Centurion Corp. Ltd. – Value Analysis (SINGAPORE:OU8) : December 21, 2017

Capitalcube gives Centurion Corp. Ltd. a score of 66.

Our analysis is based on comparing Centurion Corp. Ltd. with the following peers – Ban Leong Technologies Limited, Allied Technologies Ltd. (Singapore), Miyoshi Limited and Datapulse Technology Limited (B26-SG, A13-SG, M03-SG and BKW-SG).

Investment Outlook

Centurion Corp. Ltd. has a fundamental score of 66 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Compared to peers, relative outperformance over the last year has faded more recently.
  • It’s current Price/Book of 0.99 is about median in its peer group.
  • The market expects OU8-SG to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • OU8-SG‘s relatively high profit margins are burdened by relative asset inefficiency.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • Over the last five years, OU8-SG‘s return on assets has declined from above median to about median among its peers, indicating declining relative operating performance.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • While OU8-SG‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • OU8-SG seems to be constrained by the current level of debt.

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Leverage & Liquidity

OU8-SG is debt-constrained.

  • With debt at a relatively high 68.84% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 32.10%), and interest coverage level of 3.44x, OU8-SG seems debt-constrained.
  • Of the 4 chosen peers for the company, only 3 of the stocks have an outstanding debt balance. Companies with no debt include BKW-SG.

OU8-SG has moved to a Some Capacity from a relatively high leverage profile at the recent year-end.

  • OU8-SG‘s interest coverage is upward trending but is still within one standard deviation below its five-year average interest coverage of 4.09x.
  • The increase in its interest coverage to 3.44x from 2.61x (in 2016) was also accompanied by an increase in its peer median during this period to 12.96x from 3.72x.
  • Interest coverage fell 8.42 points relative to peers.
  • OU8-SG‘s debt-EV continues to trend downward but is still within one standard deviation above its five-year average debt-EV of 58.80%.
  • While its debt-EV decreased to 68.84% from 79.88% (in 2016), its peer median increased during this period to 32.10% from 27.33%.
  • Relative to peers, debt-EV fell 15.81 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Ban Leong Technologies Limited 32.1 1.8 27.48 111.42
Allied Technologies Ltd. (Singapore) 38.94 1.63 12.96 57.44
Miyoshi Limited 27.33 2.21 3.72 47.01
Datapulse Technology Limited 0 6.68 No interest exp 999
Centurion Corporation Limited 68.84 0.8 3.44 8.47
Peer Median 32.1 1.8 12.96 57.44
Best In Class 27.33 6.68 No interest exp 999

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Company Profile

Centurion Corp. Ltd. is an investment holding company, which engages in the ownership and operation of workers and student accommodation assets. It operates through the following segments: Optical, Workers Accommodation, and Student Accommodation. The Optical segment manufactures and sells optical discs and related data storage products. The Workers Accommodation segment provides dormitory accommodation and services for workers. The Student Accommodation segment offers accommodations and services for students. The company was founded in 1981 and is headquartered in Singapore.

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