Centurion Corporation braces for headwinds as bed space supply surges 40%

Demand is softening on back of foreign worker arrival slowdown.

Centurion Corporation has seen outstanding growth in the past few years, mainly due to the fact that it was one of the first firms to capitalize on Singapore’s worker dormitory undersupply. However, CIMB warns that the good times may well be at an end for the mainboard-listed firm.

According to CIMB, Centurion will experience headwinds in the near future on back of increase in supply of bed space in the market and a potential slowdown in demand.

Singapore will add c.100k beds for worker accommodation in the next two years, which represents a 30-40% increase in bed space even with a reduction of 30k-40k beds from termination of some short-lease dormitories.

“Moreover, demand could soften as the nation’s construction sector slows down and construction firms that are facing margin pressure could opt for cheaper accommodation solutions. Centurionmay face stiffer competition from peers hungry to stem rising vacancies,” noted CIMB.