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Public company info - Analogue Holdings Limited , 01977.HK
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Analogue Holdings Limited, 01977.HK - Company Profile
Chairman Poon Lok To Otto
Share Issued (share) 1,400,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Construction & Decoration
Corporate Profile Business Summary: The principal businesses of the group are encompassing (1) provision of electrical and mechanical engineering building services, including the design, installation, testing and commissioning and maintenance of heating, ventilation and air-conditioning system, fire service system, plumbing and drainage system and electrical and extra low voltage system; (2) provision of total solutions for the design, construction, operation and maintenance of environmental engineering systems for treatment of sewage, water, solid waste, sludge and gas; (3) provision of total solution for the design, hardware and software development, installation and maintenance of infrastructure communications and security and access systems; and (4) provision of total solution for design, supply and installation of a wide range lifts and escalators offered under the trade name of “Anlev Elex” and repair and maintenance services for lifts and escalators. Performance for the year: The Group recorded a consolidated net profit for the year of HK$245.0 million, which represents a decrease of 22.3% compared to FY2018. In FY2019, the Group recorded total revenue of HK$4,481.9 million, decreased by HK$1,484.1 million or 24.9% as compared with that in FY2018. Business Review Overview 2019 was a very busy year for us during which the Group put in great efforts to replenish and build our order book, following a year of record high business turnover in 2018. High level of tendering activities continued from the first half of 2019 into the second half of 2019 and the result also turned out to be rewarding. During the reporting period, the Group submitted a total of approximately 1,332 tenders or quotations each with a value of over HK$1 million. In the reporting period, approximately 316 tenders and quotations each with an individual value of over HK$1 million were awarded, the total value of which amounted to approximately HK$5.5 billion. The total value of tenders and quotations awarded in year ended 31 December 2019 (“FY2019”) was approximately HK$6.5 billion, an increase of 13.3% compared to HK$5.7 billion in the year ended 31 December 2018 (“FY2018”). During the reporting period, we paid particular attention to growing our maintenance business of providing repair, servicing, operation, and associated minor alteration and fitting out works to customers. We believe that the maintenance market is growing steadily and is less susceptible to fluctuations in economic cycle and construction cycle of large contracting projects and hence will facilitate providing a steadier stream of income. Maintenance business also helps to maintain a continuing and close working relationship with our customers after the completion of a new project. In FY2019, 15.1% of our revenue was contributed by maintenance contracts which amounted to HK$679 million, an increase of 23.2% over that of FY2018. Moreover, in the reporting period, approximately HK$988 million of maintenance contracts was awarded, representing 15.3% of the value of contracts awarded by work nature, alongside 81.4% and 3.3% of contracting work and sales of goods respectively. As at 31 December 2019, the Group saw a record high value of outstanding contracts in hand of approximately HK$9.4 billion (including contracting work, maintenance work and sales of goods), representing an increase of approximately HK$2.0 billion over that at 31 December 2018, and approximately HK$0.5 billion over that at 30 June 2019. The Group recorded a total revenue of HK$4,482 million in FY2019, which was 24.9% lower compared to the FY2018, (the year 2018 being a year of record high business turnover). The decrease in revenue in FY2019 was mainly attributable to a few factors in building services contracting, including the substantial completion of a number of large contracting projects in 2018, as well as the delay in progress of some of the contracting projects in Hong Kong resulting in a decrease in project billing for the reporting period compared to the corresponding period in 2018 (such delay being caused by, among a number of factors, delay by other parties). Following the factors mentioned above, the Group recorded a consolidated net profit for the year of HK$245.0 million, which represents a decrease of 22.3% compared to FY2018. Notwithstanding the drop in revenue and profit in amounts, the gross profit margin was improved to 17.6% in FY2019, compared to 14.9% in FY2018. The improvement in the Group's gross profit margin was due to improved gross profit margin of each of its four business segments, namely, Building Services from 12.6% (2018) to 12.9% (2019), Environmental Engineering from 11.0% (2018) to 17.7% (2019), ICBT from 26.4% (2018) to 27.6% (2019), and Lifts and Escalators from 38.2% (2018) to 40.9% (2019). The increased proportions of maintenance work and sales of goods awarded, which contributed a higher gross profit margin than contracting work to the overall revenue stream in FY2019, compared to their proportions in FY2018, also contributed to the improvement in the Group's gross profit margin. The revenue ratio of contracting work, maintenance work and sales of goods was 79.9%, 15.1% and 5.0% respectively in FY2019, compared to the revenue ratio of 87.5%, 9.2% and 3.3% respectively in FY2018. The net profit margin of the Group in FY2019 was also improved to 5.5%, compared to 5.3% in FY2018. Building Services Our building services segment continued to be the largest business segment of the Group in terms of revenue in the reporting period. Our capability encompasses the design, installation, testing and commissioning and maintenance of heating ventilation and air-conditioning (HVAC) systems, fire services (FS) systems, plumbing and drainage (P&D) systems, electrical (EL) and extra low voltage (ELV) systems as well as combined services electrical and mechanical (E&M) engineering contracts. We serve customers in Hong Kong, Macau and mainland China for a wide range of buildings and premises including residential, commercial, industrial, institutional, data centre, hospital and healthcare, as well as infrastructure facilities such as airport, public transportation, road and tunnel, etc. In FY2019, our building services segment expended special effort to replenish the order book and we are pleased to report that the effort proved to pay off. For contracting operation, we were able to, while maintaining our existing rich client base, enlist some major new customers. We were also successful in leveraging our competitive edge in multi-disciplinary capability and secured a number of large package projects. The major contracting projects of awarded value over HK$100 million secured in FY2019 include: • A package project including HVAC, EL, FS, P&D, Building Management System (BMS) & ELV for the mixed commercial development in Kai Tak area of a new developer client • A package project including HVAC, EL, FS, P&D & BMS for a commercial office development in Kai Tak area of an existing developer client • A HVAC installation project for a commercial office development in Cheung Sha Wan of an existing developer client • A HVAC installation project for a hotel development in Cheung Sha Wan of an existing developer client • A package project including HVAC, EL, FS, P&D & BMS for a residential project in Tai Po of an existing developer client adopting Modular Integrated Construction (MiC) technology • A package project including HVAC, EL, P&D and seawater pumping system for a transfer terminal building in Chek Lap Kok • A P&D installation project for a commercial office development at Chek Lap Kok of an existing developer client • A building services package installation project at Hong Kong-Zhuhai-Macao Bridge • An EL and P&D installation project for the renovation of a service apartment in Cotai, Macau • An EL installation project for a commercial development in Shanghai of an existing developer client Mindful of the long term importance of maintenance projects to the Group, our building services team has spared no effort in bidding maintenance tenders during the reporting period. We are pleased to report that the outcome was fruitful and we were awarded a number of major maintenance projects the value of each of which was over HK$10 million, including: • A 5-year maintenance contract for the building services equipment in 5 stations of a mass transit railway company • An electrical and mechanical maintenance services contract for a radio television organisation in Kowloon • A building services maintenance contract for a data centre in Tseung Kwan O • A quadrennial term contract for the maintenance of HVAC installations at Hong Kong-Zhuhai-Macao Bridge • A quadrennial term contract for the maintenance of electrical installations at Hong Kong-Zhuhai-Macao Bridge • A triennial term contract for the maintenance of mechanical installations at Hong Kong-Zhuhai-Macao Bridge To maintain our leading position in the market, we have stepped up our impetus in investing in, developing and implementing innovative construction technologies. We have resolved a series of technical, logistical and cross-border administration and statutory approval issues related to the adoption of the latest construction technology of Modular Integrated Construction (MiC) for the InnoCell residential project in Pak Shek Kok of the Hong Kong Science & Technology Park, one of the first construction project of its kind in Hong Kong. The project which started in 2019 was making good progress and a number of building modules with building services provisions fully furnished in a MiC factory in mainland China were duly inspected and delivered to site for final assembly and connections, with an expected completion in 2020. In other government, private development, data centre, healthcare and infrastructure projects, we are developing our ATAL Building Services Prefabrication & Modularisation Construction Technology (ABSPM) to adopt off-site prefabrication and modularisation of building services components in a systematic approach and on a wider scale in order to enhance quality, safety and productivity, and to mitigate the acute problems of aging and shortage of site workers. As at 31 December 2019, the value of outstanding contracts of the Group in our Building Services segment amounted to HK$5,804 million, representing an increase of HK$2,188 million over that at 31 December 2018. Environmental Engineering Our environmental engineering segment provides total solutions for the design, construction, maintenance and operation of environmental engineering systems and treatment plants for water, wastewater, sludge, solid wastes and gas projects. Our strong technological expertise and proven track records in project delivery set us apart from our competitors, and firmly place us in the market leading position in environmental engineering segment in Hong Kong. Through our in-house research and development (R&D) team and in collaboration with reputable universities, research institutes and technological partners in Hong Kong, mainland China and overseas, we have developed and adopted a number of advanced technologies on water, wastewater and solid waste treatment processes, including: • ATAL Multistage Flocculation System (AMSFS I & II) for suspended solid removal in wastewater treatment • ATAL Multistage Flocculation Magnetic (AMSFM), a containerised high rate clarifier system for black stream water treatment • ATAL Biological Aerated Filter (ABAF), a high discharge quality, small foot-print filter for sewage treatment • ATAL High Power Ultrasound (AHPUS) reactor used in sludge digestion • ATAL Nano-bubble (ANANO) technology for wastewater treatment plant • ATAL Electrocoagulation (AEC) process for high concentrated wastewater • ATAL Extra-deep-bed Denitrification Filter (AEDNF) for wastewater tertiary treatment These in-house advanced treatment processes give us the competitive edge not only for bidding tenders in Hong Kong but also tapping into the vast market of mainland China, which has set very stringent environmental control standards and ambitious national environmental targets under the current five years plan. During the reporting period, 13 contracts in mainland China were awarded to upgrade the existing plants adopting our own technologies AMSFSII & ABAF in order to meet the new environmental standards. Up to 31 December 2019, we have already had project references in most of the 34 provincial-level administrative divisions in mainland China. Leveraging our strong technological expertise and proven track records in Hong Kong and mainland China, we are also exploring opportunities to provide environmental engineering service overseas, particularly to relevant belt and road countries. In 2019, by working with a large China state-owned enterprise, we secured a contract for the supply of technologies and equipment, including 5 years’ operation, for a wastewater treatment plant project of capacity 50,000m3/day in Nepal. Operation and Maintenance (O&M) contracts have become an increasingly important income stream for our environmental engineering segment. With the completion of the organic waste treatment facility in Siu Ho Wan in the end of FY2018, the plant was under our operation and maintenance in FY2019, adding the total number of O&M contracts in this business segment to 13, of which 11 are in Hong Kong, 1 in mainland China and 1 in Nepal. These O&M contracts typically have a duration of 10 to 15 years, together with other maintenance contracts with a typical duration of 3 to 5 years, they can provide steady and recurrent income to the business segment for a relatively long time span. As at 31 December 2019, the value of outstanding contracts of the Group in this business segment amounted to HK$2,335 million, representing a decrease of HK$330 million from that of 2018. ICBT The mission of our Information Communications and Building Technologies (ICBT) segment is to offer solutions to help build green and intelligent buildings and facilitate Hong Kong to become a smart city through integrating a wide range of information and communication technologies with building energy and management technologies. Through in-house R&D as well as in collaboration with many leading hardware and software business partners, universities and research institutes, we provide customised software and one-stop engineering solutions to meet diverse needs of our customers. Building Management System (BMS), Extra Low Voltage (ELV) & Security Systems and Automatic Vehicles and Passengers Clearance Systems (e-Channels) are the three largest of the existing business sub-segments in our ICBT segment. With the escalating global effort to cope with climate change and the mega trend of smart city, we see new, rising business opportunities in providing advanced technological solutions in building energy optimisation and management, Internet of things (IoT) infrastructure and analytics, and Intelligent Transport. Our award-winning Cloud-based Chiller Plant Energy Management Platform was commercialised in 2019. This in-house developed software works on a monthly subscription business model and has attracted the interests of many reputable clients of commercial buildings, with a number of orders received and more under negotiation during the reporting period. We have further developed a Fault Detection & Diagnostic (FDD) software and an Energy Management Visualisation (EMV) software which help better monitor the working conditions of building services equipment and building energy consumption pattern. FDD and EMV are ready for official launch in 2020. Retro-commissioning of building services systems in offices, commercial and government buildings is to bring them back to the most energy efficient and optimal operation condition after such systems’ operations for a number of years. This was another new technological service we were keen to promote in 2019. With 85% of the approximately 42,000 buildings in Hong Kong being over 20 years old (65% being over 10 years old), we see good business opportunities in our retro-commissioning services as well as the supply of other green and energy efficient equipment and energy saving retrofit installations. Equipping office, commercial and government buildings with IoT infrastructure was a new stream of income in our ICBT segment in FY2019. Apart from IoT infrastructure orders for individual buildings, we also received orders for providing integrated IoT infrastructure from some leading developers for their cluster of buildings in Central and in Quarry Bay, as well as from Government for cluster of government buildings. To further enhance our service, we are going to launch the ATAL IoT Platform as well as more powerful analytical functions in 2020. In Intelligent Transport, we secured an Automated Guided Vehicular (AGV) Parking System contract for the Hong Kong Science and Technology Park last year, the first commercialised smart parking system of its kind in Hong Kong, and are in the process of bidding for the second one. We are also embarking on other Intelligent Transport business opportunities including Free Flow Tolling system and Traffic Control Surveillance System, as well as EV Charging System, both the wired and wireless types, to help transform Hong Kong to an Asia’s smart city. As at 31 December 2019, the value of outstanding contracts of the Group in this business segment amounted to HK$834 million, representing an increase of HK$117 million over that at 31 December 2018. Lifts & Escalators Our lifts and escalators segment encompasses the design, manufacturing (under the trade name “Anlev”), sale, installation and maintenance of a wide range of lifts, escalators and moving walkways for different uses and meeting different requirements, including heavy duty escalators for public transport and large cargo and vehicular lifts. Anlev Elex Elevator Limited (“AnlevElex”), our wholly owned subsidiary, has obtained the highest rating in safety and quality performance for both the Lift Contractors’ Performance Rating and Escalator Contractors’ Performance Rating systems of the Hong Kong Electrical and Mechanical Services Department for 7 years or 28 consecutive quarters from the commencement of the quarterly rating systems in January 2013 up to the last quarter of 2019. To further enhance safety and cope with the problem of shortage of skilful workers in the industry, we are embracing innovation and technologies. In lift installation, we have increased the use of scaffold-less installation method for improved safety and efficiency. In maintenance service, with the Anlev Predictive Maintenance & Remote Monitoring System (APMRMS) that we have developed and applied to the lifts we installed or under our maintenance contracts, we are able to monitor and analysis the performance of the lifts meticulously, taking timely and effective maintenance actions before a breakdown occurs, leading to improved performance reliability and reduced manpower requirement. In FY2019, we received our first order of APMRMS from a client for 35 lifts. With the APMRMS in place, routine maintenance frequency can be reduced from weekly to biweekly as agreed with client. Capitalising on our outstanding performance ratings in safety and quality, the steady growth in order intake, revenue and gross profit continued in the segment in FY2019. On top of our normal projects of new lift installation and maintenance, we received many enquiries for modernisation of aged lifts in the reporting period primarily due to the increasing safety concern for lifts in society. In FY2019, we secured contracts for modernisation of lifts of total value HK$83.8 million and completed contracts of value of HK$44.5 million. Moreover, as the HKSAR Chief Executive announced in the 2018 Policy Address to launch a HK$2.5 billion “Lift Modernisation Subsidy Scheme” (“LIMSS”) and subsequently in 2019 announced an additional funding allocation of HK$2.0 billion over the seven years starting from 2019-20 to promote lift modernisation in the community through provision of financial incentive to building owners in need, our outstanding performance rating and project track record put us in a good position to capture these forthcoming business opportunities. Hong Kong Housing Authority (“HKHA”) is the single largest customer in the lift market in Hong Kong. Subsequent to our admission to the HKHA approved contractor list for lift installations in March 2018, we were awarded our first HKHA lift contract for Fu Shan Estate in FY2019. We are prepared to pursue more lift tenders from HKHA in the coming years. Among projects in progress, one of the signature projects of AnlevElex is the replacement of the twenty-one escalators and moving walkways between Central and Mid Levels. The elevators and moving walkway system connects the commercial and transportation hubs in Central to the schools and residential buildings at the Mid Levels of Hong Kong Island as well as provides convenient transportations for local people and tourists to explore many international restaurants, cultural attractions and heritage spots alongside it. To replace long escalators and moving walkways in a built up environment calls for special engineering skills as well as demanding logistical and phase completion planning. We overcome this social and technical challenge by working closing with the community groups and government agencies to minimise inconvenience to the local residents and tourists alike. Eight of the twenty-one units have been completed and put in operation as of end 2019, with the overall project completion expected to be in 2022. The Group takes pride in being the supplier and contractor of this iconic project for the community. To the export market initially as an unknown name, Nanjing Anlev Elevator Limited (“Anlev”), our wholly owned subsidiary, has now built up its reputation as a manufacturer of safe, reliable and energy efficient lifts and escalators. Anlev equipment are sold to five continents through its distributor network and the business is growing. We actively support our oversea distributors in bidding projects, such as metro/railway tenders in South Korea, Australia and Mexico. During the reporting period, we were awarded our first order in Mexico and Portugal respectively and signed new distributorship agreements in Eurasia and Eastern Europe regions. We will put in extra effort to boost our business growth overseas, targeting on areas with large market size and higher price level, such as the USA and East and South Pacific Rim countries. Moreover, we are looking for ways to work more closely with our oversea partners, and in addition to being a manufacturer and supplier, get ourselves involved in the maintenance business overseas as well as in mainland China. To cope with the new manufacturing licence requirement in mainland China and to meet our anticipated production needs for the next few years, we are working on an expansion plan of our factory in Nanjing. Our present plan of the expansion encompasses increasing the production area by 4,650 square metres, increasing the height of the test tower to 90 metres and installing a number of automatic production lines to enhance our production capacity and to streamline our production process. A letter of intent together with the expansion proposal were submitted to the local Government in end of last year and the consultation and approval process is now in progress. The pace of expansion will be suitably adjusted according to market conditions. As at 31 December 2019, the value of outstanding contracts of the Group in the Lifts and Escalators segment amounted to HK$436 million, representing an increase of HK$15 million over that at 31 December 2018. Prospects: FY2019 was an eventful year not short of challenges, nor FY2020 will be. Externally, while the trade conflict between China and the United States of America (“U.S.”) prevailing over last year might have reached a first stage agreement at the turn of the year, it is unlikely to be fully resolvable in the near future. Locally, Hong Kong has not yet recovered from the social unrest which started in early June last year. According to the forecast estimate released by the Census and Statistics Department in February 2020, Hong Kong GDP (“GDP”) grew at a negative annual rate of 2.9% in the fourth quarter of 2019, the second consecutive quarter of contraction. For the whole of 2019, GDP is expected to contract by 1.2% in real terms, the first annual decline since 2009. Within the construction industry, the filibustering in the HKSAR Legislative Council has delayed the award of new public works contracts, while on the other hand, the problems of aging and shortage of construction labour continue to impose big challenge on productivity to construction companies. As 2020 begins, the Coronavirus outbreak that started in January has not yet receded at the date of this annual report and the progress of some construction tenders and projects in Hong Kong, Macau and mainland China have been inevitably affected to some extent. Due to the abovementioned volatile economic atmosphere globally and locally, we expect market competition to become increasingly fierce in the short term, exerting pressure on profit margins of tenders and projects in the industry.

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