Chip Eng Seng

27 Nov 2014 13:03 #21341 by potatolover
Replied by potatolover on topic Chip Eng Seng
It is interesting to note that CES has fallen below the last share buyback level by the company at 90 cents..

Will the company start to buy back more again?

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28 Nov 2014 10:31 #21351 by potatolover
Replied by potatolover on topic Chip Eng Seng
Based on the latest announcement from CES, the following news seemed to be inaccurate?

AM I right?

I think it’s a matter of opinion if the stock has priced in Q4 bumper profit. Personally, I think it has, to a certain extent. But I think other catalysts may support the share price or even nudge the stock a tad higher – perhaps a higher dividend or a bonus issue to celebrate the record annual profit.

Meanwhile, one possible positive catalyst could be the peaceful solution to the Tower Melbourne dispute. There is some talk (on skyscrapercity forum) that demolition works have resumed, though I am not sure how true it is. However, perhaps a more reliable source is a short line found in this article:

Hidden towards the bottom is this:

“Some readers will know that one of the CBD Four, Tower Melbourne, began demolition in excess of a year ago only for CEL Australia to be mired down in legal wrangling with a fellow Singaporean developer controlling the adjoining site. With that matter now settled Tower Melbourne is expected to begin demolition once more shortly.”

I am not very sure about the profit margins of Tower Melbourne, but I think a good guess is a gross profit of at least S$50m, based on an estimated A$100k+ profit per unit. I must add this is quite a wild guess, but I relied on CES’ profit figures in Q3 and Q4 2012, when the co reported its earnings from 33M (together with what appear like “smaller” figures from other projects). In those 2 quarters, the co made a gross profit of $99m. If say half of this came from 33M, then the 388 units would have earned CES about S$146k per unit.

Extrapolating that figure to TM’s 581 units would give a gross profit of S$85m, but to be conservative, I would lower this rather wild guess to just S$50m (I have seen others projecting much higher figures).

It would be good if other readers who are familiar with profit margins of Aussie apartments are able to guide us on this matter.

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28 Nov 2014 11:59 #21353 by sumer
Replied by sumer on topic Chip Eng Seng
I think the earlier report on the demolition works resuming was probably based on CES winning the first complaint by the neighbour. It appears that the same neighbour has now applied to a different authority to strike off TM.

As said earlier, for prudence it would be good to put TM (and its other Aussie projects) aside in doing the maths for CES for now.

Personally, I think that CES could win the TM battle as the political and economic fallout of a cancellation would be too substantial. In particular, buyers’ confidence in off the plan projects in Melbourne may be greatly affected, as they fear that what appear to be proper government approvals can still be challenged and a whole sold-out project cancelled. My guess is either the neighbour losing this latest challenge or the authority mediating a win-win outcome.

In any case, I think the market has got wind of this a couple of days earlier (and saw a bit of selling) as this possibility was reported in The Age on Wednesday.

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28 Nov 2014 14:01 #21355 by RT Knight
Replied by RT Knight on topic Chip Eng Seng
Agree on Sumer.
We should put aside the TM, and think of its worst case scenario, which is the TM project will not proceed, and CEL return the Buyer Deposit with Interest and the Queen Street Building keep as a rental income.

I also agree that the case won't be so easy to settle. Still remember the conversation with Raymond, earlier this year, the Queen street building was somehow introduced by his neighbor to him. He purchased it, then plan to develop to TM. Subsequently, a lot of incidents happen, which it is still happening now.

What's wrong to the Chow Family???

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28 Nov 2014 14:57 #21356 by Wiki
Replied by Wiki on topic Chip Eng Seng
From my interpretation, the same neighbour applied for another injunction with a differing reason against the development of Tower Melbourne, after the first application was revoked.

Nonetheless, like what RT Knight has mentioned, any proceeds for TM should be put aside and expectations set for a worse case scenario.

On a positive note for developers with exposure to Aussie or Melbourne properties in particular, Malaysian listed developer UEM Sunrise managed to sell 95% of their 92 storey project in just 2 weeks:

"The developer has sold 895 apartments of the 941 apartments - mostly through its sale ­networks in south-east Asia and China over the past fortnight.

Some 22% of the Aurora Melbourne Central apartments, priced between $395,000 and $1.1 million, were bought by Malaysians, 25% were purchased by Australians, 15% by Singaporeans and the remaining 38% by Hong Kong and Chinese investors."

Hopefully, CES' Carlton Brewery site in Melbourne can proceed without further hurdles and and in time to ride on what seems to be very strong demand for residential properties there before its over.

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28 Nov 2014 18:00 #21358 by RT Knight
Replied by RT Knight on topic Chip Eng Seng
for CEL, I am not worry about the 2015 or 2016 performance. In these 2 particular years, CEL should have 30cents EPS.

2017 is the year that, till date, I don't see any project to be completed. Based on the way of CEL operate, I would expect they should have some to be finished.

Just like Prive, Belysa in 2013; 100PP, Manhattan, Belvia, ALex in 2014.
2015, we should have Alex Hotel.
2016, we have Fulcrum, Nine resi, Junc 9.

What about 2017?
I would believe the company has started some of the project recently, this should be reflect in the coming Annual report or quarterly report.
Remember the company just got the MTN note recently? The fund should be for the coming project?

What could be the next? - Donscaster, Melaka, CUB, Fernvale, Perth West Coast Highway?

I would think that, away from 2017, there is 3 years still. Donscaster project should be able to finish in 2017. Not because it is less issue compare to the CUB project, but also the project is smaller.

For CUB, I would think that could be 2018 or later. The CUB project is larger than the TM project, if TM schedule to be 2018, CUB should be later than that.

Fernvale is EC, based on the history schedule, this should take 4 years since land purchase, expect 2018 or later as well.

Melaka could it be 2017? This is the first time CEL has a project in Malaysia.

Perth Highway? This has been in the land bank since 2010. Seem like it is a hard swollen project to CEL.


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