http://www.businesstimes.com.sg/arch...1-profit-dives

Published May 09, 2012

Chip Eng Seng Q1 profit dives

By Kelly Tay


MAINBOARD-listed Chip Eng Seng Corporation Ltd's first-quarter earnings have taken a severe beating, due to a 99.3 per cent year-on-year drop in revenue recognition from its property development projects.

Net profit for the three months ended March 31 plunged 91.7 per cent from the corresponding period a year before, from $52.3 million to $4.4 million.

Chip Eng Seng's total revenue decreased from $144.2 million in Q1 2011 to $49.2 million in Q1 2012 - a slump of 65.8 per cent.

The group said that the decrease was mainly due to the completion of several construction projects and a 100 per cent-owned development project which obtained a temporary occupation permit in the previous year.

Its property development business segment suffered a 99.3 per cent or $82 million drop in revenue for the quarter, due in part to a lack of further contribution from its development pro-ject, Oasis@Elias, which obtained a temporary occupation permit in September 2011.

Chip Eng Seng's other development project, My Manhattan, also failed to contribute to the group's property development revenue in a significant way, since as at March 31, it had not reached its active stage of construction.

Meanwhile, the group's construction division also saw a decrease in revenue by 21.8 per cent to $47.8 million in Q1 2012. The decline was due to the completion and near-completion of several construction projects in 2011.

Chip Eng Seng said that as at March 31, its outstanding order book for its construction contracts stood at $424 million, and that it is "actively tendering" for construction projects.

Earnings per share for the quarter were 0.66 of a cent per share, a 91.6 per cent drop from Q1 2011's 7.9 cents per share.

No dividend was declared for the period.

The group said that it expects the construction of 33M in Melbourne - its wholly owned development project - to be completed in the second half of this year.

It is also targeting to hand over the development units to buyers in Q4 2012, which will enable Chip Eng Seng to recognise 33M's revenue and related ex-penses. To date, the development is 99 per cent sold.

Chip Eng Seng shares closed unchanged yesterday at 42 cents apiece.