other Adjustments - post-tax

Preference Dividends (Australia)

Net Profit 31.7 79.3 35.2 40.1 43.2

Normalised Net Profit 38.9 35.6 40.4 45.3 48.4

Fully Diluted Normalised Profit 32.9 30.8 35.2 40.1 43.2

Cash Flow


EBITDA 69.75 115.81 73.22 79.20 83.01

Cash Flow from Invt. & Assoc. (4.61) (6.57) (7.27) (7.38) (7.48)

Change In Working Capital (5.18) (0.08) 0.68 1.22 1.23

Straight Line Adjustment

(Incr)/Decr in Total Provisions

Other Non-Cash (Income)/Expense

Other Operating Cashflow (14.70) (64.67) (20.13) (20.15) (20.17)

Net Interest (Paid)/Received 20.64 22.88 27.40 27.53 27.65

Tax Paid (8.96) (9.90) (10.09) (11.32) (12.10)

Cashflow From Operations 56.94 57.48 63.81 69.11 72.14

Capex (24.38) (121.82) (7.37) (55.98) (2.00)

Disposals Of FAs/subsidiaries

Disposals of Investment Properties

Acq. Of Subsidiaries/investments

Other Investing Cashflow (44.16) 4.68 5.89 0.96 0.84

Cash Flow From Investing (68.55) (117.14) (1.48) (55.02) (1.16)

Debt Raised/(repaid) (8.93) 97.93 (12.81) 9.69 (10.00)

Proceeds From Issue Of Shares 19.76 0.00 0.00 0.00 0.00

Shares Repurchased (1.12) 0.00 0.00 0.00 0.00

Dividends Paid (15.36) (21.02) (17.62) (20.05) (21.59)

Preferred Dividends

Other Financing Cashflow 10.10 (28.55) (28.55) (28.49) (28.48)

Cash Flow From Financing 4.45 48.36 (58.97) (38.85) (60.07)



31

BY THE NUMBERS… cont’d


Balance Sheet


Total Cash And Equivalents 76 63 66 42 52

Properties Under Development

Total Debtors 14 12 13 14 15

Inventories 0 0 0 0 0

Total Other Current Assets 24 19 19 19 19

Total Current Assets 113 94 99 75 87

Fixed Assets 9 8 8 7 7

Total Investments 1,065 1,219 1,227 1,288 1,296

Intangible Assets 0 0 0 0 0

Total Other Non-Current Assets 2 1 1 1 1

Total Non-current Assets 1,076 1,228 1,235 1,296 1,303

Short-term Debt 108 43 43 43 43

Current Portion of Long-Term Debt

Total Creditors 45 42 44 46 48

Other Current Liabilities 11 8 8 8 8

Total Current Liabilities 164 93 95 97 99

Total Long-term Debt 545 695 683 692 682

Hybrid Debt - Debt Component

Total Other Non-Current Liabilities 0 0 0 0 0

Total Non-current Liabilities 546 696 683 693 683

Total Provisions 4 8 8 8 8

Total Liabilities 713 797 786 798 790

Shareholders' Equity 463 507 525 545 567

Minority Interests 13 18 23 28 33

Total Equity 476 525 548 573 600

Key Ratios

Dec-17A Dec-18A Dec-19F Dec-20F Dec-21F

Revenue Growth 14.6% (12.6%) 11.1% 8.5% 4.1%

Operating EBITDA Growth 5.68% (5.23%) 8.87% 8.18% 4.81%

Operating EBITDA Margin 52.4% 56.8% 55.7% 55.6% 55.9%

Net Cash Per Share (S$) (0.69) (0.80) (0.78) (0.83) (0.80)

BVPS (S$) 0.55 0.60 0.62 0.65 0.67

Gross Interest Cover 3.07 2.68 2.47 2.69 2.83

Effective Tax Rate 23.8% 12.9% 20.0% 20.0% 20.0%

Net Dividend Payout Ratio 62.4% 54.6% 50.0% 50.0% 50.0%

Accounts Receivables Days 28.94 39.49 35.10 35.58 36.16

Inventory Days 0.80 0.93 0.86 0.82 0.79

Accounts Payables Days 391.3 468.5 419.6 419.8 421.3

ROIC (%) (260%) (796%) (709%) (681%) (624%)

ROCE (%) 6.04% 5.34% 5.53% 5.91% 6.09%

Return On Average Assets 5.23% 4.74% 5.19% 5.46% 5.57%

Key Drivers

Dec-17A Dec-18A Dec-19F Dec-20F Dec-21F

Unbooked Presales (m) (S$) N/A N/A N/A N/A N/A

Unbooked Presales (area: m sm) N/A N/A N/A N/A N/A

Unbooked Presales (units) N/A N/A N/A N/A N/A

Unsold attrib. landbank (area: m sm) N/A N/A N/A N/A N/A

Gross Margins (%) 68.7% 71.9% 71.9% 72.7% 72.7%

Contracted Sales ASP (per Sm) (S$) N/A N/A N/A N/A N/A

Residential EBIT Margin (%) N/A N/A N/A N/A N/A

Investment rev / total rev (%) N/A N/A N/A N/A N/A

Residential rev / total rev (%) N/A N/A N/A N/A N/A

Invt. properties rental margin (%) N/A N/A N/A N/A N/A

SG&A / Sales Ratio (%) -16.2% -20.4% -18.5% -18.9% -19.5%



32

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The report is not a “prospectus” as defined under Indian Law, including the Companies Act, 2013, and is not, and shall not be, approved by, or filed or registered with, any Indian regulator, including any Registrar of Companies in India, SEBI, any Indian stock exchange, or the Reserve Bank of India. No offer, or invitation to offer, or solicitation of subscription with respect to any such securities listed or proposed to be listed in India is being made, or intended to be made, to the public, or to any member or section of the public in India, through or pursuant to this report.

The research analysts, strategists or economists principally responsible for the preparation of this research report are segregated from the other activities of CGS-CIMB India and they have received compensation based upon various factors, including quality, accuracy and value of research, firm profitability or revenues, client feedback and competitive factors. Research analysts', strategists' or economists' compensation is not linked to investment banking or capital markets transactions performed or proposed to be performed by CGS-CIMB India or its affiliates.

CGS-CIMB India does not have actual / beneficial ownership of 1% or more securities of the subject company in this research report, at the end of the month immediately preceding the date of publication of this research report. However, since affiliates of CGS-CIMB India are engaged in the financial services business, they might have in their normal course of business financial interests or actual / beneficial ownership of one per cent or more in various companies including the subject company in this research report.

CGS-CIMB India or its associates, may: (a) from time to time, have long or short position in, and buy or sell the securities of the subject company in this research report; or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company in this research report or act as an advisor or lender/borrower to such company or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.

CGS-CIMB India, its associates and the analyst engaged in preparation of this research report have not received any compensation for investment banking, merchant banking or brokerage services from the subject company mentioned in the research report in the past 12 months.

CGS-CIMB India, its associates and the analyst engaged in preparation of this research report have not managed or co-managed public offering of securities for the subject company mentioned in the research report in the past 12 months. The analyst from CGS-CIMB India engaged in preparation of this research report or his/her relative (a) do not have any financial interests in the subject company mentioned in this research report; (b) do not own 1% or more of the equity securities of the subject company mentioned in the research report as of the last day of the month preceding the publication of the research report; (c) do not have any material conflict of interest at the time of publication of the research report.

Indonesia: This report is issued and distributed by PT CGS-CIMB Sekuritas Indonesia (“CGS-CIMB Indonesia”). The views and opinions in this research report are our own as of the date hereof and are subject to change. CGS-CIMB Indonesia has no obligation to update its opinion or the information in this research report. This report is for private circulation only to clients of CGS-CIMB Indonesia. Neither this report nor any copy hereof may be distributed in Indonesia or to any Indonesian citizens wherever they are domiciled or to Indonesian residents except in compliance with applicable Indonesian capital market laws and regulations.

This research report is not an offer of securities in Indonesia. The securities referred to in this research report have not been registered with the Financial Services Authority (Otoritas Jasa Keuangan) pursuant to relevant capital market laws and regulations, and may not be offered or sold within the territory of the Republic of Indonesia or to Indonesian citizens through a public offering or in circumstances which constitute an offer within the meaning of the Indonesian capital market law and regulations.

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Malaysia: This report is distributed in Malaysia by CGS-CIMB Securities Sdn. Bhd. (formerly known as Jupiter Securities Sdn. Bhd.) (“CGS-CIMB Malaysia”) solely for the benefit of and for the exclusive use of our clients. Recipients of this report are to contact CGS-CIMB Malaysia, at 29th Floor Menara CIMB No. 1 Jalan Stesen Sentral 2, Kuala Lumpur Sentral 50470 Kuala Lumpur, Malaysia, in respect of any matters arising from or in connection with this report. CGS-CIMB Malaysia has no obligation to update, revise or reaffirm its opinion or the information in this research reports after the date of this report.

New Zealand: In New Zealand, this report is for distribution only to persons who are wholesale clients pursuant to section 5C of the Financial Advisers Act 2008.

Singapore: This report is issued and distributed by CGS-CIMB Research Pte Ltd (“CGS-CIMBR”). CGS-CIMBR is a financial adviser licensed under the Financial Advisers Act, Cap 110 (“FAA”) for advising on investment products, by issuing or promulgating research analyses or research reports, whether in electronic, print or other form. Accordingly CGS-CIMBR is a subject to the applicable rules under the FAA unless it is able to avail itself to any prescribed exemptions.



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Recipients of this report are to contact CGS-CIMB Research Pte Ltd, 50 Raffles Place, #16-02 Singapore Land Tower, Singapore in respect of any matters arising from, or in connection with this report. CGS-CIMBR has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only. If you have not been sent this report by CGS-CIMBR directly, you may not rely, use or disclose to anyone else this report or its contents.

If the recipient of this research report is not an accredited investor, expert investor or institutional investor, CGS-CIMBR accepts legal responsibility for the contents of the report without any disclaimer limiting or otherwise curtailing such legal responsibility. If the recipient is an accredited investor, expert investor or institutional investor, the recipient is deemed to acknowledge that CGS-CIMBR is exempt from certain requirements under the FAA and its attendant regulations, and as such, is exempt from complying with the following :

(a) Section 25 of the FAA (obligation to disclose product information);

(b) Section 27 (duty not to make recommendation with respect to any investment product without having a reasonable basis where you may be reasonably expected to rely on the recommendation) of the FAA;

(c) MAS Notice on Information to Clients and Product Information Disclosure [Notice No. FAA-N03];

(d) MAS Notice on Recommendation on Investment Products [Notice No. FAA-N16];

(e) Section 36 (obligation on disclosure of interest in specified products), and

(f) any other laws, regulations, notices, directive, guidelines, circulars and practice notes which are relates to the above, to the extent permitted by applicable laws, as may be amended from time to time, and any other laws, regulations, notices, directive, guidelines, circulars, and practice notes as we may notify you from time to time. In addition, the recipient who is an accredited investor, expert investor or institutional investor acknowledges that as CGS-CIMBR is exempt from Section 27 of the FAA, the recipient will also not be able to file a civil claim against CGS-CIMBR for any loss or damage arising from the recipient’s reliance on any recommendation made by CGS-CIMBR which would otherwise be a right that is available to the recipient under Section 27 of the FAA, the recipient will also not be able to file a civil claim against CGS-CIMBR for any loss or damage arising from the recipient’s reliance on any recommendation made by CGS-CIMBR which would otherwise be a right that is available to the recipient under Section 27 of the FAA.

CGS-CIMBR, its affiliates and related corporations, their directors, associates, connected parties and/or employees may own or have positions in specified products of the company(ies) covered in this research report or any specified products related thereto and may from time to time add to or dispose of, or may be materially interested in, any such specified products. Further, CGS-CIMBR, its affiliates and its related corporations do and seek to do business with the company(ies) covered in this research report and may from time to time act as market maker or have assumed an underwriting commitment in specified products of such company(ies), may sell them to or buy them from customers on a principal basis and may also perform or seek to perform significant investment banking, advisory, underwriting or placement services for or relating to such company(ies) as well as solicit such investment, advisory or other services from any entity mentioned in this report.

As of January 6, 2020, CGS-CIMBR does not have a proprietary position in the recommended specified products in this report.

CGS-CIMBR does not make a market on the securities mentioned in the report.

South Korea: This report is issued and distributed in South Korea by CGS-CIMB Securities (Hong Kong) Limited, Korea Branch (“CGS-CIMB Korea”) which is licensed as a cash equity broker, and regulated by the Financial Services Commission and Financial Supervisory Service of Korea. In South Korea, this report is for distribution only to professional investors under Article 9(5) of the Financial Investment Services and Capital Market Act of Korea (“FSCMA”).

Spain: This document is a research report and it is addressed to institutional investors only. The research report is of a general nature and not personalised and does not constitute investment advice so, as the case may be, the recipient must seek proper advice before adopting any investment decision. This document does not constitute a public offering of securities.

CGS-CIMB is not registered with the Spanish Comision Nacional del Mercado de Valores to provide investment services.

Sweden: This report contains only marketing information and has not been approved by the Swedish Financial Supervisory Authority. The distribution of this report is not an offer to sell to any person in Sweden or a solicitation to any person in Sweden to buy any instruments described herein and may not be forwarded to the public in Sweden.

Switzerland: This report has not been prepared in accordance with the recognized self-regulatory minimal standards for research reports of banks issued by the Swiss Bankers’ Association (Directives on the Independence of Financial Research).

Thailand: This report is issued and distributed by CGS-CIMB Securities (Thailand) Co. Ltd. (“CGS-CIMB Thailand”) based upon sources believed to be reliable (but their accuracy, completeness or correctness is not guaranteed). The statements or expressions of opinion herein were arrived at after due and careful consideration for use as information for investment. Such opinions are subject to change without notice and CGS-CIMB Thailand has no obligation to update its opinion or the information in this research report.

CGS-CIMB Thailand may act or acts as Market Maker, and issuer and offerer of Derivative Warrants and Structured Note which may have the following securities as its underlying securities. Investors should carefully read and study the details of the derivative warrants in the prospectus before making investment decisions.

AAV, ADVANC, AEONTS, AMATA, AOT, AWC, BANPU, BBL, BCH, BCP, BCPG, BDMS, BEC, BEM, BGC, BGRIM, BH, BJC, BPP, BTS, CBG, CENTEL, CHG, CK, CKP, COM7, CPALL, CPF, CPN, DELTA, DTAC, EA, EGCO, EPG, ERW, ESSO, GFPT, GLOBAL, GPSC, GULF, GUNKUL, HANA, HMPRO, INTUCH, IRPC, IVL, JAS, JMT, KBANK, KCE, KKP, KTB, KTC, LH, MAJOR, MBK, MEGA, MINT, MTC, ORI, OSP, PLANB, PRM, PSH, PSL, PTG, PTT, PTTEP, PTTGC, QH, RATCH, RS, SAWAD, SCB, SCC, SGP, SPALI, SPRC, STA, STEC, STPI, SUPER, TASCO, TCAP, THAI, THANI, THG, TISCO, TKN, TMB, TOA, TOP, TPIPP, TQM, TRUE, TTW, TU, VGI, WHA, BEAUTY, JMART, LPN, SISB, WORK.

Corporate Governance Report:

The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information.

The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be



36

changed after that date. CGS-CIMB Thailand does not confirm nor certify the accuracy of such survey result.

Score Range: 90 - 100 80 – 89 70 - 79 Below 70 or No Survey Result

Description: Excellent Very Good Good N/A

United Arab Emirates: The distributor of this report has not been approved or licensed by the UAE Central Bank or any other relevant licensing authorities or governmental agencies in the United Arab Emirates. This report is strictly private and confidential and has not been reviewed by, deposited or registered with UAE Central Bank or any other licensing authority or governmental agencies in the United Arab Emirates. This report is being issued outside the United Arab Emirates to a limited number of institutional investors and must not be provided to any person other than the original recipient and may not be reproduced or used for any other purpose. Further, the information contained in this report is not intended to lead to the sale of investments under any subscription agreement or the conclusion of any other contract of whatsoever nature within the territory of the United Arab Emirates.

United Kingdom and European Economic Area (EEA): In the United Kingdom and European Economic Area, this material is also being distributed by CGS-CIMB Securities (UK) Limited (“CGS-CIMB UK”). CGS-CIMB UK is authorized and regulated by the Financial Conduct Authority and its registered office is at 27 Knightsbridge, London, SW1X7YB. The material distributed by CGS-CIMB UK has been prepared in accordance with CGS-CIMB’s policies for managing conflicts of interest arising as a result of publication and distribution of this material. This material is for distribution only to, and is solely directed at, selected persons on the basis that those persons: (a) are eligible counterparties and professional clients of CGS-CIMB UK; (b) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Order”), (c) fall within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc”) of the Order; (d) are outside the United Kingdom subject to relevant regulation in each jur isdiction, material(all such persons together being referred to as “relevant persons”). This material is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this material relates is available only to relevant persons and will be engaged in only with relevant persons.

Where this material is labelled as non-independent, it does not provide an impartial or objective assessment of the subject matter and does not constitute independent “research” (cannot remove research from here under the applicable rules of the Financial Conduct Authority in the UK. Consequently, any such non-independent material will not have been prepared in accordance with legal requirements designed to promote the independence of research (cannot remove research from here) and will not subject to any prohibition on dealing ahead of the dissemination of research. Any such non-independent material must be considered as a marketing communication.

United States: This research report is distributed in the United States of America by CGS-CIMB Securities (USA) Inc, a U.S. registered broker-dealer and a related company of CGS-CIMB Securities Sdn. Bhd. (formerly known as Jupiter Securities Sdn. Bhd.), CGS-CIMB Research Pte Ltd, PT CGS-CIMB Sekuritas Indonesia, CGS-CIMB Securities (Thailand) Co. Ltd, CGS-CIMB Securities (Hong Kong) Limited and CGS-CIMB Securities (India) Private Limited, and is distributed solely to persons who qualify as “U.S. Institutional Investors” as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is only for Institutional Investors whose ordinary business activities involve investing in shares, bonds, and associated securities and/or derivative securities and who have professional experience in such investments. Any person who is not a U.S. Institutional Investor or Major Institutional Investor must not rely on this communication. The delivery of this research report to any person in the United States of America is not a recommendation to effect any transactions in the securities discussed herein, or an endorsement of any opinion expressed herein. CGS-CIMB Securities (USA) Inc, is a FINRA/SIPC member and takes responsibility for the content of this report. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CGS-CIMB Securities (USA) Inc.

CGS-CIMB Securities (USA) Inc. does not make a market on other securities mentioned in the report.

CGS-CIMB Securities (USA) Inc. has not managed or co-managed a public offering of any of the securities mentioned in the past 12 months.

CGS-CIMB Securities (USA) Inc. has not received compensation for investment banking services from any of the company mentioned in the past 12 months.

CGS-CIMB Securities (USA) Inc. neither expects to receive nor intends to seek compensation for investment banking services from any of the company mentioned within the next 3 months.

Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

Rating Distribution (%) Inv estment Banking clients (%)

Add 58.8% 0.9%

Hold 26.3% 0.0%

Reduce 14.9% 0.1%

Distribution of stock ratings and inv estment banking clients for quarter ended on 30 September 2019

777 companies under cov erage for quarter ended on 30 September 2019



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Spitzer Chart for stock being researched ( 2 year data )

Centurion Corporation Ltd (CENT SP)

Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (Thai IOD) in 2018, Anti-Corruption 2018

ADVANC – Excellent, Certified, AEONTS – Good, n/a, AH – Very Good, n/a, AMATA – Excellent, Declared, ANAN – Excellent, Declared, AOT – Excellent, Declared, AP – Excellent, Certified, ASP – Very Good, Certified, BANPU – Excellent, Certified, BAY – Excellent, Certified, BBL – Very Good, Certified, BCH – Good, Certified, BCP - Excellent, Certified, BCPG – Excellent, Certified, BEM – Very Good, n/a, BDMS – Very Good, n/a, BEAUTY – Good, n/a, BEC – Very Good, n/a, , BGRIM – Very Good, Declared, BH - Good, n/a, BJC – Very Good, Declared, BJCHI – Very Good, Certified, BLA – Very Good, Certified, BPP – Very Good, Declared, BR - Good, Declared, BTS - Excellent, Certified, CBG – Very Good, n/a, CCET – Good, n/a, CENTEL – Very Good, Certified, CHG – Very Good, Declared, CK – Excellent, n/a, COL – Excellent, Declared, CPALL – Very Good, Certified, CPF – Excellent, Certified, CPN - Excellent, Certified, DELTA - Excellent, n/a, DEMCO – Excellent, Certified, DDD – Very Good, Declared, DIF – not available, n/a, DREIT – not available, n/a, DTAC – Excellent, Certified, EA – Excellent, n/a, ECL – Very Good, Certified, EGCO - Excellent, Certified, EPG – Very Good, n/a, ERW – Very Good, n/a, GFPT - Excellent, Certified, GGC – Excellent, Certified, GLOBAL – Very Good, n/a, GLOW – Very Good, Certified, GPSC – Excellent, Certified, GULF – Very Good, n/a, GUNKUL – Excellent, Certified, HANA - Excellent, Certified, HMPRO - Excellent, Certified, HREIT - Excellent, Certified ICHI – Excellent, Declared, HUMAN – not available, n/a, III – Good, n/a, INTUCH - Excellent, Certified, IRPC – Excellent, Certified, ITD* – Very Good, n/a, IVL - Excellent, Certified, JASIF – not available, n/a, JWD – Very Good, n/a, KBANK - Excellent, Certified, KCE - Excellent, Certified, KKP – Excellent, Certified, KSL – Excellent, Certified, KTB - Excellent, Certified, KTC – Excellent, Certified, LH - Very Good, n/a, LPN – Excellent, Certified, M – Very Good, Certified, MACO – Very Good, n/a, MAJOR – Very Good, n/a, MAKRO – Excellent, Declared, MALEE – Very Good, Certified, MC – Very Good, Certified, MCOT – Excellent, Certified, MEGA – Very Good, n/a, MINT - Excellent, Certified, MTC – Excellent, Declared, NETBAY – Good, n/a, OSP – not available, n/a,PLANB – Excellent, Declared, PLAT – Very Good, Certified, PR9 – not available, n/a, PSH – Excellent, Certified, PSTC – Good, Certified, PTT - Excellent, Certified, PTTEP - Excellent, Certified, PTTGC - Excellent, Certified, QH – Excellent, Certified, RATCH – Excellent, Certified, ROBINS – Excellent, Certified, RS – Very Good, n/a, RSP – not available, n/a, S – Very Good, n/a, SAMART - Excellent, n/a, SAPPE – Very Good, Declared, SAT – Excellent, Certified, SAWAD – Very Good, n/a, SC – Excellent, Declared, SCB - Excellent, Certified, SCC – Excellent, Certified, SCN – Very Good, Certified, SF – Good, n/a, SIRI – Very Good, Certified, SPA - Good, n/a, SPALI - Excellent, n/a, SPRC – Excellent, Certified, STA – Very Good, Certified, STEC – Excellent, n/a, SVI – Excellent, Certified, SYNEX – Very Good, Declared, TASCO – Excellent, Certified, TCAP – Excellent, Certified, THANI – Excellent, Certified, TIPCO – Very Good, Certified, TISCO - Excellent, Certified, TKN – Very Good, Declared, TMB - Excellent, Certified, TNR – Very Good, Declared, TOP - Excellent, Certified, TPCH – Good, n/a, TPIPP – Good, n/a, TRUE – Excellent, Certified, TU – Excellent, Certified, TVO – Very Good, Declared, UNIQ – Good, n/a, VGI – Excellent, Certified, WHA – Excellent, Certified, WHART – not available, n/a, WICE – Very Good, Certified, WORK – Good, n/a. Companies participating in Thailand’s Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) under Thai Institute of Directors (as of August 31, 2018) are categorized into:

- Companies that have declared their intention to join CAC, and

- Companies certified by CAC

* The company, its director or management had been reportedly accused for breaching proper corporate governance such as violation of the SEC’s regulations or charged with corruption.

0.300

0.350

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Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19

Price Close



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Recommendation Framework

Stock Ratings Definition:

Add The stock’s total return is expected to exceed 10% over the next 12 months.

Hold The stock’s total return is expected to be between 0% and positive 10% over the next 12 months.

Reduce The stock’s total return is expected to fall below 0% or more over the next 12 months.

The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward net dividend yields of the stock. Stock price targets have an investment horizon of 12 months.

Sector Ratings Definition:

Overweight An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation.

Neutral A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation.

Underweight An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation.

Country Ratings Definition:

Overweight An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark.

Neutral A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark.

Underweight An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark.

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