HONG KONG--(BUSINESS WIRE)--Highlights
- Revenue decreased 6.6% to RMB1,999.1 million
- Gross profit increased 7.3% to RMB118.2 million, primarily due to an increase in gross profit of construction contracting business during this period
- Gross profit margin increased to 5.9% from 5.1% of the corresponding period in 2015, primarily due to improvement of gross profit margin of new projects since the Group obtained the Premium Class Certificate for General Building Construction Contracting Work (“Premium Class Certificate”). The Group devoted much attention to selecting prestigious and high-margin projects to tender for
- Profit for the period attributable to owners of the parent increased 5.0% to RMB48.0 million
Financial Highlights
| Six months ended 30 June | |||||||||
| RMB ‘000 | 2016 | 2015 | Change | ||||||
| Revenue | 1,999,078 | 2,139,776 | -6.6% | ||||||
| Gross Profit | 118,180 | 110,093 | +7.3% | ||||||
|
Profit for the period attributable to owners
of the parent |
47,975 | 45,672 | +5.0% | ||||||
| Gross profit margin |
5.9% |
5.1% |
+0.8% |
||||||
| Net profit margin |
2.4% |
2.1% |
+0.3% |
||||||
The largest construction company in Jiaxing, Zhejiang Province in terms of output value in 2014, Jujiang Construction Group Co., Ltd. (“Jujiang Construction”, together with its subsidiaries, the “Group”; stock code: 1459), announced its results for the six month ended 30 June 2016. During the period, Jujiang Construction recorded revenue of RMB1,999.1 million (6 months ended 30 June 2015: RMB2,139.8 million), and gross profit of RMB118.2 million (6 months ended 30 June 2015: RMB110.1 million). Profit for the period attributable to owners of the parent increased 5.0% to RMB48.0 million (6 months ended 30 June 2015: RMB45.7 million).
Business Review
For the six months ended 30 June 2016, approximately 99.5% of the revenue was contributed by the construction contracting business. The Group recorded a revenue of approximately RMB1,999.1 million for the six months ended 30 June 2016, decreased by 6.6% as compared with the same period in 2015. Profit for the period rose by 5.4% to approximately RMB48.0 million. The Group’s performance maintained a steady growth.
During the six months ended 30 June 2016, the Group pushed forward high-end projects and cooperated with high-value customers, including securing quality new customers such as Greentown China Holdings Limited (綠城中國控股有限公司) and Shida Creative Tourism Development Yangzhong Limited (世達創意旅遊開發揚中有限公司). Compared with the value of backlog of about RMB5,126.6 million as at 30 June 2015, the value of backlog declined by 4.4% to approximately RMB4,902.1 million as at 30 June 2016. The decline was mainly due to the impacts of slackened growth in fixed asset investment and continued decline in real estate investment. In addition, with the full implementation of replacement of business tax (the “Tax Reform”) by value-added tax in the construction industry by the government since May 2016, the Group has paid more attention to project risk control and attached more importance to quality customers when negotiating new projects. As at the date of this announcement, the Group has fully assessed the financial impact of the Tax Reform. It expected that there will be an improvement in second half of 2016, the Group will actively to look for high-margin project to tender for.
Future Prospects
The company will continue to develop according to plan at the beginning of the year, so that the Group continuous development includes the followings:
(1) Leverage the Premium Class Certificate and Grade A Engineering Design (Construction Industry) Certificate to provide complete construction solutions for larger-scale and more complex construction projects;
(2) Develop business opportunities to undertake build-transfer and public-private partnership projects;
(3) Capture opportunities in the international market and actively participate in overseas construction and infrastructure projects.
Furthermore, with the development of science and technology, advanced technology plays a major role in promoting the development of the industry. Currently, the construction industry is advocating application of the information technology of Building Information Modelling (“BIM Technology”) throughout the whole process of project design, construction, operation and maintenance to enhance overall benefits. As important technological measures of promoting innovative development of the building and construction industry, application and promotion of the BIM Technology will have an immense impact on the scientific and technological advancement as well as the transformation and upgrade of the building and construction industry. The Group has aligned itself with industry trends to fully leverage the advantages of the BIM Technology, fully pushing forward the progress of applying the BIM Technology to the Zhenshi Headquarters Building (振石總部大樓) project. To prepare itself for future development, the Group has also gradually developed pilot projects including Xianghu Leisure Manor (湘湖逍遙莊園), Scientific Innovation Park Phase II (科創園二期) and Municipal Utility Ducts (市政管廊). The Group will strengthen its BIM Technology team, and through professional training and technological exchanges, a professional core team has initially been set up, with a group of BIM application technical staff in place in the project department.
Proposed A Share Offering
The Board has resolved to propose to apply for an initial public offering and listing of the Company’s A Shares. The total number of A Shares to be issued will be not more than 59,262,223 A Shares, representing approximately 10% of total enlarged issued share capital of the Company. The offering price will be determined by the Board and the leading underwriter with reference to the results of the price consultation process and market condition.
The Board believes the offering will further optimize the corporate governance structure of the Company, develop domestic and international financing platforms and improve the liquidity of the Company’s shares. The offering will enhance the Company’s corporate image and brand name, further widen the Company’s funding channels, increase the Company’s working capital and achieve stronger recognition of the capital markets by attracting large institutional as well as medium and small investors in the PRC.
Mr. Lv Yaoneng, Chairman, Executive Director and General Manager of Jujiang Construction, said, “With the successful listing on the Hong Kong Stock Exchange of the group, we have gained recognition and trust of our client. We are planning to apply for an initial public offering and listing of A Share. We believe the offering will be beneficial to our business growth, financing flexibility and business development. It will also enable us to obtain more financial resources and improve our competitiveness. We will continue to capture greater market share in Zhejiang province and in other provinces and regions in China, as well as expand our presence overseas to become a leading construction contracting and design company in selected regions.”
About Jujiang Construction Group Co., Ltd.
The Group is principally engaged in construction contracting business. It also provides design, survey and consultancy services to customers, as well as manufactures civil defense products. The Group is principally engaged in undertaking construction projects as a general contractor. During the Track Record Period, the Group completed a total of 650 construction projects, including residential construction projects, commercial construction projects, industrial construction projects and public works construction projects. The Group’s construction projects were mainly located in Zhejiang Province, others were located in Jiangsu, Anhui, Shandong and Liaoning Provinces. According to Ipsos, Jujiang Construction was the largest construction company in Jiaxing, Zhejiang Province in terms of output value in 2014, holding a market share of 10.4%.