This Company Has Gone Up 255% Over The Past 3 Years: What’s Driving Its Future Growth?


Centurion Corporations (SGX: OU8) share price been on a tear over the past few years. The company was trading at around S$0.20 per share in October 2011 after the completion of its reverse takeover (RTO); today, its shares are exchanging hands at S$0.71, representing a gain of 255% in a little less than three years.

Has the company’s business been growing? If so, what’s the company’s source of growth and can we expect better things ahead?

From workers’ dormitories to student hostels

After its RTO in 2011, Centurion Corporation started out running worker’s domitories in Singapore and Malaysia. In 2012, the company began to purchase land to develop more such dormitories as demand grew. In the same year, Centurion Corporation also embarked on its first Australian dormitory project in Port Hedland, Western Australia. Thereafter, the company expanded into Indonesia with another workers’ dormitory project in the country’s capital of Jakarta.

In conjunction with all the above activity, Centurion Corporation then ventured into the student accommodations business with the purchase of RMIT Village in Melbourne, Australia late last year. At that point, the company had already been growing at a breakneck speed with revenue shooting up from S$29.8 million in 2011 to S$127 million as of the 12 months ended 31 March 2014.

But just this week, the company had added four more student accommodation assets in the United Kingdom through acquisitions; Centurion Corporation would be buying three student accommodation properties in Manchester and one in Liverpool for a total sum of S$164.5 million. When it’s done, it will be the largest acquisition Centurion Corporation has ever made.

Does this mean that the company will start looking into student accommodation assets as the next growth engine? Assuming that the properties were acquired on 1 January 2013, they would help add 11% to the company’s net profit by the end of 2013.

At Centurion Corporation’s proposed acquisition price, the UK properties would deliver an annualised yield of 8% based on the properties’ net profit of £1.525 million in the first quarter of 2014. That’s an attractive yield and seems to be a smart purchase by the company.

Foolish Summary

Although Centurion Corporation’s activities seem to be focused on worker dormitories for the time being, another way to look at the company would be to see it as being in the property development and management business. As long as the company’s able to find great assets that will provide sufficient returns for its shareholders, investors should not worry too much about whether the projects are for worker dormitories or student accommodations.

In any case, with the new UK acquisition and RMIT Village, Centurion has shown that it thinks that student accommodations-related assets might be the new big thing for it.

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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.