CR Construction Announces Interim Results, Gross profit increased by 25.0% YoY
Declared an interim dividend of HK1.5 cents per share
Highlights:- Revenue generated by RMAA works increased by approximately 11.2%
- Gross profit increased by 25.0% to approximately HK$188.1 million.
- Gross profit margin increased by 1.5 p.p. to approximately 6.8%.
- Basic earnings per share was HK7.17 cents. The Board resolved to declare the payment of interim dividend of HK1.5 cents per share.
Financial Highlights:
| | For the 6 months ended 30 June | |||
| HK$'000 | 2024 | 2023 | Change | |
| Revenue | 2,773,188 | 2,832,073 | -2.1% | |
| 2,414,268 290,600 68,320 | 2,455,898 261,406 114,769 | -1.7% +11.2% -40.5% | |
| Gross profit | 188,062 | 150,480 | +25.0% | |
| Gross profit margin Net profit | 6.8% 36,220 | 5.3% 45,954 | +1.5 p.p. -21.3% | |
| Earnings per share (HK cents) | 7.17 | 9.09 | -21.1% | |
HONG KONG SAR - Media OutReach Newswire - 23 August 2024 - 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 2024 (the "Reporting Period"). During the Reporting Period, the revenue recorded by the Group amounted to approximately HK$2,773.2 million representing a decrease of approximately 2.1% as compared to approximately HK$2,832.1 million for the six months ended 30 June 2023 (the "Corresponding Period Last Year").
Net profit of the Group during the Reporting Period was approximately HK$36.2 million, representing a decrease of approximately 21.3% as compared to the Corresponding Period Last Year.
During the Reporting Period, gross profit of the Group was approximately HK$188.1 million, representing an increase of approximately 25.0% as compared to approximately HK$150.5 million for the Corresponding Period Last Year. The Group's gross profit margin was approximately 6.8% and 5.3% for the six months ended 30 June 2024 and 2023, respectively. The gross profit margin of the Group increased slightly by approximately 1.5 percentage points by comparing the six months ended 30 June 2024 against the six months ended 30 June 2023.
During the Reporting Period, earnings per share of the Group was approximately HK7.17 cents (for the six months ended 30 June 2023: HK9.09 cents). The Board has resolved to declare the payment of interim dividend of HK1.5 cents per share.
BUSINESS REVIEW
Construction Operations
Building Construction Works
For the six months ended 30 June 2024, the revenue generated from the building construction works was HK$2,414.3 million, representing a decrease of approximately 1.7% as compared to approximately HK$2,455.9 million for the six months ended 30 June 2023.
During the Reporting Period, the gross profit of building construction works was approximately HK$126.7 million, representing a decrease of approximately HK$3.9 million as compared to approximately HK$130.6 million for the Corresponding Period Last Year. The gross profit margin decreased slightly to approximately 5.2% for the six months ended 2024. The decrease in gross profit and gross profit margin was mainly due to additional cost incurred for variation orders for projects during the Reporting period, while the respective revenue is expected to be recognised at a later stage.
Repair, Maintenance, Alteration and Addition ("RMAA")
The revenue generated from the RMAA works increased by approximately 11.2% from approximately HK$261.4 million for the six months ended 30 June 2023 to approximately HK$290.6 million for the six months ended 30 June 2024.
During the Reporting Period, the gross profit of RMAA works was approximately HK$43.2 million, representing an increase of approximately HK$44.6 million from the gross loss of approximately HK$1.4 million for the six months ended 30 June 2023. The gross profit margin increased to approximately 14.9% for the six months ended 30 June 2024. The increase in the gross profit and gross profit margin for the six months ended 30 June 2024 was mainly due to additional cost incurred for variation orders for a project during the prior period, while the respective revenue were only certified during the Reporting Period.
Environmental Operations
For the six months ended 30 June 2024, the revenue generated from the environmental operations was approximately HK$68.3 million, representing a decrease of approximately 40.5% as compared to approximately HK$114.8 million for the six months ended 30 June 2023.
During the Reporting Period, the gross profit was approximately HK$18.2 million, representing a decrease of approximately HK$3.1 million as compared to approximately HK$21.3 million for the six months ended 30 June 2023. The gross profit margin increased to approximately 26.6% for the six months ended 30 June 2024. The decrease in the gross profit and increase in gross profit margin for the six months ended 30 June 2024 was mainly due to decrease 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 2024, the contract costs recorded by the Group were approximately HK$2,585.1 million, representing a decrease of 3.6% compared to approximately HK$2,681.6 million for the six months ended 30 June 2023. Such decrease was attributable to the decrease in subcontracting costs, material costs and direct staff costs for new projects and existing projects during the Reporting Period.
PROSPECTS
Subsequent to 30 June 2024, the Group has been further awarded 1 new projects relating to building construction works with original contract sum of approximately HK$2.1 billion.
The Group has also attached great emphasis to technological innovation, enhancing its core competitiveness in the construction industry. The total expenditure for the research and development is approximately HK$11.6 million during the Reporting Period. Our self-developed "4S Smart Construction Safety System" has obtained the ISO 27001 Certification for Information Security Management System, becoming the first company in Hong Kong to achieve this certification for a smart construction safety system.
In addition, our environmental company has successfully developed an integrated rural domestic sewage treatment equipment, which has passed the performance test by a third-party testing institution. Therefore, in line with the digitalization trend in the construction industry and the government's policy on Smart Site, our Group will enhance technology research and development, and is committed to introducing various innovative technology tools in various projects to enhance management efficiency and construction safety.
In the second half of 2024, Hong Kong's economic activities are expected to continue steady development, while cost pressure is expected to rise with increasing construction volume. The government's previous introduced labour importation schemes in the construction industry, with the completion of more dormitories and support measures, we expect to further reduce hiring costs and help alleviate some challenges related to technical talent shortages. The government recently announced that the Land (Compulsory Sale for Redevelopment) (Amendment) Bill 2023 is expected to come into effect by the end of this year. After the implementation of the new legislation, which lowers the compulsory sale application thresholds, it is believed that it could facilitate the redevelopment of large-scale projects. We expect that this measure will have a positive impact on the Group's business.
Our Group will continue to work hard to find new potential construction business opportunities to achieve Group's profit growth. At the same time, leveraging our experience in the industry, our Group is keen to explore suitable business opportunities in construction and environmental industries and other areas both domestic and overseas.
Hashtag: #CRConstruction #InterimResults
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.
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