13 August 2011

Chip Eng Seng 1H Report Short Review

Source from: http://www.chipengseng.com/administration/NewsReports/4bcc1c0b-b943-486c-98d1-f452fd1757d5_CES_2Q2011_Press_Release_11August2011.pdf

Chip Eng Seng posted an 14% lower earning as compared to last quarter. The difference of the result could be mainly due to the different financial reporting standard that CES adopted INT FRS 115 under which revenue and related expenses from overseas sales of development units and Singapore residential units
sold under the DBSS (“Design, Build and Sell Scheme”) and EC (“Executive Condominium”)
will be recognised when the development units are delivered to the purchasers. This new
accounting standard will result in profit recognition for development projects not in tandem
with the construction progress, thus creating more volatility in the Group’s earnings.


As of 30 June 2011, the Group has $147.5 million in cash and cash equivalents, up from
$133.6 million previously. This was primarily attributed to dividend income from its joint
ventures upon the TOP of three joint development projects, namely The Parc Condominium,
CityVista Residences and Grange Infinite.

The Group’s net debt/equity ratio was 0.72 as at 30 June 2011 as compared to 0.47 as at 31
December 2010. The increase was due to bank borrowings taken to finance the purchase of
land for property development in Singapore and Australia.

Shareholders’ equity has expanded from $320.3 million to $363.1 million as at 30 June 2011.
As a result, net asset value per share rose from 48.56 cents to 54.88 cents.

(Means that if we purchase the shares at 38.5c now, we are buying the NAT at 70% discount!)

Property Development Division

Development properties were valued at S$566.3 million as at 30 June 2011, up from
S$318.8 million as at end 2010. The increase was due to the land acquisitions in
Singapore and Australia.

The Group expects to obtain Temporary Occupation Permit (TOPs) for its wholly-owned
development project, Oasis@Elias before the end of 2011.

Since the beginning of the year, the Group has sold more than 1,100 units of its projects
which included units in Privé, Belysa, My Manhattan, Oasis@Elias in Singapore and 33M in
Australia. To date, Oasis@Elias is 100% sold, Privé is 97% sold, My Manhattan is 34%
sold while Belysa is 100% sold (based on options granted). 33M in Melbourne is 98% sold.
Privé and Belysa are 40%-owned joint venture executive condominium projects. In line with
INT FRS 115, revenue and profits in Privé, Belysa and 33M will only be recognised upon

(If we use the older version of FRS, then we could expected an higher instead of lower earning comparison with 2Q2011)

Depending on market sentiment and conditions, the Group expects to launch its 136-unit
condominium project in Fort Road and its 488-unit DBSS project in Bedok Reservoir in the
coming months.

(I shall check with CES again on the expected launch date for the above two projects and update you)

Construction Division

The Group has substantially completed the construction of its HDB project, Queenstown
RC25 in 2Q2011. As at 30 June 2011, the Group’s outstanding order book for its
construction contracts stood at $295.5 million.

(As construction now is contributing about slighly higher revenue compared to property division, I believe that it will move to Property Development Sector in SGX within next 5 years).

1 comment:

  1. Thanks for the info.
    If buy @38.5c, dividend 4c(last year)
    DY 10.38961038961039


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