Chip Eng Seng

(13-10-2018, 12:36 PM)weijian Wrote: Miss Tang is now chairwoman of CES. With 2 ex-insiders exiting after selling out, she puts in her capable subordinate at OKH as an independent director - Simply great since it seems it follows SGX rules since both OKH and the entity that bought out the founders are different legal entities. Prof Mak will be jumping up and down again.

new ID: http://infopub.sgx.com/Apps?A=COW_CorpAn...e42243a184

Miss Tang is now chairwoman: http://infopub.sgx.com/Apps?A=COW_CorpAn...45a03efe8e

Companies like Japan Foods that aspire to go beyond minimum rules are the exception. I more often observe companies approaching the Code like Asian Micro and Chip Eng Seng.  Asian Micro recently re-designated the nephew of the executive chairman, whose wife is the controlling shareholder, from a non-independent non-executive director to an independent director, citing the reasons that he is not deemed as an immediate family member under the Code and that “his familial relationship does not interfere, or be reasonably perceived to interfere, with the exercise of his independent business judgement with a view to the best interests of the company”. At Chip Eng Seng, a new independent director who was appointed following the change in controlling shareholders is the executive director and CEO of another listed company with the same controlling shareholders – again, this is in compliance with the letter of the Code but arguably not in spirit.


http://governanceforstakeholders.com/201...rossroads/

(06-03-2018, 06:18 AM)weijian Wrote: PROPOSED DIVERSIFICATION INTO EDUCATION SECTOR

http://infopub.sgx.com/FileOpen/Proposed...eID=491713

Opening of their inaugural pre school at Alexandra Central.

OPENING OF THE FIRST REPTON PRE-SCHOOL CENTRE IN SINGAPORE 

http://infopub.sgx.com/FileOpen/Opening%...eID=539253

Provisional Tender Result for Land Parcel at Kampong java Road for Residential Development

Chip Eng Seng Corporation Ltd announced that the Company’s wholly-owned subsidiary, CELH Development Pte. Ltd. ("CELH"), has emerged as the top bidder for a land parcel at Kampong Java Road (the "Site").

On 15 January 2019, CELH had submitted a tender to the Urban Redevelopment Authority to acquire the Site at a tender price of S$418,380,000. The Site has a lease term of 99 years comprising approximately 11,643.3 square metres of land area with a maximum permissible gross floor area of approximately 32,602 square metres. The allowable development is residential, and the Company intends to develop the Site into a condominium project, with approximately 380 units.

The Company will make a further announcement once the Site is officially awarded to CELH.

S$418.38 MILLIONS / 380 UNITS = 1.1 MILLIONS / UNIT lower bound price

Award of Land Parcel at Kampong Java Road for Residential Development

Chip Eng Seng Corporation Ltd announced that on 21 January 2019, CELH Development Pte. Ltd. (the Company's wholly-owned subsidiary) has been awarded the tender for the land parcel at Kampong Java Road (the "Site") at a tender price of S$418,380,000 by the Urban Redevelopment Authority.

The Site is located in an established residential area near Newton Circus, bounded by Bukit Timah Road, Makeway Avenue and Kampong Java Road. It is within walking distance to Newton MRT interchange station and the popular Newton Food Centre. Educational institutions such as AngloChinese School (Junior), Anglo Chinese School (Primary) and St Joseph’s Institution Junior are also in close proximity to the Site and are easily accessible.

Chip Eng Seng reported good results last Friday. Positive for the co: 1. Not only does it continues to dish out one of the highest dividend per share among prop counters, it is able to consistently paying out 4ct per year because of its consistently good earnings. Yield at current price is nearly 5.5%. 2. Its tender for the Kampung Java site was opportunistic and hence a very good buy. At just $1,192 psf ppr paid for the land, it will make a comfortable profit margin based on very conservative ASP of $2,000-2,200 psf. 3. The new major shareholder (Tang), whose family also owns SingHaiYi, has done share buyback at SingHaiYi, helping the stock price to recover after investors sold down the counter. There is a good chance that once disgruntled old-time investors at CES have sold off their holdings, and a share buyback is initiated, a recovery in CES share price could be expected. With an RNAV of above $1.30 and a consistent good dividend payout, the only missing factor for CES is investors' trust in the new shareholder. 4. A sudden divestment of its Alexandra hotel will reap substantial cash and profits.

Meanwhile, the risk factors include its property developments Down Under (but relative to CES' earnings and assets, that's not too substantial) and investors' continued dislike for the new major shareholder.

In CES 2018 Annual Report released a few days ago, I note that in Page 117, it was disclosed that its freehold and leasehold land and buildings were appraised at about $572 million. This compares with its book value of about $330 million (3 items – freehold land, leasehold land and buildings - added up) disclosed in page 115.
These figures imply that there is a revaluation surplus of about $242 million, translating to 38.6ct per share.
Add this to CES’ NAV of about $1.40 per share, we get an NAV of almost $1.80.
I suspect that even the values appraised may also be on the conservative side. For example, CES Centre was bought at $113m and half of the Auckland building costs it $88m. These 2 buildings already add up to $201m, leaving I suspect, a revalued figure of between $250m and $300m for Park Hotel Alexandra. Note I derive $250m-300m for Park Hotel based on the fact that CES still owns various land and buildings apart from those mentioned above. My own estimate is that Park Hotel is worth about $900,000 per key, which will mean a value of $360 million.
All this mean that if we account for a more aggressive revaluation of its assets as well as expected earnings from CES’ 3 Singapore projects (which are largely unaccounted for as of now), CES’ RNAV could easily go above $2.

@Sumeria.. what's your take on CES purchase of the Kampung Java site? How much do you think CES will make from it?

(05-04-2019, 10:22 AM)vbReader Wrote: @Sumeria.. what's your take on CES purchase of the Kampung Java site? How much do you think CES will make from it?

My simplified estimate of CES’ Kampong Java site earnings is net profit of about $140 million, or EPS of 22.3 ct, which is quite substantial and will allow CES to keep dishing out consistent approximate 5% dividend yield based on current share price.

Here is the maths:

Site cost: $418.8m or $1,193 psf.

Construction/finance cost: $600 psf.

Average selling price: $2,200 psf.

Gross profit margin: $480 psf.

Total gross profit: $480 X 350,915 (GFA) = $168.43 million.

Net profit after tax: $140 million.

EPS: 22.3 ct spread over perhaps 3 years.

Three areas of concerns:

1. The company redeemed two bonds earlier as there was a change of control in ownership. The two bonds carried a coupon rae of 4.75% and 4.9% respectively. Then, the company issued another bond to raise $100 m with a coupon rate of 6%. In other words, the borrowing cost is higher.

2. Diversifying into education sector may be a risk as it's a pretty crowded market. The chairman statement also alludes that further diversification into other sectors is on the cards.

3. The assumption of $2.2 k ASP for Kg Java project looks aggressive given the market today.