Chip Eng Seng reports 3Q18 net profit rose 8 percent on higher property development revenue

A Singapore 10-dollar note Photo by Leslie Shaffer

Property developer and construction firm Chip Eng Seng reported on Friday that its net profit for the third quarter rose 8.4 percent on-year to S$14.28 million amid a “robust” revenue contribution from the property development and hospitality divisions.

Revenue for the quarter ended 30 September rose 50.1 percent on-year to S$320.10 million, it said in a filing to SGX after the market close on Friday.

Property development revenue rose 22.6 percent on-year in the quarter to S$257.3 million on the progressive recognition of High Park Residences, Grandeur Park Residences and Park Colonial, and the sale of property at 150 Queen Street, Melbourne, Australia, Chip Eng Seng said.

Hospitality revenue increased 74.4 percent on-year to S$18.2 million in the quarter on contributions from its island resort in Maldives, Grand Park Kodhipparu Resort, while the topline was also boosted by contribution from two newly acquired hotels in Australia, The Sebel Mandurah and Mercure & Ibis Styles Grosvenor Hotel, it said.

However, construction revenue fell 22.6 percent on-year to S$42.2 million in the quarter on lower revenue recognition from the Tampines N6C1A/1B and Woodlands N1C26 & N1C27 prorjects as they reach completion, Chip Eng Seng said, adding that was partially offset by revenue recognition from two Bidadari projects under construction.

Property investment revenue also fell, declining 23.7 percent on-year in the quarter to S$1.9 million on the absence of rental contribution from 420 St Kilda Road in Melbourne, Australia, which was divested in August 2017, the company said.

The cost of sales increased 51.1 percent on-year in the quarter to S$273.41 million, it said.

Administrative expenses in the quarter increased 35.1 percent on-year to S$23.098 million, while marketing and distribution expenses surged to S$3.93 million from S$226,000 in the year-ago quarter, it said.

For the nine-month period, Chip Eng Seng reported net profit rose 63.3 percent on-year to S$31.43 million, while revenue increased 54.4 percent on-year to S$583.09 million.

Outlook

In its outlook, Chip Eng Seng said Singapore’s private residential prices steadied in the third quarter after the government’s latest round of cooling measures took effect in July.

Since its second-quarter results announcement, the Park Colonial development’s total sale-to-date has risen to 65.1 percent, while Grandeur Park Residences was 96.7 percent sold and the launch of Changi Garden was set for the first half of next year, it said.

Chip Eng Seng said that in Australia, the Melbourne property market was in a “soft landing,” and that it has sold 4.1 percent of the first phase of the Fifteen85 project launched in June 2018, and that it has 20 apartments available for sale at the Williamson Estate project.

In the construction segment, it didn’t obtain any significant projects in the quarter, leading its order book to fall to S$440.7 million at quarter-end from S$479.9 million in the previous quarter, it said.

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