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Chip Eng Seng Q4 net profit down 2.4% on higher administrative costs, lower income

HIGHER administrative expenses and lower income from other sources dampened results for construction and property group Chip Eng Seng in its fourth quarter.

Net profit fell 2.4 per cent to S$14.5 million from the preceding year, the group said in a Singapore Exchange filing on Tuesday evening.

For the three months ended Dec 31, revenue grew 2.4 per cent to S$256.1 million from the year-ago period.

Its property development and hospitality divisions recorded stronger performances.

Overall company revenue was, however, dragged down by the construction and property investment arms, which saw revenue decline due to a weaker order book and the divestment of an office building in Melbourne respectively.

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The group's other income fell by 89.3 per cent in the fourth quarter due to an absence of fair-value gain on investment properties and net foreign exchange gain.

It also recorded higher expenses due to depreciation charges, fair-value loss on investment properties, and foreign exchange loss.

As a result, earnings per share dipped to 2.34 Singapore cents from 2.4 Singapore cents in the preceding year.

Chip Eng Seng said it will continue to look for opportunities to further replenish its land bank in Singapore. In Australia, the launch date for its South Melbourne project remains on track for the second quarter of this year.

For its construction division, the order book slipped further to S$397.1 million as at end-2017, from S$458.3 million a quarter ago. Its recent win of a S$168 million contract from the Housing and Development Board will, however, bump up its order book in the first quarter of 2018, it said.

In hospitality, the group expects the occupancy of its Singapore hotel Park Hotel Alexandra to be maintained, with higher international visitor arrivals expected in Singapore this year. It also expects to complete the acquisition of the Mercure & Ibis Styles Grosvenor Hotel in Adelaide next month.

The group also recorded improvements in its investment properties in Singapore, though rental rates remain soft, it said.

Chip Eng Seng's board has declared a first and final dividend of four Singapore cents for each share, the same amount it gave last year.

The counter rose 2.5 cents, or 2.7 per cent, to close at 95 Singapore cents on Tuesday before the results announcement.

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