23 November 2011

Chip Eng Seng, Worth to Invest?

As everyone knows that Singapore is experiencing economy slow down, the government just issued out a projection of economy growth for the year 2012 that the economy growth can only in between 1%-3% growth. While we cannot deny that Singapore is an open economy entity that to be impacted by the global economy circle, we also should look at it in long term whether Singapore can still be in a good position to fight with it.

CES is a company leaded by Raymond Chia. As far as I know, it is undergoing a transition period where the Property Development division start providing greater net profits compared to its construction division. As of current, its order book is having around SGD300++M, which has about 2-3 years profit visibility.

Means while, its property development division is having a slowing down impact due to the recent government efforts to lower down the speed of rising of the private property. Let us read through CES property development division:

- HDB - EC / DBSS: Less Impact on the slowdown as there are still a lot of Singaporean waiting for the opportunity to upgrade their flat to a better condo.

- Private Property: Impact is high. However, we should also look at the execution power of particular property developer on how they can promote and able to sell off the property they have on hand. So far, the take up rate on Simei Property is around 35% which I think is not very encouraging. Nonetheless, it is worth for us to wait through the whole circle to be up again as in my opinion, I like to buy cheap value stock and wait another property circle to peak again. 

- Oversea Property: Australia (Australia is a growing population country). Hence in long run, it is still worth to build more properties there within strategic location such as Melbourne / Perth / Sydney / Brisbane etc. 

In conclusion, if your investment time horizon is long enough (3-5 years), my suggestion is to average down whenever the price is going down, and wait for another property circle to peak again. This advice is for long term investors. 

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