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Investors’ Corner (Centurion Corp, Ascendas India Trust, Nam Cheong, Parkway Life REIT)
Investors' Corner | 08 January 2015
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By: Tan Jia Hui
Articles (82) Profile

Centurion Corporation
Price – $0.525
Target – $0.86

Centurion Corporation’s 51:49 JV with Lian Beng Group won a tender from the Association of Process Industry (ASPRI) to develop a 7,900-bed workers’ dormitory and training centre at Jalan Papan, located in close proximity to Jurong Island. Given the support from ASPRI as well as the dormitory’s strategic location, we believe that there will be strong demand for beds when it is operational in mid-2016. However, our net profit forecast between FY14 to FY16 has been lowered by 2% to 8%, mainly on the back of higher interest expense from the new investment, as well as lower revenue forecast from the group’s disposal of the bulk of its heritage business assets last year. On a brighter note, the group’s occupancy rates remained strong with 2 out of 3 dormitories operating at near full occupancy, and recent measures proposed by the Singapore government have helped to improve the competitive landscape. Since a 34% pull back in share price from its 52-week high, Centurion offers an attractive package at the current valuations of 12.7x 2015F P/E. Maintain BUY. UOB-Kay Hian (5 Jan)

Ascendas India Trust
Price – $0.82
Target – $0.87

Ascendas India Trust (AIT) announced the acquisition of BlueRidge Phase II, a 1.5m sqf IT property in Pune. AIT will initially subscribe for INR2.6b ($54m) worth of non-convertible debentures to help fund the construction of the property which is scheduled for completion by 2H15. AIT will acquire the property on 31-Dec 16 if the minimum leasing threshold of 65% is met, at no more than INR6.4b ($133m) or at an estimated 10 to 11% net property income yield. The acquisition of BlueRidge Phase II provides AIT with exposure to Pune which is an important IT/ITES hub. With an enlarged portfolio of 9m sqf, up from 7.5m sqf, the trust will now be diversified across 4 key Indian cities of Chennai, Hyderabad, Bangalore and Pune. AIT stands at a healthy 3-year 6% CAGR on distribution per unit (DPU) and potentially offers a combined return of 12% (6% upside on price and 6% yield). Upgrade to BUY. DBS Vickers (2 Jan)

Nam Cheong
Price – $0.31
Target – $0.58

Nam Cheong secured sales contracts for a 6,000 brake horsepower anchor handling towing supply vessel and a 5,000 deadweight tonnage platform supply vessel (PSV) from repeat customers, worth a total of US$45m. With the contracts, its order book stands at RM1.7b, comprising 26 vessels. Nam Cheong’s ability to secure these two contracts indicates that the shallow water segment remains resilient against the drop in oil prices. Furthermore, its build-to-stock model should benefit in the current climate where customers prefer to secure contracts ahead of ordering vessels. In a bear case scenario, Nam Cheong’s shipbuilding margin falls to 10% from 24% in 3Q14 and our current 19.5% (FY15F) and 19% (FY16F) estimates with FY15F/FY16F profits falling to RM169m and RM199m respectively. Valuations are compelling at 5.6x/4.3x FY14/15F P/Es with 58/31% earnings growth in those years respectively. One near-term catalyst will be the launch of Nam Cheong’s first diesel-electric PSV in FY15. Maintain BUY. DMG & Partners (2 Jan)

Parkway Life REIT
Price – $2.37
Target – $2.53

Parkway Life REIT (PREIT) announced its maiden divestment of 7 Japanese nursing homes to Fortress Japan Investment Holdings for $88.3m (JPY8b). Its recycling strategy creates value, as the selling price is about 16% above book value, and approximately 8% higher than the latest independent valuation. PREIT is likely to record divestment gains of $12.3m (net of tax, but inclusive of the Japanese consumption tax rebate receivable), which we expect to add $0.02 to NAV per share. Additionally, the divestment of assets with less strategic value is likely to strengthen the overall quality and growth potential of PREIT’s Japan portfolio. There is more to come from this asset recycling exercise, likely in the form of yield-accretive acquisitions. As a result, we expect the drop in DPU to be temporary and reversed with more acquisitions. We continue to like both its stable underlying portfolio and value creation from its asset recycling exercise. Maintain ADD. CIMB Securities (28 Dec)

Armed with a bachelor in mathematics, Jia Hui keeps close tabs on the oil & gas, and manufacturing sectors in Singapore.

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Centurion Corp  0.405 -- --   
Business: Co engages in the accommodation and optical storage media manufacturing businesses. [FY18 Turnover] Workers accommodation (67.1%), students accommodation (31.4%), optical (1.5%).

Insight: Feb-19, FY18 revenue fell 12% mainly due to the le... Read More
Lian Beng Group  -- -- --   
Business: A construction co with integrated civil engineering & support service capabilities. [FY18 Turnover] Construction (43.6%), mfg of concrete (24.4%), ppty development (14.5%), dormitory (9.1%), investment holding (8.3%), engineering & leasing of machinery (0.1%).

Insight: Apr-19, 9M19 revenue dipped 1% due to decreased re... Read More
Ascendas India Trust  1.480 -- --   
Business: Co engages in the ownership of real estate properties primarily used as business space and real estate related assets in India.

Insight: Apr-19, FY19 total property income declined 3% in ... Read More
Nam Cheong  -- -- --   
Business: An offshore marine group specialising in the building of offshore support vessels. [FY18 Turnover] Shipbuilding (59.2%), vessel chartering (40.8%).

Insight: May-19, 1Q19 revenue jumped multiple times to RM29... Read More
Parkway Life REIT  3.070 -- --   
Business: Invs REIT specialising in healthcare ppties.

Insight: Jul-18, 1H18 gross revenue rose 2.3% to $55.9m lar... Read More

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