Hi ateo, yes, CES’ results announced last evening was a surprise. It seems that the bigger than expected Q4 profit could have come mainly from an item that is not too ordinary – the “additional profit from a JV project completed in 2011 of which the development costs were finalized only in 2013”. This alludes to Grange Infinite. Perhaps the JV had earlier set aside a provision for the lawsuit. As it was a JV’s provision, CES probably had no need to mention it earlier.
CES has also started booking some revenue from Junction 9/9 Residences. I suspect the booking of revenue is only for the residential portion, as it would be strange for CES to book Junction 9’s revenue while it did not do the same for Alexandra Central. They could have booked a bit of profits for the residential portion too, but the co is not clear on this.
The dividend of 4ct per share declared was higher than my expectation of 3ct (I did not expect Q4’s surprise item). In any case, it’s good to err on the side of conservativeness.
In yesterday’s report, CES stated that 4 projects will TOP in 2014: Belysa, 100PP and My Manhattan in 1H and Belvia in 2H. Recall that no profit has yet to be booked for 3 of these projects, so 2014 promises to be another good year for CES.
My understanding is that for a mixed residential/commercial project, the progressive profit recognition method applies to the whole project. Hence CES has started to book Junction 9's revenue. As Alexandra Central is hotel/commercial with no residential component, the completion of contract recognition method is used.
The following user(s) said Thank You: sumer, pine, axe
Hi mervynsim, thanks for alerting me. I have Googled and I think you are right. For mixed resi/comm projects, recognition of revenue and profit is progressive, so Q4 includes Junction 9/9 Residences.
Looks like I will have to account for these 2 projects' profits for 2014 onwards then.
Management just uploaded the presentation slides for FY2013.
New information includes 100PP which is 65% sold and Alexandra Central retail component which will TOP in 2014.
It's going to be a huge year for CES in 2014, my estimates are approximately 1.25billion in revenue and 322million in gross profits. This includes revenue from their construction division.
Hi axe, yes you are right, management is guiding for 2014 TOP of Alexandra Central. With CES also booking revenue and profit for Junction 9/9 Residences (instead of my earlier expectation of lump sum booking in 2015 for the retail portion), I am also expecting a bumper year of profits in 2014. My expectation is for a more conservative gross profit of $280-300m. EPS may hit as high as 35ct per share, which gives the stock a forward PE of about 2 times!
Good pick guys. Vested with u. Now let's hope for some strong catalysts for the shares. Will that big buyer return?
Suggest you also look at Heeton. Big discount.
