You are here

Chip Eng Seng Q2 earnings cut by two-thirds amid foray into education

MAINBOARD-LISTED property developer Chip Eng Seng Corp plans to expand its education arm with an Australian pre-school, the company said on Thursday, even as second-quarter results showed revenue declines in its core real estate and construction businesses.

Chip Eng Seng turned in a net profit of S$3.99 million for the three months to June 30, less than one-third of the S$12.2 million that it earned in the year-ago period. Group revenue fell by 7.2 per cent year-on-year to S$237.4 million, with hospitality the only division to post growth.

Amid lower gross profit, the group also felt the pinch from a jump in administrative expenses, on the inclusion of its new education division and forex loss on the softer Australian dollar, while finance costs nearly doubled on higher borrowing costs on development expenditure.

Chip Eng Seng said in its financial statements that turnover from property development fell on the completion of Williamsons Estate and High Park Residences in previous quarters, while construction revenue was down from projects that were done in the second half of 2018.

Meanwhile, sales for the Park Colonial residential development stood at 82.6 per cent, while 97.4 per cent of Grandeur Park Residences units have been moved, Chip Eng Seng noted. Parc Komo, which was launched in May 2019, has been 38.4 per cent sold.

Your feedback is important to us

Tell us what you think. Email us at

"The group will remain selective in replenishing its land bank and adopt competitive pricing strategy in view of the rising supply in the pipeline and slow sales in new launches," Chip Eng Seng said of the Singapore property development business in its outlook statement.

The construction order book was flat at S$388.4 million, against S$388.8 million as at end-March, as new pre-cast component contracts were offset by revenue recognised.

Earnings per share stood at 0.64 Singapore cent for the three months, down from 1.97 Singapore cents in the same period the previous year, while net asset value was 128.75 Singapore cents a share, against 130.56 Singapore cents as at Dec 31, 2018.

Net profit for the six months came in lower by 17 per cent at S$15.2 million, despite a 14.8 per cent jump in revenue to S$374.1 million.

No dividend was recommended for the latest quarter, unchanged from the previous year.

Separately, Chip Eng Seng has announced a A$3.5 million (S$3.29 million) agreement to buy a childcare centre in the Melbourne suburb of Tarneit in Australia.

The company had reported S$5.11 million in revenue for the half-year from its new education division, which comprises a chain of pre-schools and Invictus International School in Singapore.

"Subject to regulatory approvals being obtained, the group's Invictus International School will open a primary school and a kindergarten in Hong Kong and Repton Schoolhouse will open an international kindergarten in Singapore before the end of the year," it said in its results.

The group now plans to bring the 130-pupil centre, which is run under the "Kool Kidz" franchise, into the fold of its 70 per cent-owned subsidiary White Lodge Education Group Services.

The planned purchase, which would be funded with internal cash resources, "presents the company with the opportunity to extend its footprint in the childcare business into Australia", Chip Eng Seng said. It cited its property development and hospitality operations in that market, as well as "long-term objective to own more pre-school facilities" there.

Chip Eng Seng closed flat at S$0.705 on Thursday before the announcements were made.

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to