Chip Eng Seng reports 3Q19 net profit tumbled 74 percent

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Chip Eng Seng reported Tuesday its third quarter net profit tumbled 74.3 percent on-year to S$4.68 million on a lower contribution from property development, partly offset by higher education, construction and hospitality contributions.

Revenue for the quarter ended 30 September dropped 15.8 percent on-year to S$267.16 million, the construction and education company said in a filing to SGX.

Income tax expense was S$5.94 million in the quarter on deferred tax assets not provided on losses, swinging from a tax credit of S$253,000 in the year-ago quarter, the company said.

Depreciation increased 31.5 percent on-year to S$6.97 million in the quarter on changes to accounting for leases, the filing said.

Property development

Property development revenue declined 21.9 percent on-year to S$201.03 million on the completion of High Park Residences in the first quarter of 2019 and the year-earlier disposal of the 150 Queen Street, Melbourne, property, Chip Eng Seng said. That was partially offset by higher contributions from the Grandeur Park Residences and Park Colonial projects, it added.

In Singapore, “the real estate industry is expected to be challenging amidst economic uncertainties and substantial pipeline supply ahead. The group will remain selective in replenishing its land bank and will adopt competitive pricing strategy,” the company said, noting it planned to launch its Kampong Java project in the first half of next year.

Construction

Construction revenue rose 4.6 percent on-year in the quarter to S$41.3 million, mainly on higher revenue from Bidari C8 and C9 and Sengkang N4C39 and C40, which are in their active stage of construction and higher revenue from Precast, the filing said.

Chip Eng Seng said its orderbook fell to S$349.2 million, from S$388.4 million in the previous quarter, on progressive billings for existing projects and the absence of new ones.

Hospitality

The hospitality segment posted a 5.5 percent rise in revenue to S$19.2 million on improvement in contributions from Grand Park Kodhipparu
Resort in the Maldives and Park Hotel Alexandra in Singapore, the company said. Revenue from the Australia hotels was relatively stable, the filing said.

“The group expects its hotel and resort in Singapore and the Maldives to continue to benefit from growth in tourist arrivals in these two markets. The group’s proposed hotel at Pirie Street, Adelaide, Australia will be branded as Hyatt Regency,” Chip Eng Seng said. “The hotel is expected to open in early 2023.”

Education

Education revenue climbed 660 percent on-year to S$3.79 million for the quarter, Chip Eng Seng said. The education division includes revenue from White Lodge preschools, its first Repton Schoolhouse and the newly acquired Invictus International School, the filing said.

“Preparations for the opening of Invictus International School’s first overseas kindergarten and primary school in Hong Kong is well underway, pending the grant of the relevant license. Separately, the group’s second Repton Schoolhouse in Bukit Timah and The Perse Singapore elementary school in Upper Bukit Timah are slated to open in January 2020,” the filing said.

For the nine-month period, Chip Eng Seng reported net profit fell 45.5 percent on-year to S$19.92 million on revenue of S$772.41 million, flat on-year.

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