SINGAPORE (Oct 19): DBS is starting coverage of Chip Eng Seng with a “buy” and target price of $1.18 given the stock of the developer and builder is trading at a substantial discount to RNAV with an attractive yield.
Founded in the 1960s as a construction company, Chip Eng Seng has expanded its scope and scale over the past five decades, gradually diversifying into property development, investments and hospitality businesses. In recent years, the group has been selectively acquiring projects in Singapore and overseas, which is ripe for the picking in FY17-18 as the property market experiences an upturn.
According to a Tuesday report by analyst Carmen Tay, most of the group’s residential projects have substantially been sold and together with a construction net order book of $538.4 million as at end 2Q17, Chip Eng Seng has locked in at least $1 billion in sales which will be recognised progressively, underpinning strong earnings visibility in the coming years. In addition, the award of a recent tenders at Woodleigh and Changi should boost the group’s earnings and NAV in the medium term.
