Centurion

NAV 0.557.

Yealy dividend of 2 cents.

Yield of 4.54%. If plus special dividend of 0.5 cent then yield would be higher at 5.68%.

PE of 11.89x 

TA wise, neutral mode.

Likely to retest 45/45.5 cents! 

Not a call to buy or sell.

Pls dyodd.

I was looking at Centurion Corp. The first few things I picked up which were important were it's fast growth, mounting debt level as well as increase in equity through various means such as conversion of warrants to shares etc. 

Quote: Jeremyowtaip

I decide to follow on with more investigation into these areas to see what I can find. As such, I list down the following findings and provide my opinion on this company.

I look at their growth in revenue, operating profit and net profit attributable to shareholders for the past 5 years (2012 to 2017).

 The CAGR for their revenue was 16.01%. The CAGR for their operating profit was 37.11%. 

The CAGR for their net profit attributable to shareholders was 28.26%. This company has been really profitable and experienced fast growth in running their businesses which are into workers and students accommodation. They have also ventured to overseas markets like UK and Malaysia. But their businesses still derive predominantly their revenue from Singapore.

Next, I look at their debts over the years. Five years ago, their debt to equity ratio was 0.69. As of current Jun 2018, their debt to equity ratio was 1.35. It looks like they have been gearing up taking on higher debts to pursue growth over the past 5 years.

Now, it begs the question whether they have reached a point whereby they have geared themselves too much. I will leave this opinion to the individual reader as different people can see things differently. Some would say it is still ok given their nature of business in providing accommodation which is well diversified across different premises, different locations in a country, different geographical regions, serving different client types (workers and students) and has good occupancy rates showing the demand is still strong to meet supply. However, I noted that this year, their revenue has decreased due to a lease on one of their premises expiring. Thus, be careful of thinking things will always be a bed of roses as the future of any business is always unpredictable. Only one thing is predictable here. Creditors always run after their debtors to get their money back when the time is up.

 And we already seen so many cases of companies pursuing growth with high leverage which did not turn out well. When times are good, people do not question high leverage. When times are bad for the business, then suddenly people start to grow very panicky and rushed for the exit to sell their stocks in a company which is running into debt problems.

Last but not least, I look into their equity position. Their EPS 5 years ago in 2012 was 1.21 cents. Their EPS in 2017 was 4.17 cents. Their CAGR in EPS was 28.1%. Their CAGR in shareholder equity was 34.24%. Their return on equity in 2012 was 8.6%. Their return on equity in 2017 was 6.85%. It seems that despite some dilution measures they have taken to raise equity in various forms also to pursue growth, they still managed to maintain decent profitability for shareholders in terms of EPS growth. However, returns on equity have fallen over the 5 years due to their raising of equity to pursue growth apart from debts.

The current ratio for Centurion Corp is now around 0.54. It has intentions of taking up a potential bond to fulfill it's immediate debt obligations (see link below). It has grown well by taking on high leverage, similar levels to the likes of Ezion Holdings last time. This is a choice an investor has to make here. Would you have the attraction and risk appetite of a high leverage growth company like Centurion or not? Again, different people, different opinions on the whether the high leverage growth in Centurion is still safe after all or not based on it's business model and operating industry which is different from Ezion Holdings.

"Centurion Corporation Limited: Potential New SGD Bond" by FSMOne 

https://secure.fundsupermart.com/fsm/article/view/14019/centurion-corporation-limited-potential-new-sgd-bond