SINGAPORE (Aug 15): Dormitory operator Centurion Corporation says it is looking to add close to 11,600 beds across three new worker accommodation facilities in Singapore and Malaysia, as it aims to grow its business amid favourable legislation in both markets.

According to chief executive officer Kong Chee Min, the group’s 2Q19 revenue had been boosted significantly by an uptake in workers’ accommodation in Singapore.

Kong says that this demand has been pushed up by more stringent guidelines imposed by the Ministry of Manpower (MOM) on housing options for foreign workers.

Across the Causeway, recent amendments to the Workers’ Minimum Standard of Housing and Amenities Bill by the Malaysian government have also increased the allure of Centurion’s foreign worker facilities, he adds.

“The barriers to entry into the industry are high, so with the increase in regulatory requirements for foreign worker accommodation and the stable supply of such facilities, we have an advantage”, Kong says in a media briefing on Aug 14.

Centurion Corp posted a 4% rise in earnings to $10.2 million for the 2Q19 ended June, on the back of stable growth in occupancy at its accommodation facilities.

See: Centurion posts 4% increase in 2Q earnings to $10.2 mil; declares 1 cent interim dividend

For 1H19, earnings were down 4% y-o-y to $18.1 million, which Kong attributes to higher start-up costs incurred for new properties, such as the Westlite Tampoi 2 Workers’ accommodation facility in Malaysia that is under construction.

Kong also notes that the group also saw a drag from a 23% y-on-y increase in finance expenses to $7.1 million after an increase in borrowings to fund their expansion.

Centurion Corp was also hit by a 16% increase in administrative expenses to $5.9 million.

2Q19 revenue rose 8% to $32.9 million, aided by contributions from newer dwell-branded student accommodation facilities in Australia and the UK, bringing revenue for the first half of the year to $64.2 million, some 6% higher than a year ago.

The group’s workers’ accommodation segment accounted for close to two-thirds of total revenue in 1H19.

Some 88% of the $41 million in revenue raked in from workers’ accommodation segment in 1H19 was generated in Singapore, with the remaining 12% from Malaysia.

Looking ahead, Kong expects the workers’ accommodation segment to continue growing in both markets.

Leveraging on the legislative amendments, he says the company has “carefully built a diversified customer base”, and now provides living quarters to workers from several industries, such as construction, oil and gas, manufacturing and services.

The group is now looking to unveil two new worker accommodation facilities in Malaysia with a total occupancy of 9,700, and one in Singapore with a capacity of 1,900 beds.

Centurion Corp adds that they are looking to further entrench themselves in their existing markets, even as they look out for opportunities in new pastures.

Meanwhile, the group’s student accommodation business is holding up in the UK, which now accounts for 65% of revenue from the segment. Revenue from Australia came in second, accounting for close to a quarter of total revenue from the segment.

Despite Brexit jitters, Kong does not foresee a major decline in housing take-up in the UK.

Citing statistics from the Universities and Colleges Admissions Service (UCAS) on the UK Department of Education, he points out that the UK is aiming to attract 600,000 international students by 2030 – up from the current 460,000.

He also expects the take-up in the other countries the group operates in to remain consistent.

Centurion’s board has declared an interim dividend of 1.0 cent per share, unchanged from the same period last year, which will be payable on Sept 12.

As at 4pm on Thursday, shares in Centurion Corp are trading flat at 41 cents.