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Public company info - China Saite Group Co. Ltd. , 00153.HK
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China Saite Group Co. Ltd., 00153.HK - Company Profile
Chairman Li Xulin
Share Issued (share) 3,021,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Construction & Decoration
Corporate Profile Business Summary: China Saite Group Company Limited (“China Saite” or the “Company”, together with its subsidiaries the “Group”) is an integrated steel structure and prefabricated construction solution service provider. Performance for the year: Revenue increased by approximately 6.3% to RMB1,501.3 million. Net profit decreased by approximately 38.8% to RMB139 million. The Group’s overall gross profit margin decreased by 1.9 percentage points from approximately 25.5% for the Year 2017 to approximately 23.6% for the Year 2018. Basic earnings per share decreased by approximately 39% to RMB5.96 cents. BUSINESS REVIEW In 2018, the total investments in fixed assets (excluding agricultural households) in the PRC amounted to approximately RMB63,563.6 billion, up 5.9% year on year. The growth rate, while level to that of 2017, was the lowest since 2001. During the year under review, the PRC saw its Gross Domestic Product (the “GDP”) grew approximately 6.6% year on year, which was the lowest in the past 28 years. The overall macroeconomic environment inflicted considerable repercussions on demand for the construction materials and related services. Despite the slow economic growth in the PRC during the year under review slowly, buoyed by the policy of stabilizing domestic demand from the Central Government, investments in transportation infrastructure construction gradually picked up to meet the completion quota for major projects of highway and bridge construction in both the midstream and downstream regions along the Yangtze River, supporting the demand for steel structures. The steel structure business of the Group resumed growth and recorded a 14.2% increase in revenue. As for the prefabricated construction business in 2018, the construction volume of affordable housing in the PRC reached a bottleneck and the growth in new projects began to slow down. Yet competition within the industry was still intense, prompting an adjustment by the Group of its planned landscape for the prefabricated construction business and slight declines in revenue (and gross profit margin) for this segment. The Group’s revenue for the year ended 31 December 2018 (the “Year 2018”) amounted to approximately RMB1,501.3 million (2017: RMB1,411.7 million). Gross profit for the year under review amounted to RMB353.8 million (2017: RMB359.9 million) and gross profit margin averaged approximately 23.6% (2017: 25.5%). Profit attributable to owners of the Company amounted to approximately RMB139.0 million (2017: RMB227.2 million). Basic earnings per Share for the year under review were approximately RMB5.96 cents (2017: basic earnings per Share: RMB9.77 cents). The Board did not recommend any final dividend payment for the Year 2018 to the shareholders (2017: nil). Steel structure business Characterised by their strength, durability, flexibility in layout, low pollution and recyclability, steel structures have been widely applied in the construction of factory premises, bridges, sports stadiums, convention and exhibition centers, airports, railway stations and other various infrastructures since the development of steel structure construction in the PRC in the late 1990s. According to the list of top 100 construction enterprises in Jiangsu Province issued by Jiangsu Provincial Department of Construction, the Group ranked among the top ten steel structure construction service providers in Jiangsu Province. For the Year 2018, the revenue of the Group from the steel structure business amounted to approximately RMB968.3 million, up approximately 14.2% from the RMB848.3 million for the previous year. During the year under review, gross profit margin for the steel structure business decreased by 0.9% percentage points from 18.5% to 17.6% due to economies of scale and synergies. The completed steel structure parts for the year under review amounted to approximately 92,600 tons, increasing approximately 25.0% from approximately 74,100 tons for 2017. During the year under review, the number of steel structure projects completed amounted to 24 increased by 10 (2017: 14). The number of bridges projects completed amounted to 5 (2017: nil), representing an increase of 5 projects year on year, and the revenue generated from completed bridges projects amounted to RMB201.1 million (2017: nil). The number of export orders of steel structure projects completed amounted to 4 (2017: 2), representing an increase of 2 projects year on year, and the revenue generated from completed export orders of steel structure projects increased by approximately 44.6% from approximately RMB54.5 million to approximately RMB78.8 million. The number of public structures projects completed amounted to 4 (2017: 4), representing no change from year on year, and the revenue generated from completed public structures projects increased by approximately 39.6% from approximately RMB112.0 million to approximately RMB156.3 million. The number of factories projects completed amounted to 11 (2017: 8), representing an increase of 3 projects year on year, and the revenue generated from completed factories projects decreased by 13.6% from approximately RMB501.5 million to RMB433.6 million. During the year under review, the Group mainly focused on construction projects covering plant construction, roads and bridges in Shandong, Shanghai, Jiangsu, Jiangxi and other midstream and low stream regions of Yangtze River for its steel structure business. Amongst these regions, the revenue generated from Jiangsu Province represented approximately 50.2% of the total revenue generated from steel structure business segment, and one of the major construction projects of the Group outside Jiangsu Province was construction of Construction Project of Teaching Building of Primary School in Xinyi City. Breaking down by geography of the revenue generated from steel structures, the number of projects completed in Jiangsu Province was 14, representing an increase by 6 projects from 2017 (2017: 8). The revenue generated from completed projects in Jiangsu Province increased by approximately 77.5% year on year from approximately RMB273.5 million to approximately RMB485.5 million. In 2018, the number of completed projects in the PRC outside Jiangsu Province increased by 4 projects from 2017, i.e. 10 (2017: 6) projects. The revenue generated from completed projects in the respective geographical region decreased by approximately 2.6% year on year from approximately RMB394.5 million to approximately RMB384.3 million. The Group’s revenue generated from projects in progress as at the end of the year decreased from approximately RMB180.3 million to approximately RMB98.5 million, representing a decrease of 45.4%, which is mainly due to the fact that a lot of factories projects were completed during the year. Prefabricated construction business Prefabricated construction mainly involves pre-production of major structural components, such as columns, beams, wall panels, floor panels, stairs and balconies, etc., in factories and direct assembly of these components on location. Compared to traditional steel and concrete structures which are fabricated on location, prefabricated construction allows prefabrication control, conferring better accuracy, stronger shock resistance, shorter construction lead-time, and is more environment-friendly, which aligns perfectly with objectives of environmental protection in the PRC, particularly in green construction areas. With the encouragement and support from the PRC government via various policies, the Group believes that prefabricated construction is set to become a major trend in development of the construction industry. The Group is one of the largest prefabricated construction service providers in Jiangsu Province by revenue. Following diligent efforts over the years, the Group has secured a number of patented technologies in prefabricated construction. For the Year 2018, the Group completed 500,610 square metres (“sq.m.”) of prefabricated construction materials, down approximately 1.7% from the 509,200 sq.m. in 2017. The revenue from prefabricated construction projects amounted to approximately RMB533.0 million in 2018 (2017: RMB563.5 million), representing a decrease of approximately 5.4% over the previous year. The Group has competitive edges in technology and as a pioneer in the prefabricated construction business. Yet in Jiangsu Province, where the business of the Group is based, construction of affordable housing has reached a bottleneck, limiting the development of the prefabricated construction business which primarily serves the affordable housing sector. During the year under review, this business segment contributed approximately RMB533.0 million to the total revenue of the Group, compared with approximately RMB563.5 million for the previous year. The revenue generated in this segment comprised approximately 35.5% of the Group’s total revenue, decreasing from approximately 39.9% in the previous year. In 2018, the Group engaged in 12 (2017: 10) prefabricated construction projects, all of which were residential projects, and recorded a revenue of approximately RMB533.0 million (2017: RMB563.5 million). During the year under review, the number of new contracts signed and the total contract revenue of new contracts entered into by the Group was 25 (2017: 24) and approximately RMB1,182.2 million (2017: RMB1,158.2 million), respectively. The average contract revenue of the signed contracts decreased to approximately RMB47.3 million from approximately RMB48.3 million for 2017. The closing contract value of backlog in 2018 decreased to approximately RMB162.3 million from approximately RMB481.5 million in 2017. Investment Business On 27 December 2018, Jiangsu Saite Steel Structure Co., Ltd. (江蘇賽特鋼結構有限公司) (“Jiangsu Steel”), an indirect wholly-owned subsidiary of the Company, entered into the Construction Agreement with Shenyang Jindihan Investment Co., Ltd. (沈陽金迪晗投資有限 公司) (“Shenyang Jindihan”) in respect of manufacturing and installation of the Vertical Automated Parking System. Jiangsu Saite shall be responsible for design, manufacturing, transportation, installation, testing, checking and inspection, after-sale maintenance and repair and training in respect of the Vertical Automated Parking System at a car park complex located on the east land plot of Yingbin Street, Shenhe District, Shenyang in the PRC. Jiangsu Saite shall provide Shenyang Jindihan an initial warranty of 24 months for free, in respect of the Vertical Automated Parking System. Shenyang Jindihan shall pay Jiangsu Saite consideration aggregating RMB109,240,824.00 (equivalent t o approximately HK$124,137,300.00). Jiangsu Saite, a wholly-owned subsidiary of the Company, is principally engaged in construction of steel structures and prefabricated construction projects. Shenyang Jindihan is principally engaged in carpark services, industrial investments and real estate development. This will become a pilot vertical automated parking system project for the Group. The Group has full confidence about prospects of vertical automated parking systems in the PRC. In order to alleviate shortages of parking spaces in cities, the Group proposed static traffic solutions such as vertical automated parking system and three-dimensional parking garages, which alleviated inadequacies in parking lots by fully utilizing the plot ratio. A three-dimensional parking garage is basically composed of steel structures, which has synergy with the steel structure business of the Group. Targeting drivers in cities and towns of different sizes, these three-dimensional parking garages can generate income within a short period of time. Prospects: The PRC government has stipulated a economic growth target at 6%–6.5% for the country in 2019. The PRC government will stimulate the economy by enacting various measures, including tax cuts, more infrastructure investments and more relaxed economic policies. The Group is of a view that despite the continued slowdown in the PRC’s economic growth, the Central Government has established the policy to strengthen infrastructure investments to support domestic demand. The management of the Group will explore more business opportunities in the steel structure business through enlarging its shareholder base and tapping the three-dimensional parking garage business. As early as in 2017, the State Council had released Guidance Opinion on Promoting Prefabricated Construction 《( 關於大力發展裝配式建築的指導意見》), which proposed that the Government strives to raise the proportion of fabricated buildings among new buildings to 30% within 10 years. As the main structural system most suitable for the development of prefabricated buildings, buildings with fabricated steel structures and composite structures are set to reach one-third of prefabricated buildings, which will increase the proportion of the prefabricated steel structure residential building from less 1% at present to 10%. Compared to developed countries, bridges with steel structures and composite structures comprise a low proportion of the total in the PRC, especially small- and medium-span bridges with steel structures and composite structures comprise less than 1% of the total. For this reason, Ministries including the Ministry of Transport have made great efforts to promote the construction of bridges with steel structures and composite structures and proposed that at the end of the “13th Five-Year Plan” period, new large-span and extra-large-span bridges will be dominated by steel structures and the proportion of steel structures will be significantly improved in newly-built bridges. In addition, reaping benefits from the rapid development of the “One Belt, One Road” construction developments, steel structures made in the PRC are being exported to other markets. In the PRC, infrastructure construction will still play an important role in economic development. Steel structure buildings, better known as “green buildings”, are gradually evolving into a trend and the development of steel structure buildings has been included in the “13th Five-Year Plan” in respect of the steel structure industry. The PRC government strives to increase the use of steel in steel structures from 50 million tons at present to 100 million tons and above in 2020. Therefore, the Group believes that the steel structure business still has great development potential. For the steel structure business, the Group will continue to expand its markets from the Yangtze River Delta region to the central and western regions of the country. According to the 13th Five-Year Plan, the Central Government of the PRC will speed up the pace of development of the central and western regions, constituting a great opportunity for expansion of the steel structure business of the Group into more regions. The Group also strives to expand into other overseas markets including Australia, Turkey and Africa through cooperation with multinational corporations. With both the opportunities from the Government’s development initiatives and the Group’s close business relationship with multinational partners, the Group will capture more market shares in these areas. For the prefabricated construction business, the bottleneck in construction of affordable housing is expected to continue in the short and medium term. Coupled with intense competition within the industry, the Group will adopt a defensive strategy so as to maintain the scale of prefabricated construction business and the contribution to the overall profitability. In a nutshell, amid the complicated economic environment in both the domestic and overseas markets, the Group will respond promptly to changes in the markets and continue to improve its own operation and management efficiency to capture opportunities arising from the increasing interconnection between the domestic macro-economic situation and the international markets. The Group will take full advantage of the solid foundations of its steel structure business and dive deeper into other collaborative business opportunities while enhancing cooperation with state-owned enterprises, Central-Government-owned enterprises and multi-national corporations to enrich its business mix and broaden its income streams, seeking to take the Group’s businesses to a next level and creating long-term value for shareholders.

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