Chip Eng Seng

SGD232.8m HDB contract for construction building works at Woodlands Neighbourhood --- This is a major contract win that will boost Chip Eng Seng's order book significantly. As at 30 June 2014, Chip Eng Seng's order book stood at SGD548.0m. BUY (TP: SGD1.07)

Net profit margin from construction project is at max 5%.

This new HDB contract can boost EPS by a max of about 2 cents only.

Sharing pix of Alexandra Central project @ Jln Bukit Merah/Alexandra Rd.

Pix taken yesterday 5 Nov 2014. Does it look like it can TOP by next month ?

...

Company results statement gives more specifics abt Alexandra Central :

"With regard to the Alexandra retail-hospitality mixed development, things have been progressing well. Notably, revenue and profit from the Group’s first foray into the retail segment, Alexandra Central, are expected to be recognised upon the development’s completion in the final quarter of 2014.

The hotel arm on the other hand is slated for
completion sometime in mid-2015 and will be
known as Park Hotel Alexandra. The Group has since
started a recruitment drive to for the
management team and other key roles for the hotel.

Quick analysis of CES 9M results:

Q3 gross profit $93.3 from Belvia (lump sum) plus 9 Residences and Junction 9 and sale of remainder units (no mention of Fulcrum). This is a pretty big figure, but as no breakdown was given, can’t tell exactly where it came from. However, my gross profit estimate for Belvia was only $52.8m. That leaves $40.5m for the rest (including construction), which is highly unlikely. In other words, I probably underestimated profit for Belvia, which is good.

Q3 share of profit from associates amounts to $7.9m, which came from remaining share of profit from Belysa. This brings total share of profit from Belysa to about $16.4m (Q2 $8.5m) which is very close to my own estimate of $16.2m.

There are some paper losses due to weakening Aussie dollar. This forex risk is to be expected as the co ventures overseas. Not a big concern.

9M earnings is now $113.1m or EPS of 17.7 ct. NAV surged to nearly 91ct.
My forecast for Q4: gross profit from Alexandra Central could come in at $145m, and another $15m perhaps from other projects/construction. Total: $160m. Net profit (assuming 17% tax rate) would be about $133m or EPS of 20.5ct.

Full year net earnings will therefore hit $246m or 38.2ct, giving the stock a PE of 2.3X. NAV should rise to above $1.10.

Meanwhile, I have seen an ad for a project manager for its Melaka land. Final approval for this land purchase, however, has not been received.