Chip Eng Seng posts 173% surge in earnings

Chip Eng Seng posts 173% surge in earnings
Lim Tiam Seng, executive chairman, Chip Eng Seng Corporation Pte Ltd.

CONSTRUCTION and property group Chip Eng Seng's second-quarter earnings surged 173 per cent over last year, mainly owing to the completion of a joint-venture residential project.

The company posted net profit of $18.6 million for the three months ended June 30, up from $6.83 million in the same quarter last year.

The big jump was largely thanks to profit recognition from the completion of condominium development Belysa in Pasir Ris, in which the group has a 40 per cent stake.

The development obtained its Temporary Occupation Permit in the second quarter.

Revenue for the quarter was $123.6 million, up 13.4 per cent from the same period last year.

Of this, $85.1 million came from the company's construction division, which posted a 27.1 per cent increase in revenue from last year owing to stronger contributions from new and ongoing projects in Tampines, Jurong West and Yishun, among others.

Revenue from the property developments division declined 11.3 per cent to $36.8 million in the second quarter.

The division's sales were derived mainly from ongoing developments still in the initial stages of construction, and the sale of remaining units of some completed projects.

In the previous year, sales were bumped up by the progressive recognition of revenue and profit from a recently completed project, My Manhattan.

Earnings per share was 2.9 cents for the second quarter, up from 1.05 cents in the same period last year. Net asset value per share was 80.44 cents as of June 30, up from 77.12 cents as of Dec 31.

The group's construction order book stood at $548 million as at June 30, after factoring in its latest $165 million HDB contract.

The company recorded net profit of $40.2 million and revenue amounting to $321.4 million in the first six months of the year, with property developments overtaking construction as the largest contributor to earnings.

Chip Eng Seng continued to perform well "despite increased pressure arising from a softer property and construction outlook, worker shortages and higher levies", said executive chairman Lim Tiam Seng.

The group will "continue to exercise prudence in expanding its land bank in view of a softening property market in Singapore", it said in a statement yesterday.

The company's first hotel property in Alexandra Road is expected to be completed next year.

Chip Eng Seng shares closed 0.5 cent higher at 81.5 cents yesterday. The results were released after the market closed.

This article was first published on August 7, 2014.
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