Chun Wo net profit surges 20% to HK$93 million

Analysis, Slider 26 Jun 2014
Chun Wo net profit surges 20% to HK$93 million

Chun Wo Development Holdings Ltd net profit surged 20% to HK$93 million meeting it’s annual growth target of 10%.

The Group achieved a total revenue of approximately HK$6.55 billion, up 34% year-on-year. Net profit surged by 20% year-on-year to HK$93 million, met the 10% annual growth target that the Group previously set. Earnings per share rose by 12.9% to HK8.95 cents. The Board has recommended the payment of a final dividend of HK1.7 cents per share, representing an increase of 21.4% as compared with last year.

Construction

The Group’s construction segment saw significant gains in the review year, both in terms of the number of projects won, and its success in tendering for complex large-scale projects demanding considerable specialized technical expertise from the winning bidder. Revenue from the construction segment amounted to HK$5.89 billion for the review year, a further rise from the record HK$4.06 billion achieved the previous year. Profit from the construction segment was HK$57.2 million, against the figure HK$41.7 million in last year. 

As at 31 March 2014, the estimated total value of the Group’s contracts in hand amounted to approximately HK$28.81 billion, of which HK$14.63 billion remains outstanding. These figures represent increases of 14% and 19% respectively over the comparable figures as at 31 March 2013. During the review year, the Group won over 14 major contracts, worth a total of approximately HK$7.86 billion. Subsequent to the close of the review year, the Group had won further new contracts worth approximately HK$8.42 billion in aggregate.

The Group continued to be successful with a number of railway infrastructure projects including several new contracts awarded by MTR Corporation Limited (“MTRC”), Kai Tak Station and associated tunnels for(Hong Kong

the Shatin to Central Link, platform modification and associated works at East Rail Line, and station commercial and improvement works at Fo Tan Station. Good progress continued to be made on the Group’s largest ongoing projects, associated with the Wan Chai Development Phase II and the Central-Wan Chai Bypass.

The Group has taken up a number of projects related to resort development in Macau, primarily for leading gaming operator Melco Crown Entertainment Limited. The Group also won the government contract for constructing a new hangar at Macau International Airport. These projects generally deliver a better profit margin for the Group compared to those in Hong Kong.

Chun Wo expects to be highly competitive in the bidding for upcoming projects over the next few years. In April 2014, the Group won an important joint venture contract for work on the substantial HK-Shenzen-Zhuhai-Macao Bridge project, consisting of the construction work of the Hong Kong Boundary Crossing Facilities.

Moving forward, the Group will focus particularly on forthcoming large-scale civil engineering and public housing projects. In addition, the broader and more specialized technical expertise Chun Wo has acquired from recent projects, in areas such as tunneling, has further strengthened its strong and unique market position in relation to the upcoming tenders for large-scale and complicated infrastructure projects. Amid the rising operating costs for construction projects, the Group will refocus on projects that can provide quicker return and higher margin. Moreover, greater caution will be brought to the bidding process, and tender prices will be adjusted to offset the risk of sub-contractor price inflation.

 

 

 

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