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3Q 2018 passive income (non-REITs): Centurion.

Wednesday, September 26, 2018

In 3Q 2018, I decided on many things in the non-REIT space and this will be the first in a series of blogs on my decisions.

Several times in 3Q 2018, I managed to add to my investment in Centurion as its price declined closer to 40c a share.


It is my belief that a dividend of 2c a share is sustainable because it represents a payout ratio of only around 50%.





Centurions's cash flow also remains strong and relatively predictable.

An almost 5% dividend yield from a business run by a savvy management with a good track record is comforting.

Throw in a strong potential to grow further and the investment is even more attractive to me.

Then, plus a big discount to NAV, at closer to 40c a piece, Centurion became a very compelling investment for both income and growth to me.





Centurion's insiders probably agree if the insider buying activity is anything to go by.

Insiders bought more in the months before I decided to increase my investment in the business.

They paid higher prices to add to their stake.

I paid lower prices to add to mine.


That makes me happy.




9 comments:

Marc Teo said...

Hi AK, thanks for the sharing! Just curious what do you think of their high debt, as their debt to equity ratio is about 1.16 at the moment, an increase from the previous year. Would this be a concern if a recession were to hit, they will be unable to meet their interest/debt obligations? Thanks!

Laurence said...

Centurion is expanding into lucrative student accommodation overseas...... FAST.

1. 55%-owned 208-bed student accommodation in Dongdaemun, Seoul by 1Q19:

Centurion unit buys South Korea's Benikea Hotel for S$16.6m

2. 133-bed student housing asset in Nottingham, UK by Oct 18:

Centurion to buy 133-bed student housing asset in UK for £10.2m

3. Centurion chief executive Kong Chee Min said in a statement: "This acquisition of dwell Castle Gate Haus will mark our entry into the city of Nottingham and continuedexpansion into other strong education hubs in UK."

Laurence said...

According to last night's filing with the SGX, Centurion's Director Han Seng Juan on 24 Sep 18 bought another 449,700 ordinary shares at S$0.431226 per share. Bringing his Total Interests to a whopping 56.896%:

Direct Interest 24,667,200 shares (2.934%)

Deemed Interest 453,703,626 (53.962%)

Total Interest 478,370,826 (56.896%)

Mr Han Seng Juan ("Mr Han") holds a 50% shareholding interest in Centurion Global Ltd (“Centurion Global”).
Centurion Properties Pte. Ltd. (“Centurion Properties”) is a wholly-owned subsidiary of Centurion Global.
Mr Han is, therefore, deemed to be interested in 445,756,126 shares held by Centurion Properties.

Mr Han also has a deemed interest in 7,947,500 shares held by his spouse, Kang Lee Cheng Susanna, which are
registered in the name of DB Nominees (S) Pte Ltd.

AK71 said...

Hi Marc,

Debt is not a bad thing if used judiciously.

Centurion's cash flow is able to manage its debt comfortably.

You might want to read my initial analysis on Centurion to get an idea:

Added Centurion to my portfolio.

AK71 said...

Hi Laurence,

Alamak.

Now everyone will want a piece of Centurion.

My queue to buy at a lower price is in jeopardy.

;p

Laurence said...

Wow, AK's qualified endorsement of Centurion today resulted in it's stock price climbing 3.53% at the close of trading.
;)

AK71 said...

Hi Laurence,

I am sure it has nothing to do with me. :)

Wilfred Yang said...

Hi AK, any thoughts on the 1H results thus far:

- Revenue, Net Profit, and Net Profit Margin dropped by 15%, 24% and 4% respectively, citing the cessation at Westlite Tuas in December 2017 and the new MTN programme in April 2017 as the key reasons for lower net profit. Based on the trajectory, it would seem Revenue and Net Profit is unlikely to surpass that in 2017, and the management has not given clear indications how it intends to make up the revenue that was previously contributed by Westlite Tuas.

- Cash & bank balance dropped by 25% to $60m, while gearing ratio increased by 1%.

AK71 said...

Hi Wilfred,

Losing Westlite Tuas was a big blow to Centurion but it is something that will not be repeated in the near future.

The numbers are weaker, for sure, but Centurion is nowhere near a crisis situation.

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