Centurion ecosystem: CAReit initiation & parent upgrade

[SINGAPORE] Analysts are turning bullish on the Centurion ecosystem, with CGS International (CGSI) initiating coverage on the newly listed Centurion Accommodation Reit (CAReit) while RHB and UOB Kay Hian see upside in its sponsor, Centurion Corporation.

CGSI initiated coverage on CAReit on Jan 21 with an “add” rating and a target price of S$1.38, representing a potential upside from its trading price of S$1.10 at the time of CGSI’s report.

CAReit was listed on the SGX mainboard in September last year, with an initial public offering (IPO) price of S$0.88 per unit.

CGSI Analysts Li Jialin and Lock Mun Yee describe the counter as offering “hidden value” and being “primed for growth”.

They project FY2026 and FY2027 distribution per unit (DPU) growth of 27.4 per cent and 10.1 per cent respectively, driven by operational bed capacity exceeding IPO forecasts.

This growth is attributed to the accelerated addition of 1,980 beds at Westlite Mandai, expected to be operational by April 2026, and the retention of 664 beds at Westlite Toh Guan until late 2028. 

“We like CAReit for its strong and visible DPU growth and potential for inorganic and organic opportunities,” the analysts said, noting that the Reit offers a FY2026 forecast dividend yield of 6.5 per cent.

“Multi-year sector tailwinds, such as the construction upcycle in Singapore and robust demand for (purpose built student accommodation) in UK and Australia, are likely to underpin CAReit’s robust earnings outlook,” the analysts said. 

Parent company rerates

Meanwhile, RHB has maintained “buy” on Centurion Corporation, and raised its target price to S$1.88 from S$1.86 on Jan 21.

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“We remain positive on Centurion Corp’s prospects, as the group focuses on property development, acquisitions, and being CAReit’s manager post spin-off of its assets to the latter,” analyst Alfie Yeo said. 

The target price upgrade follows the completion of the divestment of Epiisod Macquarie Park to CAReit for about A$345 million (S$280 million).

RHB increased its target price based on a higher sum-of-the-parts valuation, reflecting the slightly higher market valuation of its stake in CAReit. The brokerage also highlights potential future rewards for shareholders, noting that Centurion may declare another dividend in specie as it pares down its stake in the Reit next year.

Centurion Corporation shares were trading at S$1.41 at the time of RHB’s report.

Separately, UOB Kay Hian named Centurion Corporation a top pick in its construction sector update on Jan 20, with a target price of S$1.90.

The brokerage maintains an “overweight” call on the construction sector, and notes that the industry is “set to outperform, with strong construction demand and order book visibility of two to four years”.

Since its previous construction sector note, “the sector has undergone a meaningful valuation rerating”, the brokerage said. This is driven by a construction upcycle supported by post-pandemic project catch-up and a new wave of infrastructure investments.