Chip Eng Seng

[revelationofpyramids]

Look at its past records. I think its good. Expect Div per share of 3-4ct for FY13 and 4-5ct for FY14 but if they book Alex Central shops in 2014, then maybe a big dividend payout? And bonus?

This company is generous. Proven by the past record.

[revelationofpyramids]

Another good dividend payment by Chip Eng Seng. Just declared 4ct. Look at its history of dividend:

2014: 4ct
2013: 4ct
2012: 4ct
2011: 4ct
2010: 3 ct

And 2014 will be bumper year for CES. EPS is going to surge to more than 30ct! What will the dividend for 2015 be? 6ct?

[Ray168]

Yes, very good track record of dividend paid. In fact, its dividend pay-out ratio is <0.4.

Another good dividend payment by Chip Eng Seng. Just declared 4ct. Look at its history of dividend:

2014: 4ct
2013: 4ct
2012: 4ct
2011: 4ct
2010: 3 ct

And 2014 will be bumper year for CES. EPS is going to surge to more than 30ct! What will the dividend for 2015 be? 6ct?

[yawnyawn]

From CES FY 2013 presentation slides,

TOP for Belysa, 100 Pasir Panjang and My Manhattan expected in 1H 2014 and Belvia in 2H 2014

Alexandra Central will TOP in 2014 too. NAV increased from 71c to 77.1c.

It is really looking good for CES in 2014. I am also pretty satisfied with the 4c dividend. I hope to see a special dividend being paid out in 2014

[Ferns]

I took a brief look at the financial ratios. Should there be a cause of concern that the DE ratio is on the rise?

Or is it normal for construction/property businesses?

[yawnyawn]

I took a brief look at the financial ratios. Should there be a cause of concern that the DE ratio is on the rise?

Or is it normal for construction/property businesses?

From AR2013,

Borrowings
Total borrowings grew from $461.8 million to $768.5 million on the back of loans taken up to finance property development projects and for the purchase of investment properties. The increased borrowings will also be used to fund working capital purposes during the current financial year.

CES bought an investment property at Chin Swee Rd. Cash flows from the various projects will be coming in over the next 2 years as they TOP and loans will be repaid. The problem is with Fulcrum where sales have been slow and with TM in Australia as I understand there are some issue with the demolition of existing building.

I think Sumer had an article in nextinsight which gave a good update on the company's recent AGM.
http://www.nextinsight.net/index.php/sto...-and-spore

Yes I think it is normal for developers to use OPM to purchase land banks and repay them when project TOP. What matters is the project sells well and they earn a good margin on it.

[greengiraffe]

I took a brief look at the financial ratios. Should there be a cause of concern that the DE ratio is on the rise?

Or is it normal for construction/property businesses?

From AR2013,

Borrowings
Total borrowings grew from $461.8 million to $768.5 million on the back of loans taken up to finance property development projects and for the purchase of investment properties. The increased borrowings will also be used to fund working capital purposes during the current financial year.

CES bought an investment property at Chin Swee Rd. Cash flows from the various projects will be coming in over the next 2 years as they TOP and loans will be repaid. The problem is with Fulcrum where sales have been slow and with TM in Australia as I understand there are some issue with the demolition of existing building.

I think Sumer had an article in nextinsight which gave a good update on the company's recent AGM.
http://www.nextinsight.net/index.php/sto...-and-spore

Yes I think it is normal for developers to use OPM to purchase land banks and repay them when project TOP. What matters is the project sells well and they earn a good margin on it.

CES is experienced with Melbourne developments and still run into such problems. I think their experience is probably tip of the iceberg and with more cash up investors venturing Down Under, we can expect more of such disappointments coming through as time progresses.

I will stick with St****** on SGX for exposure to Aussie developments.

[revelationofpyramids]

Not to worry abt CES debt, it is very common among developers. Risk in Singapore is low as buyers cannot default easily and also of progressive payment to developers they collect quite a bit by the time the project is say 50% completed. Even if buyers default the developer would have collected 50% of the money so even a 50% drop in property prices, developers are already covered. Also many of CES projects have got high level of sales except for Fulcrum (which is not a big project) so risk to CES is manageable.

Situation is different in Australia where buyers only pay 10% and then devlopers have to borrow for construction cost till TOP to collect balance from buyers. That's why CES is not developing Victoria Street yet as it's a big project, unless they can get TM off to high level of completion of construction. Otherwise if they take on 2 sets of big construction loans and then something bad happen and the banks call on the big loans they are caught.

I think the TM neighbour is making things difficult for CES and it was not expected by management.

[Ray168]

One way to check if the company can pay its loan is to look at Interest Cover ratio (>4X)

For CES, it's ICR is double digit, i.e. 42X (FY13).

Hence, I think it is very safe.

Not to worry abt CES debt, it is very common among developers. Risk in Singapore is low as buyers cannot default easily and also of progressive payment to developers they collect quite a bit by the time the project is say 50% completed. Even if buyers default the developer would have collected 50% of the money so even a 50% drop in property prices, developers are already covered. Also many of CES projects have got high level of sales except for Fulcrum (which is not a big project) so risk to CES is manageable.

Situation is different in Australia where buyers only pay 10% and then devlopers have to borrow for construction cost till TOP to collect balance from buyers. That's why CES is not developing Victoria Street yet as it's a big project, unless they can get TM off to high level of completion of construction. Otherwise if they take on 2 sets of big construction loans and then something bad happen and the banks call on the big loans they are caught.

I think the TM neighbour is making things difficult for CES and it was not expected by management.

[CityFarmer]

Developers are still producing good profit, especially those smaller ones...

(not vested)

Chip Eng Seng's 1Q earnings surge more than fourfold to $21.6 mil

Chip Eng Seng Corporation said on May 8 that earnings for 1Q2014 ended March rose more than fourfold to $21.6 million from a year ago. Group revenue also grew 51.7% y-o-y to $197.8 million during the quarter, boosted by higher revenue from both its construction and property development business segments. The construction division reported a 9.6% increase in revenue to $71.7 million from new and ongoing projects in Tampines, Jurong West, Yishun, Bukit Batok and Bukit Panjang. Revenue from the property development business rose 95% to $125.1 million after its commercial project 100 Pasir Panjang obtained TOP in March.

http://www.theedgesingapore.com/the-dail...6-mil.html#