Centurion Q3 profit up 47% on growth in dormitory business

Mainboard-listed Centurion Corporation reported on Friday that net profit surged 47 per cent to $7.92 million for the three months to September 30, 2014, from $5.39 milion for the corresponding period last year.

The 46 per cent jump in revenue to $20.90 million in the third quarter of this year from $14.33 million a year ago, was mainly due to the comany's accommodation business.

Centurion said there was more bed capacity at Westlite Toh Guan dormitory since January 2014, maiden revenue from its student accommodation RMIT Village in Melbourne, Australia, acquired in February this year, and the continued improvements in occupancy rates of its dormitories in Malaysia.

The increase in rental rates for its dormitories in Singapore and the inclusion of two weeks' rental revenue from its newly acquired UK student accommodation assets which completed on September 2014 further contributed to the growth in revenue.

The company's optical disc business, on the other hand, experienced a drop in revenue of $800,000 in 3Q 2014 compared to the corresponding period last year due to weaker market demand, it said.

Centurion said the overall outlook remains favorable, supported by healthy demand for both its workers' and student accommodation across Singapore, Malaysia, Australia and the United Kingdom.

In Singapore, Centurion said new regulations under the Foreign Employee Dormitories Bill 2014 is positive for the company they act as barriers of entry for new and inexperienced dormitory operators.

It said, notwithstanding the Government's measures to manage the growth of the foreign workers' population, it remains positive of the long-term demand for purpose built workers accommodation in view of Singapore's integral need for foreign workers to sustain its economic growth.

While the Singapore Government has released parcels of land to build approximately 100,000 beds over the next two years, the Ggoup believes the demand for purpose built workers accommodation will continue to outweigh the supply of beds.

Centurion said thay in Malaysia, the occupancy rate for its portfolio of 14,500 beds across 5 dormitories in Johor is presently above 90 per cent and it expects the rate to continue to improve. Two more projects with a total of 10,800 beds are under construction and are expected to complete and be operational in 1Q 2015 and 4Q 2015 respectively.

On its student accommodation business, Centurion said its significant growth potential, in light of the strong demand for and stable rental rates of these assets.

In Australia, RMIT Village continues to operate at close to full occupancy, and is expected to maintain its occupancy rate. Studies are ongoing to carry out refurbishment and enhancement works to further realise the potential of the property.

In the United Kingdom, the newly acquired portfolio of three properties in Manchester and one in Liverpool with a combined total of over 1,900 beds, are also maintaining close to full occupancy. Given the demand and limited supply of purpose built student accommodation in both cities, the assets are expected to be remain almost fully occupied and contribute positively to earnings, Centurion said.