Centurion’s Hong Kong debut to have minimal impact on earnings: analyst

Income-producing assets to rise 6.5% this year with major projects underway.

Centurion’s first foray into Hong Kong’s student accommodation market will likely only have a minimal impact on its earnings this year since the project was relatively small, according to RHB Group. 

RHB analyst Alfie Yeo noted that the Centurion-LionRock student housing joint venture announced earlier this month only contains 66 beds and has a limited capex outlay for refurbishment. Further, the firm maintains just 60% ownership in the partnership. 

Renovations in the property are estimated to cost HK$11.5m or $2m, with completion set to be completed by September.

Despite this, Yeo maintained their positive outlook on Centurion since its existing pipeline of projects and ongoing asset enhancement initiatives will be boosting its income-producing portfolio, with the total number of revenue-contributing beds estimated to rise 6.5% year-on-year to 70,166 for the financial year 2024.

RHB forecasted Centurion posting a 6.1% YoY growth in recurring net profit to an estimated $74m this year from $69m last year.

“We like CENT for being well-positioned to yield better rental rates in Singapore due to the dormitory supply shortage situation, and better occupancy in Malaysia as its increasing number of foreign workers are to be housed in purpose-built dormitories,” he said.

He added that developments in Singapore like its new site at at Westlite Ubi Ave 3, as well as in Malaysia, where asset enhancements are ongoing for Westlite Johor Tech Park and Westlite Senai II, will bode well for the company.

READ MORE: Centurion unit, LionRock form JV for Hong Kong student housing