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Falling property sales dent Chip Eng Seng profit
Oasis@Elias and My Manhattan dod not contribute significantly
The Straits Times - February 23, 2012
By: Esther Teo
NET profit at construction and property firm Chip Eng Seng fell 28 per cent in the fourth quarter on declining real estate sales.
Earnings came in at $28.8 million for the three months to Dec 31 while revenue decreased 58 per cent to $57.5 million.
Net profit for the full year dipped 29 per cent to $123.7 million on revenue that fell 25 per cent to $360 million.
The property development arm posted a 93 per cent drop in quarterly revenue due to Oasis@Elias making no further contributions after it was completed in September last year, Chip Eng Seng said in a statement yesterday.
The My Manhattan project in Simei also did not contribute significantly as the construction progress had not reached its active stage, the firm said. The project was only 43 per cent sold as at Dec 31.
Chip Eng Seng also recorded $2.7 million in losses from its share in associates in the quarter compared to a share of profit of $12 million in the same period in the previous year.
This was because completed joint-venture development projects no longer contributed to the bottom line.
The losses were mainly from new joint development projects and its associates in Vietnam.
Similarly, construction revenue in the three months decreased 26 per cent to $52.2 million due to existing projects being completed.
In view of the slowdown in the residential property market, the firm said it will continue to be selective in expanding its landbank.
It has been diversifying into other property-related businesses as well as increasing its presence overseas.
It plans to develop a 450-unit hotel with shops on a site in Alexandra Road it won in a government tender last December.
It also acquired a commercial building in Melbourne in September.
The firm will launch a 128-unit freehold condominium in Fort Road in the coming months.
Earnings per share for the year fell from 26.42 cents a year ago to 18.68 cents, while net asset value per share was 62.96 cents, up from 48.56 cents.
Chip Eng Seng shares closed up one cent at 49.5 cents yesterday.