You are here
Chip Eng Seng warns of FY2020 loss due to adverse Covid-19 impact
CHIP Eng Seng is expecting to report a FY2020 net loss in mid-February 2021 as opposed to its FY2019 net profit of S$32.6 million, due to the adverse impact of Covid-19 on its businesses.
The full year net loss incurred will be wider than the S$25.7 million net loss it reported for H1 2020, said the property developer in its profit warning issued on Monday.
In the property segment, Chip Eng Seng's ongoing development projects Grandeur Park Residences, Park Colonial, Parc Komo and Kopar at Newton were affected by the closure of their construction sites for several months in FY2020, which in turn dampened revenue recognition and progressive payments from property buyers.
Kopar at Newton recognised negligible revenue for the period as construction progress was in the initial stages at the end of the "circuit-breaker" period, added the group.
Adverse effects are also expected for contribution of FY2020 revenue from the group's construction business due to delays in project schedules and increased project costs owing to the stoppage and subsequent slow resumption of work.
Further, the group noted slow construction demand over H2 2020, with the bulk of projects secured during the period to commence only in FY2021.
Due to ongoing travel restrictions and low demand for international travel, Chip Eng Seng's hospitality businesses in Singapore, Australia and the Maldives have yet to see any significant recovery in occupancy rates and revenue. This has affected the valuation of the group's hotel properties, said the group.
It also expects to report significant impairment losses in its property investment segment due to an overall decline in occupancy rate and valuation of CES Centre, its office investment property.
In the education segment, operating costs and expenses were incurred from the group's new schools in the pipeline, including Invictus-branded international schools in Singapore, Hong Kong and Cambodia, resulting in negligible FY2020 revenue contribution from these schools.
The group will also be making a provision for doubtful debts with respect to its investment in American Scholar Group, which it said was severely impacted in the face of political tensions between the US and China, further exacerbated by Covid-19.
Shares of Chip Eng Seng closed flat at S$0.44 on Monday.