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Centurion Corporation is still cheap and a strong BUY.

Sunday, November 17, 2019

Regular readers know that a business which I like very much as an investment for income is Centurion Corporation.

I like accumulating stocks of businesses which have a proven track record as reliable income generators.

I especially like accumulating them when they are trading at a big discount to NAV.

If they offer an attractive dividend yield with a relatively conservative payout ratio, even better.

To understand why I invested in Centurion Corporation back in early 2017,

See:
Added Centurion Corporation to my portfolio.






In fact, I like Centurion Corporation so much that I increased my investment in the business this year a few times.

I shared this in a blog in July 2019.

See:
Largest investments updated (3Q 2019).

I bought more when Mr. Market wasn't paying Centurion Corporation much, if any, attention.

Persistent insider buying, however, prevented the share price from falling below 40 cents a share.

So, I would queue to buy at 40 cents a share but often would buy at 40.5 cents a share.






On 25 October 2019, Centurion Corporation's share price closed at 43 cents a share, rising on the back of very high volume.

It broke resistance provided by the 200 days moving average (200dMA).

A bullish sign.

Question:

Could we see share price moving higher from here on?

Answer:

Your guess is as good as mine.

Well, more importantly, what is the implication for someone like me who likes the business?

I think it could be more difficult for me to accumulate closer to 40 cents a share in future.

Look at the chart again.

The 200dMA is gently turning up now and should approximate 41.5 cents soon.

The shorter term 20 days moving average (20dMA) has risen sharply and is currently providing immediate support at 42 cents a share.






Fortunately, I am cool with not buying more at higher prices because my investment in Centurion Corporation is pretty significant right now.

However, for anyone who still wants to get a bigger slice of the pie, paying a slightly higher price now is something probably worth considering.

Why do I say this?

Centurion Corporation got the attention of the analysts at DBS recently.

This reminds me of the time when analysts in UOB Kay Hian sank my plan to continue accumulating Hock Lian Seng's stock on the cheap.

Some readers might remember this blog from December 2014.

See:
Hock Lian Seng: Robust order book.

I said:

"If Hock Lian Seng should attract coverage from more analysts and if they are mostly positive about the stock like I am, I think opportunities to accumulate the stock on weakness could be harder to come by in future."

A case of deja vu?

Maybe.

Newer readers might also be interested in this blog from February 2017.

See:
Hock Lian Seng returns 100% and more.







Some points from a report by DBS earlier this month:

1. Centurion Corporation's purpose built workers accommodation (PBWA) segment is resilient and the expected increase of 3,600 beds in this segment may boost income by 11%.

2. Centurion Corporation's purpose built students accommodation (PBSA) bed count increased by 12.4% so far this year and this may improve top line by 11.2%.

3. Demand for PBWA in Singapore continues to outstrip supply by about 135,000 beds and despite a tightening on the number of foreign workers, occupancy rate rose from 96.9% to 97.4%.

4. Over in Malaysia, Centurion Corporation's PBWA occupancy rose from 90.2% to 91.2% as the Worker's Minimum Standard of Housing and Amenities (Amendment) Bill was passed in July.

5. PBSA occupancies improved from 90.3% to 91% in the UK.

6. PBSA occupancies in Australia improved from 80.7% to 89.8% in RMIT Village and from 82.1% to 93.9% in East End Adelaide.

DBS has issued a DCF based target price of 52 cents a share for Centurion Corporation.




I am more concerned with Centurion Corporation's ability to generate income for me consistently and meaningfully.

However, if DBS is worth their salt, there is more than 20% upside from Centurion Corporation's last Friday's closing price of 42 cents a share.

Time will tell.

I like being paid while I wait.

In the meantime, I will munch on an Old Chang Kee curry puff and watch the following video.





Related post:
More on Centurion Corporation.

Also see:
Centurion Corp posts 21% rise in 3Q earnings to $8.8 mil on higher revenue.

12 comments:

keng said...

Hi AK,

It sure seems like 50/200MA cross over is happening, but in Apr 19, that happened too, with no significant appreciation in share price. It will probably take more than one positive analyst report for good things to happen.

Although patience is a virtue, looking at SPH's and Far East Orchard's recent acquisition of student accommodation, I do hope for more acquisition of specialty accommodation assets from OU8 while the iron is still hot!

Glad to see your posts pop up now and then, having a break from your Neverwinter adventuring? :)

TCC said...

Hi AK, thank you for the update on Centurion. Been holding this stock for many years and collecting the yearly dividend. As you have mentioned, Mr Market does not seem to like Centurion and it really take a lot of patience to hold on this stock. On a side note, understand that you are also holding on to Accordia Golf Trust, may you also post an update on your view on their latest result. Hope you are free to conduct another evening with AK event.
Cheers and take care.

Tcc

AK71 said...

Hi keng,

To be sure, technical analysis is more accurate when there is higher volume.

Centurion Corporation's chart is lacking volume most of the time.

The management will do their work and I will do my adventuring in Neverwinter. ;p

I will be pretty busy in Neverwinter for a few weeks in a row from this Friday on.

Blog more while I still can. ;)

TCC said...

Hi AK,

Thank you for posting an update on Centurion. It really take a lot of patience to hold on this stock which is ignored by Mr Market. But glad that it does pay out a yearly dividend while we wait for her to be appreciated. On a side note, would like to find out from you what is your take on the latest quarterly result of Accordia Golf Trust.

Hope that you are "FREE" to conduct another Evening with AK session.

Take care and all the best in your adventure game.

AK71 said...

Hi TCC,

I don't have anything new to say about Accordia Golf Trust.

I still think it could surprise with much higher DPU in future.

Could take a few years to materialize.

Well, at least I hope so. ;p

See:
3Q 2018 passive income: AGT.

You are not the first to ask about "Evening with AK and friends".

I know many want this.

However, I am still on a break from public appearances.

When I am ready to make an appearance, I promise you will read about it here. :)

See:
Give me F.I.R.E.

AK is lazy.

So, readers must cultivate patience. ;p

Daniel Tay said...

Hi Ak,

aiya! i also want to accumulate more Centurion but was busy beefing up warchest... hope got more chance again soon...

oh... Old Chang Kee hor jiak? =P

AK71 said...

Hi Daniel,

Investing in Centurion Corporation is probably more rewarding than investing in most S-REITs in the longer run.

I love Old Chang Kee curry puffs, especially when they are "free".

A blog about Old Chang Kee from January 2013:
Have my curry puff and eat it too.

Hehehe. ;p

blazingruby60 said...

hello AK
While you are talking about Centurion.. May i ask you to talk a bit about Hock Lian Seng and Sembcorp Industries which i bought some while eavesdropping on you but i bought in at a higher price of 0.47 /5.03 .. will i see the light in the tunnel? thanks and cheers ..
so happy you took a break and chat here again,:)

AK71 said...

Hi Ruby,

With regards to Hock Lian Seng, I hyperlinked a blog from February 2017 in the blog above:

Hock Lian Seng returns 100%...

I reduced exposure by 50% at what I thought was a fairly good exit price.

My current holdings are free of cost.

I am quite happy to hold on to my remaining investment in Hock Lian Seng as I am getting free money yearly.

Hock Lian Seng is financially strong and well managed.

Hock Lian Seng is not another Chip Eng Seng. ;p

As for SembCorp Industries, you might or might not remember this blog:

Sembcorp Industries: Partial divestment.

I sold at $4.82 and $4.83 a share.

My remaining investment in SembCorp Industries is pretty small.

Although nursing a paper loss, I am willing to wait out the cyclical downturn.

See what happened with KepCorp?

It came out of the blue.

Could it happen to SembCorp too?

Maybe. :)

It could be very dangerous to eavesdrop on AK talking to himself especially if you only hear certain parts. :p

Eaglewing said...

Hi AK,
Enjoys reading your posts and have benefited in acquiring some Wilmar after your blog on it. Thanks very much. I'm starting to follow Centurion now. Really appreciate your way of putting things so simply for most to read and understand.
I've recent retired (I'm in my late 50s) too although not by choice and have started to take investing much more seriously than before as I'm going to be dependent on the returns from my investments to fund my retirement years (don't wish to live on savings). My issue is that over the years, I've blindly accumulated some supposedly "blue chip" stocks which paid decent dividends (Starhub, SPH and Keppel) at rather high prices (>$4.10,$4.13 & $9.45 - very ouch!!!).
On the part of freeing some ammo for my warchest to take advantage of the opportunities presented by Mr Market currently, I will need to take some very painful decisions to cut losses from these 3 counters. May I get some kind suggestions and comments from you as well as any other experienced investors out there.
Thanks
Eaglewing

AK71 said...

Hi Eaglewing,

Unfortunately, I am not a financial adviser and cannot help you the way you wish.

I am only talking to myself here in ASSI. ;)

I don't know how helpful these blogs are going to be for you but you might want to read:

1. Retirement adequacy for late bloomers.

2. Investing in Starhub at the right price?

Remember to always do your due diligence.

Don't just follow anyone. ;)

AK71 said...

Oops.

Link #2 is broken.

Trying again.

2. Investing in Starhub at the right price.

Also missed one earlier.

3. Sizing my investment in SPH.

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