Three main strategies of "major customer", "going out" and "quality business" achieve remarkable results

 

Highlights

 

     Revenue rises 54.5% to RMB 3.21 billion, and net profit rises 49.1% to RMB 77.42 million, a breakthrough in revenue and net profit

     Gross profit increased by 55.6% to RMB 178 million, and gross profit margin remained stable at 5.54%

     The total value of new major projects was approximately RMB2.13 billion, representing 52.6% of the total contract value

     The total amount of newly signed business outside Zhejiang Province exceeded RMB 1.26 billion, accounting for approximately 31.1% of      the total new contracts

     Proactively undertook and constructed the Engineering Procurement Construction ("EPC") projects, involved in the construction of the      "Buttonwood+" EPC project and completed the topping off on the schedule currently

 

HONG KONG, CHINA,- 24 August 2018 - Jujiang Construction Group Co., Ltd. ("Jujiang Construction", together with its subsidiaries, the "Group"; stock code: 1459) announced its interim results for 6 months ended 30 June 2018 ("the period under review").

 

The Group's revenue in the period under review amounted to approximately RMB3.21 billion (Same period 2017: RMB2.08 billion), representing an increase of 54.5%. Gross profit is RMB178.04 million (Same period 2017: RMB114.44 million). Gross profit margin remained stable at 5.54%; Profit for the period increased by approximately 49.1% to approximately RMB77.42 million (Same period 2017: RMB51.94 million).

 

Business review

 

In the first half of the year, the Group made full use of the Group's own brand superiority to strengthen the allocation of business resources by actively delivering the three main strategies of "major customers", "going out", and "quality business". During the interim reporting period, the Group achieved major breakthroughs in revenue and net profit, which increased by approximately 54.5% and 49.1% to RMB 3,214.8 million and RMB 77.4 million, respectively, compared with the same period last year. 

 

Compared with the value of backlog of about RMB5,219.0 million as at 30 June 2017, the value of backlog increased by 69.1% to approximately RMB8,822.8 million as at 30 June 2018. During the period under review, approximately 99.1% (30 June 2017: approximately 99.0%) of the revenue was contributed by the construction contracting business.

 

Quality services are recognized by "major customers"

 

With the Company's development strategy of "major customers", the Group promoted rapid development of the major customers business with our excellent services and quality. Maintaining a good relationship with major customers such as Country Garden, Vanke, Green Town, Sunac, Zhenshi and Tongkun, the Group gained recognition and trust from the existing large real estate companies and local leading enterprises. In the first half of the year, the total value of new major projects was approximately RMB2.13 billion, representing 52.6% of the total contract value. 

 

Some of the large-scale projects that Jujiang Construction undertook include the Jiaxing Jingkai Land No. 2017-10 Construction Project, the Jushi Group Co., Ltd. Smart Manufacturing 230 Project, the Ruzhou Sweet-Scented Osmanthus Garden* (汝州建業桂園) Phase I Project and Zhengzhou Rongchuangcheng Project Development Zone* (鄭州融創城項目開發區) Phase I Project.

 

Customer recognition stems from the Group's consistent commitment to providing quality service. In the first half of 2018, the production management of the Group‟s projects under construction was carried out in an orderly manner and recognized by our customers and local authorities. In the first half of the year, the Group had 6 standardized sites above the city level, including 5 provincial-level sites.

 

Among them, the CCTV New Film Space-Central New Film Tongxiang Park (CCTV新影時空-中央新影桐鄉園) Phase I Project won the title of advanced construction site in the "Civilized and Harmonious Construction Sites" competition for construction companies in Zhejiang Province, whereas the Haiyan Smart Manufacturing Innovation Center (海鹽智慧製造創新中心) Phase I Project was awarded the title of the 18th Batch of Demonstration Projects with New Construction Technology Applications in Zhejiang Province. 

 

The Group actively participated in public project bidding and tendering, with a focus on the major and quality projects, and undertook large-scale projects such as the Tongxiang*Zhejiang Media Huace Film Industrial Park* (桐鄉*浙江傳媒華策電影產業園) Phase I Project, the Jiashan No.2 People's Hospital* (嘉善縣第二人民醫院) Relocation Project, and the Tongxiang Shanty Town Redevelopment Project.

 

"Going out" development achieved significant results

 

The development of the "going out" strategy achieved remarkable results. In the first half of the year, the total amount of new businesses outside the Zhejiang Province exceeded RMB1.26 billion, accounting for approximately 31.1% of the total new contract value. 

 

By region, during the period under review, revenue from Jiaxing City accounted for 62.1%, revenue from Zhejiang Province (except Jiaxing City) was 6.8%, and revenue from other regions was 31.1%.  The Group undertook projects outside Zhejiang province such as the Lingyuan City Yongli Shopping Mall* (凌源市永利廣場) Phase III Project.

 

The Group continued to expand its market scope and explore more potential markets, including improving the operating performance of Jiangsu, Anzheng and Jiangxi the other three provinces; accelerating the deployment of emerging markets; and promoting the development of foreign cities and surrounding areas such as Jiaxing. 

 

Actively enter the blank area, seek new business cooperation; and actively participate in the competition of the high-end market in the foreign market, making use of the quality resources and brand advantages, and keeping up with the major customers and Zheshang major investment projects to achieve market expansion.

 

Undertake EPC projects and explore new areas

 

In the development of new areas, the Group proactively undertook and constructed the Engineering Procurement Construction ("EPC") projects. The Group involved in the construction of the "Buttonwood+" EPC project and completed the topping off on schedule currently, which provided the Company with an opportunity to accumulate experience for the following EPC project construction. On 24 May, the Group won the bid and undertook the EPC project of Tongxiang Kangming Road Primary School (桐鄉康明路小學).

 

Besides, the Group negotiated and followed up certain public-private partnership ("PPP") projects with thorough explorations and constant investigations, trying to look for collaboration. 

 

The Group also pushed for the research on the prefabricated structure for precast concrete ("PC") by taking the construction of the existing PC structure as an opportunity to sum up experience and reserve technology; closely followed the related developments of construction industrialization in Tongxiang City, completed project proposal drafts and accelerated implementation of industrialization base construction; as well as aggressively explored overseas project construction and steadily planned related works.

 

Mr. Lyu Yaoneng, Chairman of Jujiang Construction, said, "Although the real estate policy regulation has brought new challenges to the real estate industry since 2018, the development of the construction industry is still prosperous, and the demand of the construction industry is expected to maintain a growing trend. 

 

With high quality service and quality, we are recognized and trusted by our customers, so that we can remain competitive in the industry. Looking forward, we will continue to actively implement the three major strategies of 'major customer', 'going out' and 'quality business', and the Company's rapid and quality development will be positively facilitated."

 

Placing of Bonds

 

The Group also announced that the Company has entered into a Placing Agreement for the purposes of arranging placees to subscribe bonds up to an aggregate principal amount of HK$200,000,000. The denomination of the Bonds is HK$500,000. Interest is payable twice per annum at 7% per annum. Maturity date is the third anniversary of the dates of issue of the Bonds. 

 

The net proceeds (after deducting the placing commission and other related costs and expenses) will be utilised for financing the expansion of construction contracting business of the Company and as general working capital of the Group. The Board considers that the Placing represents a suitable opportunity to strengthen the Group's financial position and is in the best interests of the Company and the Shareholders as a whole. (mor/roc).