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Chip Eng Seng 3 year 6.5% fixed rate notes
30 Nov 2021 (721 views)  

I received an email from a stock broking firm about a 3 year fixed rate note issued by a subsidiary of Chip Eng Seng Corp (CESC) and guaranteed by the CESC. 

It offers a coupon rate of 6.5% and is for 3 years. The note is described as "direct, unconditional, unsubordinated and unsecured".

This note is described as "upsize". It appears to be for the earlier redemption of two earlier notes carrying coupon rate of 4.9% and 6% respectively. 

The minimum size of the notes is $250,000. It suggest that the note is offered only to big investors. 

There is a mention that the group incurred a financial loss of $81.1 million for the year ended 31 Dec 2020 and is likely to incur a financial year for the current financial year. 

I looked at the financial indicators for Chip Eng Seng (C29.SI), as follows:

Capitalization: 329 million SGD
Current share price: $0.42
Highest price past 52 weeks $0.52
Dividend yield 4.76%
Trailing PE ratio: 10.26 (probably a mistake as there was a loss of 2020).
Forward PE ratio: NA
Total debt to equity: 220.73%

I consider the note to be too risky and decided to skip it. In particular, I do not like the extremely high debt to equity ratio of 220.73%.

Note - This is my personal view. It is not investment advice.

Tan Kin Lian


 


Chip Eng Seng 3 year 6.5% fixed rate notes
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I received an email from a stock broking firm about a 3 year fixed rate note issued by a subsidiary of Chip Eng Seng Corp (CESC) and guaranteed by the CESC. 

It offers a coupon rate of 6.5% and is for 3 years. The note is described as "direct, unconditional, unsubordinated and unsecured".

This note is described as "upsize". It appears to be for the earlier redemption of two earlier notes carrying coupon rate of 4.9% and 6% respectively. 

The minimum size of the notes is $250,000. It suggest that the note is offered only to big investors. 

There is a mention that the group incurred a financial loss of $81.1 million for the year ended 31 Dec 2020 and is likely to incur a financial year for the current financial year. 

I looked at the financial indicators for Chip Eng Seng (C29.SI), as follows:

Capitalization: 329 million SGD
Current share price: $0.42
Highest price past 52 weeks $0.52
Dividend yield 4.76%
Trailing PE ratio: 10.26 (probably a mistake as there was a loss of 2020).
Forward PE ratio: NA
Total debt to equity: 220.73%

I consider the note to be too risky and decided to skip it. In particular, I do not like the extremely high debt to equity ratio of 220.73%.

Note - This is my personal view. It is not investment advice.

Tan Kin Lian