No new shares issued; fundamentals unchanged. Centurion Corp (CENT)’s EPS and shareholder base will be unaffected by this placement, as no new shares will be issued. Its fundamentals are expected to remain intact, with no change in expansion plans and earnings. CENT’s controlling shareholders, Centurion Properties Pte Ltd and Mr David Loh, have also indicated that they have no intention to sell or place out new shares for the next 18 months.
Expect more tie-ups with LBG. With the placement, Lian Beng (LBG SP, BUY, TP: SGD0.70) will be a substantial shareholder with a 5% stake. LBG is no stranger to CENT, since both companies have closely collaborated on
projects like the Mandai Dormitory and a 141-unit ramp-up job (a separate project), which has also just received its temporary occupation permit (TOP). CENT expects to book profits from this project in the coming quarter. We expect more tie-ups between the two companies in the future and the new ties are expected to further strengthen their working relationship.
Free float rises to 29%. Concerns over controlling shareholders owning too much equity and affecting market liquidity have also been addressed with this placement. CENT’s free float has risen to 29% from 23%, with Centurion Properties Pte Ltd paring down its stake by 10% to 55.4% - which will increase the market liquidity of the shares.
Maintain BUY, with a DCF-based TP of SGD0.82. CENT’s fundamentals and earnings projections remain intact, and its growth prospects have improved with LBG on board. Core earnings are expected to remain strong, with a 54% growth for FY13-14 from the Mandai dormitory project as well as a >4,000-bed expansion for the Toh Guan dormitory. On top of that, CENT is also expected to rake in SGD14.4m from the industrial ramp-up project.
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