SGD New Issue Review : Chip Eng Seng 4.5% 3Y


– New Chip Eng Seng SGD 3yrs announced with strong IOIs received post SG roadshow
– Initial price guidance: 4.50% area
– Issue size: TBD
– Timing: This week’s business, as early as today

– Comps:
Tuan Sing 4.5 2019 at 100, 4.50%
Koh Brothers 4.8 2018 at 101, 4.46%

Credit Highlights:
–    Chip Eng Seng Corporation Ltd. (“CES”) is a diversified real estate company with core businesses in construction and property development in Singapore and Australia
–    Listed on the Mainboard of the SGX-ST since November 1999, CES has a market capitalisation of SGD564m as at 8 October 2014
–    Well-established track record of over 30 years’ experience in general construction and is a leading contractor for public housing projects and recognised developer of quality properties
–    Construction arm is registered with the Building and Construction Authority under the A1 classification for general building construction and civil engineering, allowing it to tender for public sector projects of unlimited value – a recent notable project was the The Pinnacle@Duxton, the biggest and tallest public housing project in Singapore to date
–    Strong earnings visibility over the next 2 – 3 years with a Construction net order book of SGD548m as at end 1H2014, of which more than 70% is estimated to be recognised before end-FY15, and an estimated SGD700m likely to be recognised for Property Development by end-FY15
–    1H2014 Revenue by business segment: 49% Construction, 50% Property Development, 1% Property Investment & Others


Someone told me to buy this stock 2-3 months ago at 75 cents and look at its share price today !

chip eng seng

Pretty leveraged company 2.7 times which is nothing compared to Oxley or Swiber. Their debt/equity is going at 154%.

Net income is expected to be a whopper this year, comparable to 2010 but take a look at its stock price in 2010 !

chip eng seng net income

This is a household name in the mold of Koh Brothers and gang, and more well known and with a bigger market cap.

Coupon coming in at 4.5% vs Koh Brothers 3.5 years at 4.8% and Tiong Seng 3.5 years at 4.75%.

Incidentally Tiong Seng is trading at about 5.1% now whilst Koh Brothers has rallied to about 4.5%.

Chip Eng Seng will fit in just nicely with them all (not to mention that generous PB rebate).