S$60m MTN redeemed, financed by loan facility by SCB ? Chip Eng Seng has fully redeemed and cancelled in full the MTN on 9 April 2009, financed by a S$60m loan facility granted by Standard Chartered Bank. Given that this loan is short term in nature, we believe the interest cost will be slightly higher than MTN. As we expect Chip Eng Seng to pay off the loan with proceeds from Devonshire Suites@Central project which has obtained TOP in Feb 09, we are keeping our forecast for now. We understand from management that the 157 units will be handed over to buyers in phases.


Maintain BUY recommendation with price target of S$0.29. We maintain our earnings forecast and continue to use sum-of-the-parts valuation methodology to value its property development and construction business. We have revalued all of the Group's unsold development projects at lower than recently transacted price to assume 100% sales in current market and continued to value construction business at 3x FY09F construction earnings. We maintain our 40% discount factor to SOTP valuation, deriving our target price of S$0.29. Based on last transacted price of S$0.185, Chip Eng Seng is currently trading at 0.5x FY09F P/B.