Published February 19, 2009

Chip Eng Seng Q4 profit climbs 9.7%

Revenue saw bigger jump as contribution from construction projects rose 67%


CONSTRUCTION and property development group Chip Eng Seng Corporation's fourth-quarter revenue soared by more than half to $96.8 million, from $60.6 million in the previous corresponding period. But net profit rose by a lower 9.7 per cent to $10.8 million.

Revenue growth for the three months to Dec 31, 2008, was mainly due to a 67 per cent increase in contribution from construction projects to $89.6 million and a 4.7 per cent increase from the group's wholly owned property development project to $6.8 million. This resulted in group gross profit almost trebling to $2.2 million from $783,000.

Share of profits from associates - mainly from joint-venture property development projects - more than doubled to $18.3 million from $6.8 million. But this was partially offset by a fall in 'other income' to $857,000 from Q4 2007's $7.18 million, which came mainly from investment property fair value gain.

The group saw a doubling in administrative expenses to $8.2 million from $4.2 million. It attributed this to higher staff and related cost, fair value loss on investment properties, impairment loss on trade receivables, foreign exchange loss and higher operating cost.

Marketing and distribution expenses were also higher because of expenses relating to a wholly owned development project. Income tax expense also rose to $1.88 million from $1.3 million.

Q4 earnings per share rose to 1.64 cents from 1.58 cents a year ago.

For the full year of 2008, the group recorded a 76.3 per cent increase in revenue to $354.6 million from 2007's $201.2 million.

Net profit fell by 12.8 per cent to $43.9 million. FY2008 earnings per share slipped to 6.66 cents from 8.08 cents.

Cash and cash equivalents rose to $47.9 million from $22.5 million in FY2007. The group's net debt/equity ratio was 0.75 as at end-2008 compared with 0.39 at end-2007 due to additional bank borrowings to finance its [email protected] development project and for investment activities. [email protected] is expected to be launched in the second half of 2009.

Chip Eng Seng's outstanding order book for its construction contracts stood at $698 million as at end-2008, which it said will keep its activities busy up to 2011. The group, which expects to remain profitable in FY2009, said it will remain cautious with its investment in property development, given the slowdown in the global economy and the weakening of the property market.

Its shares closed trading yesterday at 18 cents yesterday, up half a cent or 2.9 per cent.