I am starting a new thread on CES, and will migrate some of my previous points about this counter over from the previous thread titled “Guess which SG developer plans to build this Down Under”. I will summarize and update the figures so that they are easy to digest. Meanwhile, below is my first post on this thread:
CES Q3 results released 2 days ago were within expectations. Gross profit booked from Prive was very close to my own estimate (about $1m difference). If my other estimates are as accurate, then CES should look attractive based on fundamentals.
What is positive is that Tower Melbourne is now more than 95% sold. Based on my estimates, the revenue from this project is above A$300m, with potential gross profit of A$30-60m, depending on assumptions. With TM sales crossing 95%, perhaps CES’ huge 1,000-unit project at Victoria Street will be launched soon.
Meanwhile, sales at 9 Residences are gradually increasing, crossing the 50% mark. Junction 9 shops are 91% sold, against my earlier estimate from agents of 95%. Junction 9/9 Residences project is one of the 2 big profit contributors; it can bag more than $125m in gross profit, slightly lower than Alexandra Central’s $140m.
Meanwhile, with TOP dates clearer, my estimates of CES net profit for 2013-6 are as follows:
2013: $41m, EPS 6.3ct, expected DPS: 3-4ct
2014: $94m, EPS 14.5ct, DPS: 4-5ct?
(main contributors: Belvia, Belysa, 100PP (sold units only), My Manhatten)
2015: $128m, EPS 19.7ct, DPS: 5-6ct?
(main contributor: Alexandra Central; almost fully sold; progressive recognition from 9 Residences)
2016: $97m, EPS 15ct, DPS: 5-6ct?
(main contributor: Junction 9/9 Residences; assumed fully sold)
Beyond 2016: Tower Melbourne (95% sold), Victoria Street (not launched), monetization of hotel, purchase of new sites?
For prudence, the above figures do not take into account Fulcrum profits (sales only 11%, but this is still a very profitable project), construction profits, San Centre revaluation if any, unsold units at 100PP, and the revaluation surplus of its hotel at Alexandra. Also, most of the projected profits are already “locked in”, ie, these EPS figures come from achieved sales.
Construction work at Alexandra Central is pretty fast, and if the shops are ready by next year, 2014 could be a bumper year for CES earnings, with EPS of above 30ct.
The above figures show that CES is going to book very good profits consistently from now till 2016, with generous dividends to boot.
These, plus my rather good impression of CES’ management and major shareholder, as well as its past record of bidding for land, selling its projects quickly, and dishing out dividends generously, make CES my favourite 2nd liner prop stock at the moment.