SGD New Issue Alert : Centurion

CENTURION CORP SGD 3 YR ISSUE – UPDATE #1***

New Centurion Corp SGD 3yr issue announced on the back of strong response to roadshow in Singapore
Initial price guidance @ 5.5% area
Size: TBD
Timing: This week’s business, as early as today
Comps:
Hiap Hoe 4.75% 2016 4.65%
Aspial 5% 2016 4.52%

Credit Highlights:
* Centurion is one of the largest providers of branded purpose built workers accommodation in Singapore and Malaysia.
* Supportive industry dynamics – Centurion taps into the undersupplied workers accommodation market in Singapore which has allowed Centurion’s properties achieve close to full occupancy and register increases in rental rates over the last few years.
* Diversified customer base – Centurion has approximately 500 customers including SMRT Corporation, Tiong Seng Holdings Limited, Hydrochem (S) Pte Ltd, Mun Siong Engineering Limited, and JCY International Berhad.
* Favourable payment profile – Centurion’s cashflows benefit from customers paying one month rent in advance, and two month rental deposit upon the commencement of a contract.
* Cashflow visibility – customers are locked in for a lease period of approximately a year in Singapore and between one to two years in Malaysia.
* Serves workers from a diverse mix of industries – Customer base comprises construction (51% of residents), marine (24%), oil and gas (3%), engineering (16%) manufacturing (1%) and service (5%) sectors.

The former Summit.

Zico alerted me to this company several weeks back when its stock price soared saying that its unique sort of business model is pretty sound and the dormitory business would be considered quite niche. With its stock price more than doubled for the year, and sitting on a comfortable market cap of over SGD 440 million, it is time to sell bonds !

And its a pity they chose this timing, on a day the US govt partially shuts down, I say they would have given the recent Oxley, Mencast and LMIRT a fight for their money on superior financials.

Verdict : 5.5% would be a fair price.