CR Construction Announces Interim Results
Net profit increased by 10% YoY, Proposed an interim dividend of HK1.5 cents per share
Highlights:- Revenue generated from environmental operations increased by 132.1% to approximately HK$114.8 million.
- Gross profit increased by 10.8% to approximately HK$150.5 million.
- Net profit increased by 10.3% to approximately HK$46.0 million.
- Basic earnings per share was HK9.1 cents. The Board recommended the payment of interim dividend of HK1.5 cents per share.
| | For the 6 months ended 30 June | |||
| HK$'000 | 2023 | 2022 | Change | |
| Revenue | 2,832,073 | 2,919,864 | -3.0% | |
| 2,717,304 114,769 | 2,870,415 49,449 | -5.3% +132.1% | |
| Gross profit | 150,480 | 135,756 | +10.8% | |
| Gross profit margin Net profit | 5.3% 45,954 | 4.7% 41,668 | +0.6 ppts. +10.3% | |
| Earnings per share (HK cents) | 9.1 | 8.3 | +9.7% | |
HONG KONG SAR - Media OutReach - 25 August 2023 - CR Construction Group Holdings Limited ("CR Construction" or the "Company", together with its subsidiaries, the "Group"; stock code: 1582.HK), a building contractor in Hong Kong, announced its interim results for the six months ended 30 June 2023 (the "Reporting Period"). During the Reporting Period, the revenue recorded by the Group amounted to approximately HK$2,832.1 million representing a decrease of approximately 3.0% as compared to approximately HK$2,919.9 million for the six months ended 30 June 2022 (the "Corresponding Period Last Year").
Net profit of the Group during the Reporting Period was approximately HK$46.0 million, representing an increase of 10.3% as compared to the Corresponding Period Last Year.
During the Reporting Period, gross profit of the Group was approximately HK$150.5 million, representing an increase of approximately 10.8% as compared to approximately HK$135.8 million for the Corresponding Period Last Year. The Group's gross profit margin was approximately 5.3% and 4.7% for the six months ended 30 June 2023 and 2022, respectively. The gross profit margin of the Group increased slightly by approximately 0.6 percentage points by comparing the six months ended 30 June 2023 against the six months ended 30 June 2022.
During the Reporting Period, earnings per share of the Group was approximately HK9.1 cents (for the six months ended 30 June 2022: HK8.3 cents). The Board recommended the payment of interim dividend of 1.5 cents per share.
BUSINESS REVIEW
Construction Operations
Building Construction Works
For the six months ended 30 June 2023, the revenue generated from the building construction works was HK$2,455.9 million, representing an increase of approximately 9.9% as compared to approximately HK$2,235.5 million for the six months ended 30 June 2022.
During the Reporting Period, the gross profit of building construction works was approximately HK$130.6 million, representing an increase of approximately 98.2% as compared to approximately HK$65.9 million for the Corresponding Period Last Year. The gross profit margin increased to approximately 5.3% for the six months ended 2023. The increase in gross profit and gross profit margin was mainly due to additional cost incurred for variation orders for projects during the prior period, while the respective revenue were only certified during the Reporting Period.
Repair, Maintenance, Alteration and Addition ("RMAA")
The revenue generated from the RMAA works decreased by approximately 58.8% from approximately HK$634.9 million for the six months ended 30 June 2022 to approximately HK$261.4 million for the six months ended 30 June 2023.
During the Reporting Period, the gross loss of RMAA works was approximately HK$1.4 million, representing a decrease of approximately HK$56.3 million from the gross profit of approximately HK$54.9 million for the six months ended 30 June 2022. The gross profit margin decreased to approximately negative 0.5% for the six months ended 30 June 2023. The decrease in the gross profit and gross profit margin for the six months ended 30 June 2023 was mainly due to additional cost incurred for variation orders for a project during the Reporting Period, while the respective revenue is expected to be recognised at a later stage.
Environmental Operations
For the six months ended 30 June 2023, the revenue generated from the environmental operations was approximately HK$114.8 million, representing an increase of approximately 1.3 times as compared to approximately HK$49.5 million for the six months ended 30 June 2022.
During the Reporting Period, the respective gross profit was approximately HK$21.3 million, representing an increase of approximately 42% as compared to approximately HK$15.0 million for the six months ended 30 June 2022. The gross profit margin decreased to approximately 18.5% for the six months ended 30 June 2023. The increase in the gross profit and decrease in gross profit margin for the six months ended 30 June 2023 was mainly due to increase in revenue from construction and rehabilitation services which contributed lower gross profit margin during the Reporting Period.
Contract Costs
The Group's contract costs primarily consisted of subcontracting costs, material costs, direct staff costs and site overheads. For the six months ended 30 June 2023, the contract costs recorded by the Group were approximately HK$2,681.6 million, representing a decrease of 3.7% compared to approximately HK$2,784.1 million for the six months ended 30 June 2022. Such decrease was attributable to the decrease in subcontracting costs, material costs and direct staff costs for new projects and existing projects, which was partly offset by increase in provision of rectification works and claims, during the Reporting Period.
Other Business Development
Acquisition of entire equity interest in Zhejiang Construction Investment Environment Engineering Company Limited
As disclosed in the announcement of the Company dated 31 January 2023, the Company and China Zhejiang Construction Group (H.K.) Limited (the "Seller"), one of the controlling shareholders of the Company, entered into the share purchase agreement, in relation to the Company has conditionally agreed to acquire the entire equity interest in Zhejiang Construction Investment Environment Engineering Company Limited (the "Target Company") at the Consideration of RMB201,000,000 (equivalent to approximately HK$228,409,090).
All the conditions precedent under the Share Purchase Agreement have been fulfilled, the completion took place on 8 May 2023 and the Target Company has become a wholly-owned subsidiary of the Company since then.
PROSPECTS
Subsequent to 30 June 2023, the Group has been further awarded 2 new projects in relation to RMAA contracts with an original contract sum of approximately HK$10.6 million.
The Group has also placed great emphasis on technological innovation to enhance its core competitiveness in the construction industry. The total expenditure for the research and development is approximately HK$10.7 million during the Reporting Period. Our self-developed Digital Works Supervision System ("DWSS"), SmarTick Pro has obtained the ISO27001 Certification for Information Security Management System, meeting the requirements of this international standard, and becoming the first company to obtain this certificate for DWSS in Hong Kong. As construction digitalization continues to accelerate, the Group are keeping pace with the industry by adopting more digital tools at our sites to enhance management and construction safety. Meanwhile, the Group also developed new sewage treatment membrane to be used in sewage and reclaimed water treatment services in the PRC.
In the second half of 2023, the city's economic activities will have returned to normal levels, while the const pressures will be increased alongside the recovery. As the government recently introduce labour importation schemes for the construction industry, we expect that it may help alleviate some of the challenges associated with the skilled-labour shortages. The Company will continue to put in dedicated efforts in seeking out new and promising construction business opportunities that can generate profitable growth for the Group. Meanwhile, leveraging on our industrial knowledge, the Company is keen to explore suitable business opportunities in the Construction area locally or overseas.
The issuer is solely responsible for the content of this announcement.
CR Construction Group Holdings Limited
CR Construction Group Holdings Limited, which is carrying out construction business for over 55 years locally, is one of the leading building contractors in Hong Kong. The Group principally act as a main contractor in building construction works and RMAA works projects across public and private sectors in Hong Kong. As a main contractor, the Group is responsible for (i) overall management of the projects; (ii) formulating work programmes; (iii) engaging subcontractors and supervising their works; (iv) sourcing construction materials; (v) communication and coordination with the customers and their consultant teams; and (vi) safeguarding compliance with safety, environmental and other contractual requirements.
