THE SHARE PRICE of Centurion Corporation, the largest dormitory operator in Singapore, has weakened considerably and is now way below the purchase prices of insiders (see table) who bought shares just 2-3 weeks ago.
Centurion (55 cents) has come off from the recent closing high of 75 cents on July 23 as investors began to perceive an uncertainty coming over the company’s prospects.
Centurion has a trailing dividend yield of 1.06%. Chart: BloombergThe media had reported higher-than-expected vacancy rates in existing dormitories for foreign workers, and investors have taken additional note of the increasing number of dormitories under construction.CIMB, in a cautious report, said: "Centurion was a first mover that capitalized on Singapore’s previous undersupply of quality worker dormitories and booming construction activities. However, these underlying factors that had led to Centurion’s previous success are likely to fade in future." (See: MIDAS: Buy, 50-c target; CENTURION: Falling occupancy to come)
UOB Kay Hian was more bullish though, saying in a report last month: "While we see near-term headwinds from the increase in bed supply, as it reduces the bargaining power of dormitory suppliers, we think the recent sell-down (-6.5% in last 3 days) has been overdone. Centurion is currently trading at only 14.2x FY15F PE."
A Centurion executive director, Lee Kerk Chong, seemed prescient of the stock's downfall: He sold 2 million shares from May 14 to 16 at an average of 73 cents each.
He now owns 28.376 million shares or a 3.75% stake in the company that he founded as SM Summit, an optical media business now existing as a distinct business segment within Centurion.
Mr Teo Peng Kwang, the COO of the dormitory business, owns twice as much stock as Mr Lee, and certainly far more than the CEO (who holds only 0.02%).
Mr Teo’s large stake originally came about after he was issued shares as consideration for his stake in Westlite Dormitory when it was acquired by SM Summit in 2011.
That same year, he was appointed COO of the dormitory business of the renamed Centurion.
Is Centurion stock attractive now? See forum discussion here.
Recent stories:
MIDAS: Buy, 50-C Target; CENTURION: Falling Occupancy To Come
