Chip Eng Seng   

Awarded More Contracts = No longer cheap

Time	Last	Volume	Buy/Sell
15:09:27	0.505	10,000	Sell Down
15:09:18	0.505	20,000	Sell Down
15:06:09	0.505	170,000	Sell Down
14:42:53	0.505	5,000	Sell Down

12:00:22	0.510	130,000	Sell Down
11:56:52	0.510	50,000	Sell Down

based on percentage %, the sell down is quite in a massive quantity

 

All the construction companies have reported bullish profits and their projections for fy2008 is even more bullish.  The latest is Koh Bros.  At this rate, their NAV would be raised much higher and of course their share prices too. Noted that most are giving out dividend only in May, wonder is this a tactical move to maintain their stock values ?   

 

These projections by analysts are very weak.  CES is the construction company as well the property developer. (one pocket to another) Their margins should be much more than pure construction company or property developer.  Share holders should question CES on their profit margins for construction.  Hope they are not practising creative financial reporting like most construction companies do.  Ang Mo invested their shares at 79 cents, surely not expecting them to make a lost.  Come on common sense lah  

 

Taken from Article within The Business Times 

Westcomb Financial Group, Feb 22

Revenue increased 21.9 per cent in FY07 to 201.2 million, contributed mainly by a 19.0 per cent increase in revenue from the group's construction projects to $161.6 million and a 37.3 per cent increase in revenue from the group;s 100 per cent owned property development business to $37.9 million.

Provided $12.3 million foreseeable losses for construction business, resulting in the construction segmental loss of $10.6 million.

The foreseeable losses are provided based on revised budget, which we believe is for project budgeted earlier such as the The Parc and CityVista Residences, to take into consideration the increase in construction costs for labour, materials and overheads.

We consider this upfront provision to be prudent and believe construction earnings will be fairly stable going forward, barring further hikes in construction cost.

Profits after tax increased to 242.0 per cent in FY07 to 50.3 million mainly contributed by share of profits from associates' property development projects at The Suites@Central, CityVista Residences, The Parc Condominium and Grange Infinite.

Net profit came in lower than our expectation mainly due to differences in recognition assumptions for CityVista Resudences and Grange Infinite. We have made adjustments to our recognition assumptions, which did not have any material impact to our RNAV valuations, for  FY07-10.

Order books stand at $684 million: Existing order books will the take the group through to 2011, Margins are expected to improve in FY08-09 as construction work for projects with higher margins has begun.

We believe Chip Eng Seng has the capacity to tender for another $300 million worth of high margin jobs.

Maintain "buy" recommendation with price target of $0.78: We have increase our top line estimates by 45 per cent and 40 per cent for FY08 & FY09 respectively from recognition of construction revenue from The Parc, Grange Infinite and CityVista Residences. We have also factored in contract wins of $200 million and $100 million for FY08 & FY09 respectively for its construction business, providing catalyst to share price.

 We value Chip Eng Seng using sum-of-parts valuation methods.,valuing its property developments and construction business at 10x FY08F construction earnings.

 

 

With rally last night at DJIA and good news, it would be interesting to see the performance of this counter on Monday.

 

By Phillip Securities:

Chip Eng Seng announced results. Revenue up 19% to S$161 million, and net profit jump a staggering 242% to S$50.3 million. That's only half the story. Construction costs surged 31.5% to S$200 million. Labor, materials and particularly sand has eat into the profitability. In addition to that, administrative and finance cost rocketed by 111.5% and 151.2% respectively.

Reasons for the massive jump in profits.
* S$4.6 million interest from loans to associates
* S$6.9 million revaluation gain from property investment
* S$51.9 million from joint property development

But contribution from core business is a paltry S$0.6 million. If construction is booming, then Chip is obviously not making money from the boom, I really question if they should seriously reconsider a change in industry. Property development seems to be doing a good job for them, and I applaud the prudence for choosing to develop properties via joint venture. However, a rising tide raises all ships. Be careful when the tide change.

 

My opinion is that it should be at least a 80cents-$1 counter. Poor sentiment is hurting this counter quite badly.

 

Is DBS covering the stock? Anyone would share their opinions on the price projection? 

 

Singapore winning the bid for the Youth Olympics 2010 is a BIG Boost to our Construction, Infrastructure and Hotel industries.  The win re-assure and add a new dimension to all these industries.  Mid-term should be excellent, of course without the US nonsense. 

 

ChipES financial statement out.

http://info.sgx.com/webcorannc.nsf/0357d11048060bb84825735f0028e25b/3160cf15300020f6482573f5003901fc?OpenDocument

 

hmm...when they issuein dividends? by right if a co. were to give out dividends, px will shoot up b4 tat rite?

 

market now at neck to neck junction,,,,,,,,uncertain perior,,,,,im not going to accum from now bec im believe the trading range will be 565cts to 585cts,,,,,,and 56 and 59 will be short live cos alot buyer and seller come out.........my small portion just for further profit,,,,,,,,if down sharply im going to buy more,,,,,,,,,,uncertain perior,,,,,,,,,,,,zzzzzzzzzzzzzzzzzz

 

govt mentioned building some temporary facilities for youth sports... temporary could mean easily dismantled/demolished and at low construction cost. Could be some temporary stagings and struts involved there. 

 

So today after clinching the Youth Games, would CES benefit from it? I believe so.

 

I am very disappointed with CES.  $50 million profits is way below my expectations. However $50 million profits out of $200 million turnover is 25% is reasonable.  This is in line with what was  reported  previously that due to high raw materials cost, profits will fluctuates between 20% - 30%.   CES EPS of 8.03cents and giving up to shareholders 1.75 cents (about $14M) is again reasonable.  Going forward, if CES continue at this rate till 2012, the NAV would have reach 60 cents.  Maintain my target of $1.00, accumulate on weakness.

 

 

Louis,
You have been and always will be a good entertainer.  Keep it up.
I am still holding onto CES as I believe that construction companies will do well for the next few years. My view only.

 

for those still hold tis baby dont worry,,,,the management not kiasu go to tender casino,,,,,waste time end out looser like yongnam,liangbeng,,,,,ces noe cannt fight with oversea multi nation construction grp and semb corp........oversea like malaysia johor,,,,,china ,,,,vietnam,,,better future,,,,,now they on hand proj all nearly finish,,,,,,,,,i thing they going to do big proj link with big boy,,,,,so i still like ces,,,,, why i sell away bec east wind change to west wind when thing turn uncertain,,,,,,take profit first,,,,,,,, im still thinking that they relay ann just want to recr bonus issue,,,,,but too sad dun have 

 

Hi Louis, glad to hear u unload earlier on.. but i m sure alot of newbies or traders went in seeing ur call have yetto unload hoping for the so call big cheong becos of the imaginary "fantastic dividend payout" and contradictory bonus issue...guess they have to hold on to this baby for quite some time..

luckily I am not vested..

 

arbitrager,,forgot to tell you that im out yesterday morning 59cts,,,,too bad after i sold out all my ces than it went up to 60cts,,,,,,im out at 1127am,,,,,,,,,,,,my remiser ah moh never reply me she was out of bound,,,,,,and tis morning im hightlight morning is a good chance to sell that i was posing at other,,,,,,,,,,,,,im justwant to keep low porfile,,,,,,,,,i just sell in strange

 

Hi Louis,

Did your ang moh remiser get back to you today to ask u unload ur CES since the dividend is not fantastic and not bonus issue???

Seems like alot of traders kanna burnt by this counter..