What Can Centurion Corporation’s Latest Acquisition Do for the Company?

Since undergoing a reverse takeover in 2011, Centurion Corporation (SGX: OU8) has been aggressively building up a portfolio of dormitory assets in Singapore and Malaysia. These dormitories are currently managed under the Westlite brand.

In addition, the company had also recently started expanding its business operations into student accommodations in Australia as well as worker dormitories in Indonesia.

Expansion into Malaysia

In an announcement made last week, Centurion declared that it will be acquiring a piece of land in Nusajaya, Johor through a joint venture. Centurion will have a 49% stake in the JV while a third party investor, Mr. Beh Pang Keat, will hold 51%.

The plot of land, with a land area of 7.6 acres, would be bought by the JV for RM11.7 million (around S$4.56 million). It’s in a great location for worker dormitory operations as it is situated near industrial parks in Nusajaya, such as the Southern Industrial and Logistics clusters (SiLC). Locally-listed companies like Yongnam and Teckwah Industrial have factories in the vicinity.

What’s going to happen next

Centurion plans to build two workers’ dormitories on the plot of land to serve factories in the area. Each dormitory is projected to be able to house around 5000 beds. This project is certainly not Centurion’s first dormitory project in the state of Johor (it’s actually the eighth). But, with a potential capacity of 10,000 beds, it will be the largest ever project Centurion has undertaken in Malaysia.

According to Centurion’s website, the company is looking at a number of other possible acquisitions in the country. As Singapore restructures its economy, plenty of lower-end manufacturing activities might need to be shifted to the North of Singapore; this is a reason why Centurion has been focusing its efforts in building up a strong dormitory portfolio in Johor.

Foolish Summary

Centurion currently trades at around S$0.70 per share, giving it a price to book value of 2 times. With the acquisitions that have been going on, Centurion should be kept busy for the next few years.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.