Chip Eng Seng warns of FY2020 loss due to Covid-19

Property developer Chip Eng Seng is expecting to report a net loss for the 2020 financial year due to the impact of Covid-19.

This will be wider than the $25.7 million net loss it reported for the first half of the year alone, it said in a profit warning issued yesterday.

This follows a net profit of $32.6 million in the 2019 financial year.

Chip Eng Seng’s ongoing development projects in its property segment, Grandeur Park Residences, Park Colonial, Parc Komo and Kopar At Newton, were affected by the closure of their construction sites for several months.

Chip Eng Seng said it has nonetheless built sufficient buffers into its project timelines, and will still be able to meet the deadlines for completing them.

Adverse effects likely to reduce full-year revenue to the group’s construction business include delays in project schedules and increased costs owing to the stoppage and subsequent slow resumption of work.

The group also noted slow construction demand in the second half of last year, with the bulk of projects secured during the period to commence in the 2021 financial year. Its order book for its construction business segment is about $1.3 billion, as at the end of last year.

The group expects a “challenging landscape” for the segment going forward owing to slim near-term profit margins, if any, a shortage of manpower and requirements to maintain safe management measures at worksites.

Due to ongoing travel restrictions and low demand for international travel, Chip Eng Seng’s hospitality businesses in Singapore, Australia and the Maldives have yet to see any significant recovery in occupancy rates and revenue. This has affected the valuation of the group’s hotel properties, it said.

It also expects to report significant impairment losses in its property investment segment due to an overall decline in the occupancy rate and valuation of CES Centre, its office investment property.

In the education segment, operating costs and expenses were incurred from the group’s new schools in the pipeline, including Invictus-branded international schools in Singapore, Hong Kong and Cambodia, resulting in negligible FY2020 revenue contribution from these schools.

The group will also be making a provision for doubtful debts with respect to its investment in American Scholar Group, which it said was severely impacted by political tensions between the United States and China, further exacerbated by Covid-19.

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