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 2023 (the Period).
During the Period, the Group recorded revenue of approximately RMB 358.6 million, down by RMB 28.8 million, or 7.4%, against the six months ended 30 September 2022. Loss attributable to equity holders of the Company for the Period amounted to RMB 20.4 million, narrowing by approximately 51.2% when compared with that for the period ended 30 September 2022 (2022: loss of RMB41.9 million). The improvement was primarily due to (i) decrease in exchange loss arising from foreign currency loan, resulting in a decrease in finance costs, and (ii) decrease in cost of sales due to a decrease in material and repair costs and labor subcontracting cost. The average monthly service price of tower cranes per tonne metre (TM) in use decreased from RMB 257 to RMB 225. Overall gross profit and gross profit margin decreased to RMB 63.8 million and 17.8%, respectively.
The Group’s TM in use increased to 1,594,911 for the Period from 1,577,983 for the pervious same period. As at 30 September 2023, the Group had 268 projects in progress and will generate revenue (excluding value added tax) of approximately RMB 460.7 million, and 73 projects on hand will generate revenue (excluding value added tax) of approximately RMB 224.7 million. Of those projects, the Group expects to complete approximately RMB 380.4 million worth of revenue work by the end of 30 September 2024, boasting solid earnings prospect and high earnings visibility.
During the Period, China’s construction industry was still dragged by the slow post pandemic economic recovery. Supply of new domestic construction projects decreased substantially compared with last year. That resulted in a decline in average monthly service price of tower cranes per TM. To minimize the impact of slack domestic business on its performance, the Group accelerated deployment in overseas markets during the Period. Efforts have been made to build inroads into other foreign geographical territories to increase future revenue. While maintaining its position in the domestic market, the Group expanded its geographical footprint to the Greater Bay Area including Hong Kong and Macau. By June 2023, the first unit of tower crane was deployed in Hong Kong, and more than 20 units in Macau.
At the same time, the Group had invested notably in its self-developed digital management tools “TOP” and “iSmartCon” to improve management and operational efficiency. As at 30 September 2023, the Group held 146 registered patents for utility models and inventions related to tower cranes. It believes the robust technical capabilities of its tower cranes services will continue to position it favourably in securing projects. Furthermore, the Group’s persistent focus on research and development of tower crane technical solutions will further strengthen its ability to deliver exceptional services.
Mr. Sean Yau, CEO of Tat Hong Equipment Service Co., Ltd. said, “With the central government providing at least RMB 1 trillion of low-cost financing to three major types of infrastructure projects, namely Urban village redevelopment, Affordable housing projects and ‘Dual-use for normal and emergency purposes’ projects, domestic housing demand is expected to increase, which will in turn boost the real estate and construction market. At the 10th anniversary of the Belt and Road Initiative, overall demand by participating countries for infrastructure projects, including traditional infrastructure, new infrastructure and energy projects, has greatly increased. We will make timely adjustment to our operational and geographical strategies to respond to the evolving global market environment.”
Mr. Roland Ng, Chairman of Tat Hong Equipment Service Co., Ltd. said, “Although the market is gradually recovering, the market trend overall is still full of uncertainties. Nonetheless, the Group has been able to cope with the complex and volatile environment by adjusting its operational strategies at the right time. A leading tower crane service provider in the industry, Tat Hong is currently one of the few enterprises in China that has ‘gone out’, testifying to its capabilities and leadership in China’s construction industry. We boast a stable, reputable and loyal customer base and expect to continue to expand into more Asian markets and enlarge market share in the future. Guided by our core values of ‘Virtue, Safety and Excellence”, we will strive to keep elevating our strategic sustainable development goals. By enhancing digital management, we can better share resources, reduce cost and heighten efficiency, plus aggressively pursue international businesses at the same time. This series of measures can help the Group improve operational efficiency and fulfil its goal of becoming ‘the best construction equipment service provider’ in the industry.”
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.