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QuestionsCategory: Investor PsychologyHang Lung Properties vs Chip Eng Seng
Tony asked 3 years ago

Hi,
While reviewing the workshop materials, I found a scribble noting that Hang Lung has more recurring business than Chip Eng Seng, suggesting preference for Hang Lung over Chip Eng Seng. However, the workshop was a while ago and my memory is a bit vague now and I can’t remember exactly the reason of the preference.
From a quick comparison of their annual reports (the ones used for the workshop), it seems that Hang Lung’s business model is simpler: involving only property leasing and sales. In contrast, that of Chip Eng Seng is more diverse and complex, involving property development, construction, hospitality, education, investment and others. 
Could the reason for the preference for Hang Lung be that property leasing is recurring in nature (i.e., if the tenants renew their leases). In comparison, for Chip Eng Seng, they most likely have to secure a new buyer for each property development and construction project (non-recurring)?
Thank you.
Tony

2 Answers
Victor Chng answered 3 years ago

Hi Tony,
 
You are right. Hang Lung have more recurring revenue in term of their property leasing while Chip Eng Seng’s majority of the revenue is from construction and property development which is not recurring. 

Tony answered 3 years ago

Thanks Victor.
I should have also looked at the majority of their revenue.

Victor Chng replied 3 years ago

Welcome :)