CHIP Eng Seng Corporation has extended its footprint overseas with the purchase of a A$20.2 million (S$25.8 million) site in Melbourne.
The deal is considerable when it is seen against the property and construction firm’s net profit of $75.3 million for FY2009.
The land parcel is located at Mackenzie Street, in the eastern part of Melbourne’s central business district, and spans around 20,000 sq ft. Chip Eng Seng plans to build a 32-storey tower on the site, with 350 residential apartments and other amenities such as shops.
This site marks the company’s third development project in Australia. It had earlier completed a commercial building and a residential project in Adelaide.
‘With the stabilising world economy, we believe that this is an opportune time for us to expand our development property portfolio,’ said Chip Eng Seng executive chairman Lim Tiam Seng.
‘Melbourne represents a great opportunity as the city is currently experiencing a shortage in supply even as the population continues to increase.’
Chip Eng Seng does not expect the project in Melbourne to have any material impact on its net tangible assets and earnings per share for the current financial year ending Dec 31. It will be funding the site purchase using internal funds and bank borrowings.
As at end-2009, the company had cash and cash equivalents worth $76.1 million and a net debt to equity ratio of 0.15.
Mr Lim expects Chip Eng Seng’s cash position to strengthen further when its joint development projects, The Parc Condominium in the West Coast area and City Vista Residences near Cairnhill, receive their temporary occupation permits this year.
‘This puts us in an excellent position to pursue opportunities in Singapore and the region, as well as allow us to tender competitively for construction pro-jects,’ he said.
Chip Eng Seng’s most recent property launch was that of Oasis@Elias in Pasir Ris. The company has been bidding for land at state tenders in the last few months in a bid to top up its residential land bank.
The counter closed unchanged yesterday at 39 cents.
Source : Business Times – 16 Mar 2010
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