Chip Eng Seng nearly doubles Q1 profit, to S$11.3 million, on condo projects, hotels

MAINBOARD-LISTED real estate player Chip Eng Seng Corp nearly doubled its earnings in the first quarter, buoyed by the lynchpin property development business.

Net profit came in at S$11.3 millon for the three months to March 31, up from S$6.12 million in the same period the previous year, according to financial results out on Monday.

Revenue swelled by 34.2 per cent year on year, to S$267.3 million, driven by increased completion of the Grandeur Park Residences project in Tanah Merah, and Park Colonial in Woodleigh.

Contributions from the hospitality division also rose on quarterly contributions from the Mercure and Ibis Styles Grosvenor Hotel in the South Australian state capital of Adelaide, acquired in March 2018. The Grand Park Kodhipparu Resort in the Maldives also posted revenue gains.

The group's hotels saw overall turnover grow by 19.7 per cent, to S$21.7 million.

These two segments - development and hospitality - made up for a weaker performance by the construction segment, where turnover by fell 10.3 per cent to S$37.7 million, partly on lower revenue recognised from works that were finished in the second half of 2018.

Meanwhile, revenue from the group's property investments was stable year on year.

Chip Eng Seng has also started to recognise turnover from its 70 per cent-owned White Lodge pre-school chain and Repton Schoolhouse - to the tune of S$1.75 million, which was not clocked in the year-ago period. The group said that it plans to expand into middle-school and higher-level education in Singapore, as well as explore early education opportunities abroad.

The group "will exercise caution" in its bids for new projects in Australia, as well as in Singapore, where it flagged a slowdown in property sales amid growing supply, in its outlook statement.

Its outstanding construction order book fell to S$388.8 million, down from S$425.5 million the previous quarter, as no new contracts were won. With competition for Housing Board contracts expected to stay keen, Chip Eng Seng will tender for other public projects when it can, it said.

Earnings per share rose to 1.8 Singapore cents, from 0.99 Singapore cents previously.

The group's net asset value stood at 132.4 Singapore cents a share, against 130.56 Singapore cents as at Dec 31, 2018.

No dividend was recommended, unchanged from the same period the previous year.

Chip Eng Seng shed S$0.01, or 1.28 per cent, to S$0.77, before the results were released.