Chip Eng Seng 2Q earnings down 67% to $4 mil; acquires Aussie childcare centre

SINGAPORE (Aug 1): Property and education group Chip Eng Seng reported 2Q19 earnings ended June of $3.9 million, down 67.4% from $12.2 million in 2Q18 on lower sales and higher expenses.

For 1H19 ended June, 1H19 earnings came in at $15.2 million, 17% lower compared to $18.4 million in 1H18.

Overall revenue for 2Q19 fell 7.2% lower to $237.4 million from $255.7 million a year ago.

Revenue from property development fell 9.9% to $169.8 million due to completion of Williamsons Estate and High Park Residences in 2Q18 and 1Q19 respectively, partially offset by higher contribution from Grandeur Park Residences and Park Colonial.

Revenue from construction fell 10.3% to $44.8 million. This was largely due to lower revenue recognised from Tampines N6C1A/1B and Woodlands N1C26 & N1C27 which were completed in 2H18. The decrease was partially offset by revenue recognised from the two Bidadari projects and Sengkang N4C39 & C40, which are in their active stage of construction.

The drop in overall revenue was partially offset by revenue of $3.4 million from its new education business segment and a 14.5% increase in its hospitality segment to $17.6 million.

As cost of sales declining 2.4% to $194.3 million, 2Q19 gross profit came in at $43.1 million, 24% lower than a year ago.

Administrative expenses increased 24.5% to $21.9 million while finance costs widened by 64.8% to $16 million.

As at end June, cash and cash equivalents stood at $316.8 million.

In a separate filing, Chip Eng Seng announced it has acquired Tarneit West Childcare’s childcare centre business in Tarneit, Australia for A$3.5 million ($3.3 million).

The childcare centre is currently operating under the “Kool Kidz” franchise, which will be terminated once the acquisition is completed.

Chip Eng Seng intends to engage the services of its 70%-owned subsidiary, White Lodge Education Group Services, to manage and operate the business.

The group intends to fund this acquisition via internal cash resources.

Shares in Chip Eng Seng closed at 70 cents on Thursday.