BEIJING, Aug. 19 /Xinhua-PRNewswire/ -- China State Construction International Holdings Limited (“China State Construction” or “the Group”, Stock Code: 03311) today announces its unaudited consolidated results for the six months ended 30 June 2008.
Highlight:
1H08 1H07 YoY Change (%)
Turnover (HK$ mm) 5,408 5,202 3.9
Gross Profit (HK$ mm) 398 246 61.9
Net Profit (HK$ mm) 257 116 122.4
Gross Margin (%) 7.4 4.7 57.4
Net Margin (%) 4.8 2.2 118.2
EPS (HK Cents) 10.55 5.79 82.2
DPS (HK Cents) 3.70 2.25 64.4
Note: 1. The EPS have been adjusted based on total 2.44bn outstanding
shares after share split on 13 June 2008.
2. 1H07 are figures unrestated.
The Group’s unaudited profit attributable to the shareholders for the six months ended 30 June 2008 increased by 122.4% to HK$257 million, and its turnover reached HK$5,408 million. Basic earnings per share were HK10.55 cents, representing a growth of 82.2% from HK5.79 cents announced in the corresponding period last year. Equity attributable to the Shareholders increased by 126.2% to HK$2,355 million while net asset per share amounted to HK$0.97, an increase of 86.5% compared to the corresponding period last year. The Board declared an interim dividend payout of HK3.70 cents per share for the six months ended 30 June 2008, representing a growth of 64.4% compared to the corresponding period in 2007.
Business Review
Construction Business
In the first half of 2008, the global economy was unstable. The subprime mortgage crisis in the United States caused a distinct drop in the global economy. While there was a clear economic depression in developed countries, the economies of Macau and Hong Kong, as a whole, maintained robust momentum. Economic growth in China and India remained rapid, and the United Arab Emirates saw strong economic development, creating favourable conditions for the implementation of the Group’s strategies.
During the period, the Group completed 12 projects, comprised primarily of: (in Hong Kong) 1) foundation and cover of Choi Wan Road Phase I, 2) foundation and cover of Choi Wan Road Phase II, 3) the Youth Development Centre in Chai Wan, 4) Phase I of Tin Shui Wai Area 103 and 5) rebuilding of St. Paul’s Hospital, and (in Dubai) 6) Lease Office Building and Shopping Arcade, JAFZA South.
The Group secured 21 new contracts in the first half of 2008, with an aggregated attributable contract value of approximately HK$7.63 billion, of which the Hong Kong market accounted for 71.3%, the Macau market 19.3% and Mainland China market 9.4%. New contracts awarded mainly included:
in Hong Kong
1) the Siu Sai Wan Complex,
2) the Sun Yat Sen Memorial Park and Swimming Pool Complex,
3) the Industrial Development at No. 2 Heung Yip Road,
4) the Development at Anderson Road - Site Formation and Associated
Infrastructure Works,
5) the HAECO Aircraft Maintenance Hangar No. 3A,
6) the Shopping Centre at Discovery Bay North Development,
in Macau
7) an extension project on Windsor Arch,
8) mechanical and electrical support on The City of Dreams and
in the Mainland China
9) the Xi Jin Cheng Project in Chengdu.
In the first half of 2008, the Group had a total of 87 projects in progress, with a total attributable contract value of HK$38.01 billion, of which HK$19.31 billion was from Hong Kong, HK$12.01billion from Macau, HK$5.27 billion from UAE, HK$0.31 billion from India and HK$1.11 billion from the Mainland China. The value of uncompleted contracts was HK$24.49 billion, of which HK$11.98 billion was from Hong Kong, HK$9.24 billion from Macau, HK$2.54 billion from UAE, HK$0.06 billion from India and HK$0.67 billion from the Mainland China.
Subsequent to the period under review, the Group was awarded two new projects with contract value of HK$1.38 billion.
In order to reduce the risk of rising costs, the Group uniquely divides all project contracts into four categories: 1) cost-plus & project management contracts (all costs are borne by the owners), 2) government contracts (the owners, local governments, revise the material and staff costs from month to month and award compensation to contractors), 3) private projects with cost compensation mechanism and 4) other private projects. Currently, 85% of our contracts in hand fall into the first three categories which have a cost compensation mechanism.
The Company has been engaged in the fully internationalized and competitive construction business in Hong Kong for almost 30 years, and has developed unique major competitive strengths and core competitiveness. Much effort is put on the promotion of the ‘5+3’ project management model, a balanced development in five major aspects -- safety, environmental protection, quality, progress and cost -- with a strong emphasis on the practice of three assurance systems -- workflow, process and responsibility -- at the
decision-making, management and operating levels. This model allows contract responsibility, operation responsibility and social responsibility to be organically integrated, reducing the variation on quality arising from management differences and, hence, efficiently increases overall profitability and counters Company risk, boosting shareholders’ value to the largest extend.
Related Investment Business
The infrastructural construction of Tuanbohu District, Tianjin, a primary land development project, is in full swing, and the project company has made progress payments in respect to construction. The relevant primary land development project in Chongqing is also being strictly monitored. The primary land development projects will be established within regions such as Tianjin and Chongqing, so as to accelerate the realization of strategic transformation from construction-oriented business to the combination of construction and investment businesses.
Financial Management
Management and control of finances, capital and external financing are centralized at the head office level with adherence to the principle of prudent financial management. As at 30 June 2008, the Group’s bank balance was HK$1.65 billion with HK$500 million bank borrowings, which showed a healthy financial position. There are also sufficient committed but unutilized bank facilities to meet the need for business development.
A bonus warrant plan was announced on 8 January 2008. On 4 February 2008, the Group entered into a syndicated loan amounting to HK$1 billion with the Bank of China, HSBC, Bank of Communications and the Bank of East Asia. This syndicated loan laid the foundation for a more reasonable capital structure for the Company as well as a solid basis for the diversification of the construction and related investments.
Outlook
The Group is focusing its efforts on implementing the strategy of
“cross-region operation” to take full advantage from its experience as an international contractor to build an operational platform for the three major regions of Hong Kong & Macau, overseas regions and the Mainland China and to avoid being overly exposed to any single market risk. With its advantage of being familiar with the Hong Kong market over the past 30 years, the Group has adopted cost effective and different strategies to maintain its position as one of the largest leading construction contractors in Hong Kong. By leveraging the advantage of its local company, China Construction Engineering (Macau) Company Limited, and its familiarity with the local market and enhancing the model by integrating Hong Kong and Macau, it has achieved complementary strength and resources sharing. Through the proper execution of projects already awarded, the Group has seized opportunities in Dubai’s growing construction market, fully displaying its competitive strengths in its ability to import Chinese labour and expand the Dubai market. Where its resources are balanced, the Group will further expand efforts in business development and wait to enter the Abu Dhabi market. The Group will closely monitor and study the Indian market, mainly through strategic alliances, prudently and selectively tendering in construction contracting projects. The basic objective for the expansion and operation of the construction business in the Mainland China, and prudently selecting the construction contracting business, mainly targeting foreign investment construction projects, is “achieving sustainable growth in profit.”
Meanwhile, the Group is proactively pursuing related investment business and striving to achieve a strategic transformation developed between its construction business and its related investment business, aiming at a stable recurring income and achieving an IRR no less than 12%. The Group will seize every investment opportunity in the Mainland China, mainly focusing on primary land development projects in Tianjin and Chongqing. The feasibility of acquiring infrastructural projects in the Mainland China from its parent company will be further studied and discussed. The Group will also explore new areas to increase profit. The Group will monitor construction-related investment markets in India to achieve a complement of strength, optimization and resource deployment.
At present, the operations in Macau and Dubai and the construction-related investments therein have laid the foundation for the Group’s ongoing development in the future. Within the next three to five years, the Group should improve its operating structure and significantly enhance its profitability.
By efficiently employing our human resources, making continuous innovations and reinforcing our core competitiveness, we hope to create a harmonious and win-win operating environment for the Group’s products, customers, shareholders and staff. To develop as an evergreen corporation through strengthening strategies, we will focus on our core business, actively expand related investment businesses and apply the principle of prudent financial management to strengthen our cash management. We aim to maintain our leadership position in the industry and to maximize shareholders’ value.
About China State Construction International Holdings Limited
China State Construction International Holdings Limited (“China State Construction” or “CSCI”, Stock Code: 03311) started its construction business in Hong Kong in 1979. It is a vertically integrated construction powerhouse, engaged in building construction and civil engineering operations as well as other peripheral operations such as foundation work, site investigation, mechanical and electrical engineering, highway and bridge construction, concrete and pre-cast production. In July 2005, China State Construction was listed on the Main Board of The Hong Kong Stock Exchange.
For further information, please contact:
China State Construction
Jacky Zhou (Investor Relations)
Tel: +852-2823-7066
Fax: +852-2527-5436
Email: jacky_zhou@cohl.com
Carrie Cheng (Public Relations)
Tel: +852-2823-3695
Fax: +852-2865-5939
Email: carrie_cheng@cohl.com
Doris Chung (Public Relations)
Tel: +852-2823-7333
Fax: +852-2865-5939
Email: doris_chung@cohl.com
PR China
Jane Liu
Tel: +852-2522-1838
Fax: +852-2521-9955
Email: jliu@prchina.com.hk
Henry Chik
Tel: +852-2522-1838
Fax: +852-2521-9955
Email: hchik@prchina.com.hk
