Tiong Seng

Tiong Seng: Tiong Seng has been awarded the contract for the development of an Executive Condominium at Choa Chu Kang Grove worth around $276m contract by MCL Land. The project comprises the design and build of 1,327 units, one block of 4-storey multi-storey carpark, ancillary facilities, swimming pool and a basement carpark. The contract is expected to commence in Nov ’14 and brings Tiong Seng’s current order book to $1.4b (arguably the largest order book versus Singapore construction peers), and stretching revenue visibility over the next five years. We caution however that in its recent profit warning, Tiong Seng guides that it is expected to report a net loss for 3Q14, highlighting that the property market in China continues to be slow and this challenging landscape has resulted in low property sales prices faced by the PRC developers. Hence, the group is of the view that it is appropriate to make an impairment loss for its property development business in the PRC, which is the major contributing factor to the expected loss. Tiong Seng currently trades at 0.55x P/B. The group is scheduled to release its 3Q14 results on or before 14 Nov ‘14.