Tat Hong Equipment Service Co., Ltd. (Tat Hong or the Company, together with its subsidiaries, the Group) (HKG: 2153), the first foreign-owned tower crane service provider established in the PRC, has announced its interim results for the six months ended 30 September 2022 (the Period).
During the Period, the Group recorded revenue of approximately RMB 387.4 million, representing a decrease of approximately 6.8% as compared with that for the six months ended 30 September 2021. Loss attributable to equity shareholders of the Company for the period amounted to approximately RMB 41.9 million, mainly due to the one-off currency exchange loss on USD borrowings and the economic downturn caused by the COVID-19 pandemic (the “Pandemic”). The overall gross profit and gross profit margin decreased to RMB75.5 million and 19.5%, respectively.
The Group’s total Tonne Metres (TM) in use increased from approximately 1,479,145 for the period ended 30 September 2021 to 1,577,983 for the period ended 30 September 2022. As at 30 September 2022, the Group had 292 projects in progress with a total outstanding contract value of approximately RMB 605 million and 37 projects on hand with a total expected contract value of approximately RMB 68 million. Of these projects, the Group expects to complete contract work of approximately RMB 348 million by the end of 30 September 2023, demonstrating solid earnings visibility.
Despite the gradual recovery in major economies and the surge in vaccination and immunity rates, the Pandemic has put pressure on every component of the Group’s industry value chain. To contain the spread of the Pandemic throughout the country, numerous cities have adopted anti-pandemic measures, such as persistent or intermittent lockdowns, and certain projects were temporarily suspended on account of these measures. From April to June 2022, the Group’s economic activities in eastern China were affected to a certain extent. In the meantime, against the backdrop of interest hikes by the US Fed and global inflation, economies around the world have encountered significant instability and pressure in the first half of the year. As the external environment remains volatile, the Group strives to adjust its operational strategy, optimise its management structure, and make timely and appropriate decisions in a bid to mitigate the risks brought by the Pandemic.
Mr. Sean Yau, CEO of Tat Hong Equipment Service Co., Ltd. said, “After years of the lingering Pandemic, the market remains sluggish and real estate has been severely impacted. Fortunately, the Group has optimised its business structure by placing a greater emphasis on the other business segments, reducing the real estate to approximately 30% of total revenue, which will mitigate the negative impact of the industry’s downturn. In the meantime, we will shift our focus to the energy, infrastructure and public construction segments.”
“With the continuous introduction of favourable policies and the development direction of the 14th Five Year Plan, which includes initiatives centred on ‘new infrastructure, new urbanisation and major projects’ and the aim of carbon neutrality, we believe that there are unexpected opportunities emerging in the (energy) infrastructure market. With our strong reputation and expertise, we are confident about the Group’s prospects.”
Mr. Roland Ng, Chairman of Tat Hong Equipment Service Co., Ltd. concluded, “Going forward, we will use the Pandemic as an opportunity to stimulate and accelerate transformation, to accelerate the adoption and improvement of the digital platform ‘iSmartCon’, so as to further optimise the management of various stages of the production process. Moreover, we will focus on analysing the impact of the Pandemic on each business sector and project, reviewing and modifying strategic plans, and communicating updates with all stakeholders including suppliers, clients and employees. The Group will continue its efforts in meeting the increasing customer demands for prefabricated construction using medium and large size tower cranes, and to establish a standardised post-market service eco-system for tower cranes, with the aim of providing a sustainable foundation for a green, safe and environmentally friendly tower crane service industry value chain, while adhering to the proper safety standards and PRC prevention and control policies.”
About Tat Hong Equipment Service Co., Ltd. (HKG: 2153)
Tat Hong Equipment Service Co., Ltd. is the first foreign-owned tower crane service provider established in the PRC. Since 2007, the Group has established as a tower crane service provider for one-stop tower crane solution services from consultation, technical design, commissioning, construction to after-sales services primarily to Chinese Special-tier and Tier-1 EPC contractors. Guided by its core values, “Virtue, Safety and Excellence”, the Group has successfully established its market position and maintained stable, reputable and loyal customer base in the construction industry in the PRC.