Chip Eng Seng

Hi guys,

would like to ask about revenue recognition in the financial statement.

as per the latest 3q 2014 fin statement, CES states trade receivables of 240mio approx.
the footnote clarifies that this receivable is for progress payments owed for finishing the residential projects.

however, when a residential projects TOPs, developer is owed both TOP payment of 25% , and about 1 year later, 15% payment for Completion date payment.

So is it both the above payments that are recognized, or just the TOP portion.

thanks.

Q3 results for CES was much better than my earlier forecast of ~9 cents.

CES seems to be set on track to achieve more than 35 cents for the whole of 2014...

(15-09-2014, 11:25 AM)Curiousparty Wrote: FY14 full year forecast EPS ~ 34 cents
Q1 & Q2 ~ 6 cents
Q3 - 9 cents (EPS)
Q4 - 19 cents (EPS)
NAV gain for FY14 ~ 34 cents
NAV at the end of FY14 ~ $1.11

FY15 full year forecast ~ 15 cents (EPS gain)
But NAV should increase by a further ~25 cents (revaluation gain from Alex hotel)
NAV gain for FY15 ~ 40 cents
NAV at end of FY15 ~ $1.51

Recurrent income ~ 3.5 cents per annum.
Construction segment ~ 3 cents per annum.

Property counters are usually valued as a discount to their RNAV ("potential realizable NAV" if all known/pipeline projects are sold) with some consideration given to the amount of recurrent income or "regular dividend". The most important factor is still leadership and "friendliness to minority shareholders".

If the regular dividend is increased to 6 cents, CES would likely stabilize at around ~$1.20 (i.e. 5% yield), with some fluctuation depending on the property development profits.

Current RNAV of CES is estimated to be more than $2.00, of which $1.50~$1.60 has all been "locked in" as the projects are almost fully sold off.

Of course, those who don't feel comfortable holding CES should just sell off so that u can sleep better at night
Having a peace of mind is always better than anything else

But, now we know why company still bought back up to 90 cents..

"Following the recent fund raising exercise from the issuance of bonds, the Group is now better positioned to build a larger
investment property portfolio by acquiring buildings with good rental yields and/or re-development potential. The Group will exercise
prudence when making such investment decisions."

(extract from Q3 2014 results)

Assuming that CES were to acquire another investment property (probably at or near CBD Australia) with a yield of ~8%, the total recurring EPS will exceed 4 cents (easily).
Once the portfolio has stabilized, CES can easily pay out 6 cents regular dividend. (delicious)

List of investment properties
1. Alex Hotel
2. San Centre
3. St Kilda
4. New property near/at CBD (TBC) - likely to be in Australia. With the falling Aussie dollar, it is good time to buy up office buildings in Australia..
5. Ubi HQ

Forumers from Next in sight have explained that CES is unlikely to bleed much from the delay in TM project.
In any case, there seemed to be some news that the demolition work has begun!

Profit from TM is probably around $50mil. Carlton which might be launched in early part of FY2015 might rack in twice the amt of profit of TM.

*********

http://www.nextinsight.net/index.php/for...=150#21257

"I don't think TM will turn in zero profit. Cost of construction delay is mainly restricted to the holding cost for the land. In this case, it's an approximate A$20m cost - not the kind of figures we see in Singapore. Meanwhile, CES would be collecting interest from the 10% downpayment received from buyers, and with 98% of the units sold, this should be quite a bit. In fact, assuming gross total sales is A$300m, that 10% amounts to A$30m, which is more than enough to pay for the land cost.

Since construction has not begun, I do not know of any other major costs involved that would lead to any serious bleeding for CES. A slight paper cut is all i suspect the injury is. "

"Meanwhile, one possible positive catalyst could be the peaceful solution to the Tower Melbourne dispute. There is some talk (on skyscrapercity forum) that demolition works have resumed, though I am not sure how true it is. However, perhaps a more reliable source is a short line found in this article:
urbanmelbourne.info/development/2014/11/...-begins-construction


https://urbanmelbourne.info/development/...nstruction

Hidden towards the bottom is this:

“Some readers will know that one of the CBD Four, Tower Melbourne, began demolition in excess of a year ago only for CEL Australia to be mired down in legal wrangling with a fellow Singaporean developer controlling the adjoining site. With that matter now settled Tower Melbourne is expected to begin demolition once more shortly.”

passing by ALex Centre this morning.
The surrounded working fence has been removed.
working is doing the planting.
how far from it opening? or TOP? Before Christmas?

CES is still languishing below 90 cents.

Mr Market seemed to have priced in the Q4 EPS Gain of 20 cents or so.

FY2015 EPS might drop below 10 cents??

If the Hotel is recorded at cost on CES' book, will it book revaluation gain?

If no, then the NAV of CES will remain the same even with the commissioning of the hotel? So, there is limited upside gain in NAV?

Is my understanding correct ? tks.

don't forget their recurring income of the San Center and the Kilda road in Melbourne office.
in addition, there is progressive billing contribution from the Yishun Nine Residence and Junction 9 project next year. Also, CEL is going to launch Fulcrum soon, this will contribute to 2015 as well, I believe - progressive billing.

2016 we should have the hotel contribution, Yishun, and Fulcrum as well.

We should see more project news after the ALex Centre - like the Melbourne Williamsons road, Melaka Raya, or the CUB Melbourne, or even the Fernvale, or maybe the Perth Highway?

97 cents seemed to be about the highest CES can go...

Perhaps Mr Market is already "pricing forward" the FY15 EPS...

(21-11-2014, 10:29 AM)RT Knight Wrote: don't forget their recurring income of the San Center and the Kilda road in Melbourne office.
in addition, there is progressive billing contribution from the Yishun Nine Residence and Junction 9 project next year. Also, CEL is going to launch Fulcrum soon, this will contribute to 2015 as well, I believe - progressive billing.

2016 we should have the hotel contribution, Yishun, and Fulcrum as well.

We should see more project news after the ALex Centre - like the Melbourne Williamsons road, Melaka Raya, or the CUB Melbourne, or even the Fernvale, or maybe the Perth Highway?

(25-11-2014, 06:00 PM)Curiousparty Wrote: 97 cents seemed to be about the highest CES can go...

Perhaps Mr Market is already "pricing forward" the FY15 EPS...

CP : now ya have a 180degree change of opinion, talkin' about Mr. Market pricing forward the EPS, something which I had already mentioned a few months ago when I started posting in CES thread... now share price dun move and you change your tune, haha what can I say except LOL...

http://www.valuebuddies.com/thread-676-p...l#pid89272

Anyways big money is coming in next financial report so possible rerating then. In the mean time risk such as cooling SG markets and possible peak in AUS markets are probably putting the dampener on this stock. Remember the gearing is still pretty spectacular compared with other prop. counters, some of which have already managed to reduce gearing to zero or very low level.

LOL ...司马迁之心 。。。