Chip Eng Seng

[Share Investor]

Fair value of Chip Eng Seng is easily more than $1 when Tower Melborurne is completed. Not forgetting that they still have yet to announce plans for office development in Perth.

Tower Melbourne has 581 units. Assuming each unit is sold at $950k, 581 units will give $552 mil. Deducting $170 mil building cost and $25 mil land cost will give $357mil. Of course we have to consider selling cost, tax etc. Assuming 20% overheads and 30% tax, the profit for this project will be $178mil. This translates into approx an EPS of 27 cents.

Am I realistic in the calculation???

Heard about 70% sold.

[revelationofpyramids]

Hi shareinvestor,

I believe your estimates are too high. I went to the sales room in Singapore when it was held here. Because there are several small units, I think a more conservative estimate would be about A$450-500k per unit.

I don't have the percentages sold.

[Share Investor]

Hi shareinvestor,

I believe your estimates are too high. I went to the sales room in Singapore when it was held here. Because there are several small units, I think a more conservative estimate would be about A$450-500k per unit.

I don't have the percentages sold.

I see. I am basing on a news report that the prices start from $875k for a townhouse to $2.2 mil for a penthouse.
If based on $450k per unit, the profit will be just $6.6 mil after deducting land and building cost. If we deduct sales overheads and tax, there will be nothing left.

[revelationofpyramids]

Hi shareinvestor,

Based on A$450k per unit, total sale proceeds is still a respectable A$261m. Also, there is commercial component not added in. But yes, it there are several studio units of very small sizes and low selling prices of below $400k per unit.

The A$170m given by CES could be total cost, or just construction cost. I don't know at the moment.

Its hard to make an estimate at the moment, so all calculations will be just rough guesses. Perhaps we can ask the company for more details during the next AGM.

100PP is intresting. I believe they are selling at above $1,000 psf, compared to land cost of only $463 psf.

[Share Investor]

More share buyback today at 60 cents. Close to NAV. Company feels shares undervalued?

[Share Investor]

Company bought 1,205,000 shares at close to 60 cents today.

[shn]

Based on 3Q12 results, the NAV is 64.81 cents but it has $431,316K worth of development properties recorded at cost. Its 9 month YTD gross margin is 21.9% while net profit margin is 10.7%. I estimate the development properties to be worth about 10.7% to 21.9% more, or 7.0 to 14.3 cents more per share; hence, the NAV should be between 71.8 and 79.1 cents per share. This estimation is crude but it convinces me that CES still have fair amount of meat at the last closing price of 63.5 cents. It also has $335,862k worth of investment property recorded as non-current asset, which I assume the market value to be close to teh book value.

Does anyone else here try to assess its NAV and what number do you come up with?

(Vested)

[revelationofpyramids]

You can refer to Sumer's writeup at NI forum although the website is temp not working. Chip Eng Seng's RNAV is much much higher than your estimate if you add in profits coming in from all its projects plus valuation of its hotel once completed. I think its more like $1.20-1.50. With 100 Pasir Panjang just launched and the shops @ Alexandra going to be launched later this month at $4,000-7,000 psf, the stock looks like got more legs for a bull run. Not to add the huge share buybacks recently.

[Greenrookie]

You can refer to Sumer's writeup at NI forum although the website is temp not working. Chip Eng Seng's RNAV is much much higher than your estimate if you add in profits coming in from all its projects plus valuation of its hotel once completed. I think its more like $1.20-1.50. With 100 Pasir Panjang just launched and the shops @ Alexandra going to be launched later this month at $4,000-7,000 psf, the stock looks like got more legs for a bull run. Not to add the huge share buybacks recently.

Although I am not sumer, I believed his RNAV is based on all the projects undertaken by CES, the RNAV of 1.2 to 1.5 will not be translate into NAV this year, it should be a slow climb towards this by around 2015.

In fact, 2013 projects to be TOP are not sexy (Its JV and not wholly owned by CES) compared to those in 2014/2015.

I didn't calculate NAV, but i did calculate EPS for 2012, after taking account the sales of Manhattan and 33M. According to Q2 and Q3 results, sales locked at Q3 are mainly from 33M, revenue to be recorded at Q4 from property development should be around 240 million from the sales of my manhattan. Assume construction stay constant at 60 million, and a net margin of 10% of total revenue, you will have a NP of 30 million which is about 5cent per shares, so full year eps should be close to 12 cents, to sustain 4 cents dividend, payout ratio is only 30%. Given there is no major capex (No new land bidding), and that they have spent more than 1cents per shares buying backshares, i believe the 4 cent dividend can be sustained, higher than what is predicted by NRA report of 3 cents.

I assume 90% of sales from manhattan will be locked in Q4, if its lower than that, figure will be lower

[revelationofpyramids]

Ya, earnings this year maybe not that great but if CES manages to sell shops@Park hotel it may add a bit more to earnings since construction looks like starting. Showflat for the shops is currently being built. Don't think 100PP will start construction soon.

I like CES becuz it has been bidding for govt land at reasonable prices which shows it is still hunting for new projects. Thats why it went into Australia, and is now selling the crazy high plot ratio project called Tower Melbourne. Imagine A$25.5 million paid for the land can generage A$300 million sales. Wonder if the margins are very fat.

I will not be surprised if CES looks into Iskandar next since it can't seem to clinch land sales in Singapore.