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Chip Eng Seng sees turnaround with Q2 net profit of S$11.1m

CONSTRUCTION and property firm Chip Eng Seng posted net profit of S$11.1 million for the second quarter ended June 30, a turnaround from its S$2.6 million loss in the year-ago period.

This was on the back of a 16.3 per cent growth in revenue to S$247.8 million, from S$213.1 million, as robust contribution from the property development and hospitality divisions offset lower construction revenue.

Earnings per share for the quarter were 1.79 Singapore cents, compared to a loss per share of 0.41 Singapore cents for Q2 2017. No dividend was declared.

The latest results brought the group's first-half net profit to S$17.2 million, almost three times the S$6.1 million for the first half of FY2017. First-half revenue was S$452.1 million, up 18.9 per cent from S$380.2 million.

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Noting that market sentiment has turned less favourable after property cooling measures in July, Chip Eng Seng said that it "will cautiously replenish its land bank in Singapore".

With no significant construction projects secured in the second quarter and more works done and billed, the group's construction order book declined to S$479.9 million at the end of the quarter, from S$524.6 million a quarter ago.

Chip Eng Seng said that it expected hospitality revenue to improve in the coming months due to better occupancy rates and contribution from recently acquired hotels. Occupancy rates of investment properties in Singapore, Australia and New Zealand are expected to remain stable.

Chip Eng Seng shares closed down half a Singapore cent or 0.6 per cent at 79.5 Singapore cents on Friday before the results release.