Chip Eng Seng pares H2 loss to S$31.6m as revenue rises

PROPERTY player Chip Eng Seng stemmed some losses in the second half of the fiscal year 2021 ended December, paring its H2 net loss to S$31.6 million versus S$56.7 million in the comparable year-ago period. It registered a net profit of S$99,000 in H1.

Loss for the full year came in at S$31.5 million, versus a loss of S$81.1 million in FY2020.

The improved performance in H2 came chiefly on the back of a 28.2 per cent year-on-year lift in overall revenue to S$493 million from S$384.7 million, owing to higher topline contributions from the construction, hospitality and education divisions. These were, however, partially offset by lower contributions from the property development segment.

Cost of sales in H2 was up 22.2 per cent to S$432.2 million from S$353.8 million.

Consequently, gross profit nearly doubled to S$60.8 million from S$30.9 million, thanks to lower one-off non-productive Covid-related costs.

Chip Eng Seng's board has proposed a first and final dividend of S$0.02 per ordinary share, unchanged from the dividend paid out last year. The dividend, if approved at the Apr 22 annual general meeting, will be paid out on or around May 20.

Over the course of the year, Chip Eng Seng recognised an impairment loss on investments in joint ventures of S$14.4 million due primarily to its investment in Guangzhou Yuanda Information Development Co.

The group noted that the impairment was provided as regulatory measures rolled out in China in July last year targeting the tuition industry had adversely impacted the education business outlook in the country.

The impairment loss on investments in joint ventures and lower government grants related to the Covid-19 pandemic were, however, mitigated in part by the higher gross profit and lower fair-value loss on investment properties.

For its property development business, Chip Eng Seng said the prices of private residential properties gained 5 per cent in Q4 2021, compared to a 1.1 per cent increase in the preceding quarter. Despite the stellar record in 2021, the group said sales of new private homes are expected to ease in 2022 on the back of the latest property cooling measures and a limited pipeline of launches.

It will continue to exercise caution, and be "more selective" in replenishing its land bank for its property development business in Singapore and overseas, added the group.

For construction, the group will continue to leverage its expanded capabilities in the building, infrastructure, construction and construction project management business and aim to transform its construction business through innovation and technology, which will in turn increase efficiency and productivity, and enhance its competitive edge.

As far as the hospitality business goes, Chip Eng Seng said Singapore's increasing vaccination rate will continue to facilitate the progressive easing of domestic and border restrictions, which will support the recovery of consumer-facing sectors and alleviate the labour crunch.

Shares of Chip Eng Seng ended Wednesday flat at S$0.44.