China State wins big in 2013

China State wins big in 2013

State-owned giant wins total $26.5b worth public works

State-owned giant wins total $26.5b worth public works
Mainland contractor China State Construction Engineering (Hong Kong), 
the local subsidiary of listed mainland giant China State Construction 
International Holdings (3311), was the leading contractor on public 
works tendering in 2013, with Gammon Construction as runner-up and 
Australian contractor Leighton Contractors (Asia) in third place.
According to analysis by Construction Post of awards in the 
government gazette and also by government related organisations such as 
the MTR Corporation (0066), China State bagged, as sole contractor, 
contracts worth a total of HK$10.8 billion during 2013.
If the value of joint venture projects was also taken into account, 
then the total value of work won by China State as sole contractor and 
as joint venture contractor was a cool HK$26.5 billion.

This was made up of seven contracts as sole contractor and three 
contracts as joint venture partner.
However, China State’s total of HK$26.5 billion would have been 
overtaken by French contractor Dragages Hong Kong, had the award for 
Contract 2 for the Liantang/Heung Yuen Wai Boundary Control Point 
project not, for some reason, been left out of the awards for December 
2013 in the government gazette issued late last month.

In an example of the government’s left hand not knowing what the right 
hand is doing, the website of the Civil Engineering and Development 
Department lists Dragages as having been awarded the contract worth 
HK$10.3 billion on 13 December 2013.
Together with the earlier award of HK$18.2 billion in July to the 
Dragages-Bouygues joint venture for the Northern Connection to Tuen 
Mun-Chek Lap Kok Link, then Dragages, as sole contractor and as joint 
venture partner, won a total of HK$28.5 billion worth of public works, 
comprising of just two contracts.
Leaving aside the anomaly of Dragages, second place went to Gammon, 
which won public works worth a total of HK$9.2 billion as sole 
contractor but HK$8.7 billion of it is accounted for by just one 
contract, the Southern Connection to the Tuen Mun-Chek Lap Kok Link.

Third place was Leighton with work worth HK$5.2 billion, comprising of 
just one contract, the Hung Hom Station and Stabling Sidings for the 
Shatin-Central Link for the MTR.
However, Leighton was also part of a joint venture for the Tin Shui Wai 
Hospital project worth HK$2.7 billion.
Thereafter fourth place went to Chun Wo Construction & Engineering with 
HK$4.5 billion while Yau Lee Construction finished at fifth place with 
HK$3.3 billion.
These two contractors however were also part of joint ventures for 
contracts worth a combined total of HK$10.5 billion.

The total value of public works projects won by construction firms tendering as sole contractor in 2013 (compiled by Danny Chung)

The total value of public works projects won by construction firms tendering as sole contractor in 2013 (compiled by Danny Chung)

Coming in sixth place was Hsin Chong Construction with HK$3.3 billion 
worth of Housing Authority public rental housing work.
Build King (0240), the parent of Leader Civil and Kaden Construction, 
bagged HK$1.5 billion worth of contracts as sole contractor but was a 
partner in joint venture contracts worth a total of HK$4.8 billion.
One contractor conspicuous by its near total absence in the rankings 
was the Paul Y family of contractors, the parent of which is Macau 
casino property developer Louis XIII Holdings (0577).

In 2013, it could only manage to win one public works contract, for E&M 
work worth a modest HK$25.9 billion.
It was beaten by less well-known contractors such as Kwan On, China 
Harbour, Chevalier, China Road & Bridge and Maeda.
All in all, the value of public works for construction work and 
building services awarded by the government and related organisations in 
2013 came to HK$111.3 billion.

This total excludes any contracts awarded by the Urban Renewal 
Authority as it does not release exact details of the contract value for 
its projects, which are mainly demolition.
One interesting phenomenon could be seen during the analysis.
Whether by accident or design, most of the big contractors such as 
Gammon and China State secured most of their new contracts by value in 
the first half of 2013 although there are some exceptions, namely the 
Northern Connection of the Tuen Mun-Chek Lap Kok Link and other 
individual projects.

Danny Chung



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