Analogue Holdings Limited Announces First Annual Results
Hong Kong, 27 March 2020
Achieves Record High Value of Outstanding Contracts in Hand
Continues to Innovate for Business Growth
- Total revenue and profit attributable to equity holders reach HK$4,481.9 million and HK$242.6 million respectively
- Satisfactory order intake in FY2019 valued at HK$6.5 billion, up 13.3% YOY
- A record high value of outstanding contracts in hand of approximately HK$9.4 billion
Analogue Holdings Limited (“Analogue” or the “Company”, together with its subsidiaries collectively the “Group”) (stock code: 1977),a leading electrical and mechanical (“E&M”) engineering service provider in Hong Kong with operations in Macau and mainland China, today announced its first unaudited annual results for the year ended 31 December 2019 (“the Year”) since its listing on the Main Board of The Stock Exchange of Hong Kong Limited (“HKEX”) on 12 July 2019.
During the Year, the Group recorded total revenue of HK$4,481.9 million and a profit attributable to equity holders of HK$242.6 million. The Group’s gross profit in 2019 was HK$786.7 million, with gross profit margin increasing to 17.6% (FY2018: 14.9%), mainly attributable to the increased proportions of maintenance works and sales of goods awarded, which presented a higher gross profit margin than contracting works in the overall revenue stream. The high levels of tendering activities by the Group throughout 2019 paid off with a rewarding result after a year of record high business turnover in 2018. During the Year, a total of approximately 1,332 tenders or quotations each with an individual value of over HK$1 million had been submitted, of which approximately 316 were awarded with a value totalling approximately HK$5.5 billion. The Group has recorded a notably high value of outstanding contracts in hand of approximately HK$9.4 billion (including contracting work, maintenance work and sales of goods), approximately HK$2.0 billion more than last year. During the reporting year, the total value of tenders and quotations awarded increased by 13.3% to approximately HK$6.5 billion (FY2018: HK$ 5.7 billion).
The Board has proposed a second interim dividend of HK5.07 cents per Share. Together with the first interim dividend of HK3.85 cents per Share, the total dividend for the Year amounted to HK8.92 cents per Share, representing a dividend payout ratio of 51.5%.
Dr. Poon Lok To Otto, Chairman of Analogue Holdings Limited, said, “The Group has reached a historic milestone this year with its shares successfully listed on the Main Board of the Stock Exchange in July, and the inclusion in the MSCI Hong Kong Micro Cap Index a few months later further represented recognition from the investment market. Our dedication to sustainable development was clearly reflected by the progress across all four business segments despite the worsening business environment in the second half year. Our innovative capability in generating various new applications of technologies not only gained us new orders, but also consolidated our leading position. As we forge ahead, we will continue to honour our guiding principles – We Commit, We Perform, We Deliver to provide professional, efficient and quality E&M engineering services, and will adhere to the New Technology, New Market and New Business Mode strategy. We are in good position to capture the rising opportunities in the Greater Bay Area and One Belt One Road countries to fuel our growth ahead.”
The building services segment continued to be the key revenue driver of the Group, contributing HK$2,676.3 million to revenue for the Year, with its capability encompassing the design, installation, testing and commissioning and maintenance services for customers from Hong Kong, Macau and mainland China for a wide range of buildings and premises.
During the Year, the Group managed to enlist some major new customers while maintaining an existing strong client base. It has stepped up the impetus in investing in, developing and implementing innovative construction technologies. For the Science Park InnoCell residential project in Pak Shek Kok, one of the first construction projects of its kind in Hong Kong, the Group has resolved a series of technical, logistical and cross-border administration and statutory approval issues related to the adoption of the latest construction technology of Modular Integrated Construction (MiC). The project was making good progress with completion expected in 2020. The Group was also developing the ATAL Building Services Prefabrication & Modularisation Construction Technology (ABSPM) for adoption of off-site prefabrication and modularisation in a systematic approach and on a wider scale, in order to enhance quality, safety and productivity, and to mitigate the acute problems of aging and shortage of site workers.
The environmental engineering segment provides total solutions for environmental engineering systems for water, wastewater, sludge, solid waste and gas treatment plant projects, which contributed revenue of HK$1,086.9 million for the Year. The Group has developed and adopted several advanced technologies through its in-house research and development (“R&D”) team, giving it a competitive edge not only for bidding tenders in Hong Kong but also tapping the vast market of mainland China. Up to FY2019, the Group had project references in most of the 34 provinces level administrative regions in China. The Group also explored opportunities to provide environmental engineering service overseas, particularly to the relevant Belt and Road countries. During the Year, by working with a large China state-owned enterprise, the Group secured a contract for the supply of technologies and equipment (including 5-years operation), for a wastewater treatment plant project in Nepal.
Information, Communication and Building Technology (“ICBT”)
To ride the megatrend of the Smart City, the ICBT segment endeavours to offer solutions to help build green and intelligent buildings through integrating a wide range of information and communications technologies. During the Year, the ICBT segment recorded revenue amounting to HK$444.4 million.
In 2019, The Group’s award-winning Cloud-based Chiller Plant Energy Management Platform was commercialised and has attracted the interest of many reputable clients of commercial buildings. A number of orders has been received and more are under negotiation. A Fault Detection & Diagnostic (FDD) software and an Energy Management Visualization (EMV) software are also developed and ready for official launch in FY2020, which aim to help better monitoring the working conditions of building services equipment and building energy consumption patterns. A new stream of income this year came from equipping office, commercial and government buildings with the Internet-of-Things (“IoT”) infrastructure. For intelligent transport, the Group also secured an Automated Guided Vehicular (AGV) Parking System contract for the Hong Kong Science and Technology Park, which was the first commercialised smart parking system of its kind in Hong Kong, and is in the process of bidding for the second one.
Lifts & Escalators
The lifts & escalators segment encompasses the design, manufacturing (under the trade name of “Anlev”), sales, installation and maintenance of various lifts, escalators and moving walkways meeting different purposes and requirements. Capitalising on its outstanding performance ratings in safety and quality, the segment has realised steady growth, generating a revenue of HK$274.3 million.
During the Year, the Group received the first maintenance order of the Anlev Predictive Maintenance & Remote Monitoring System (APMRMS). On top of general new lift installation and maintenance projects, the increasing safety concern for lifts in society has led to many enquiries for modernisation of aged lifts. In FY2019, the Group secured contracts for modernisation of lifts of total value at HK$83.8 million and completed contracts of HK$44.5 million. Subsequent to Anlev’s admission to the Hong Kong Housing Authority (“HKHA”) approved contractor list for lift installations, the Group was awarded the first HKHA lift contract in the Year and is prepared to pursue more lift tenders from HKHA in the coming years. The Group was also awarded its first order in Mexico and Portugal respectively and signed new distributorship agreements in the Eurasian and Eastern Europe regions. The Group will put in extra effort to boost its business growth overseas, through targeting areas with a large market size and higher price level, while looking to engage in closer work relationships with its overseas partners.
Despite the challenges in the global economy presented by the trade conflict between China and the United States of America as well as the coronavirus pandemic that started in January 2020, the Group still sees growth opportunities in its major markets, as driven by the favourable policies by the governments. Construction Industry Council forecasted that the construction expenditure in Hong Kong is on a rising trend, from HK$245-$305 billion in FY2019-2020 to HK$275-$340 billion in FY2027-2028. The Group is forseeing a healthy pipeline of tenders and business opportunities to capture in 2020 and beyond, and is cautiously optimistic about the business outlook and further improvement in the upcoming years.
Going forward, the Group will stay alert and spare no effort to foster innovation and application of technologies, while continuously supporting the sustainable business strategy through seizing various growth opportunities for its four business segments. Meanwhile, the Group is actively pursuing merger and acquisition opportunities to facilitate its overall business growth. The Group has conducted preliminary enquiries with companies in South East Asia, North America and Europe in building services and lifts and escalators segments respectively. With a healthy liquidity position, the Group is in a favourable position and will continue to look for opportunities such as acquisition and formation of joint ventures to expand its various business segments in the future.
Dr. Otto Poon added, “With the Group’s strong commitment and continuous investment in innovation, technology, process improvement, professional development, and sustainable business growth, we are confident in harvesting material benefits of improved efficiency, productivity and competitiveness in our operations and opening up new business opportunities to continue strengthening the market leadership position and increasing shareholder value going forward.”
For further details of the 2019 annual results, please refer to the announcement that has been filed with The Stock Exchange of Hong Kong Limited.
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About Analogue Holdings Limited
Established in 1977 and headquartered in Hong Kong, the Group is a leading E&M engineering service provider in Hong Kong, with substantial operations in Macau and mainland China. The Group provides multi-disciplinary and comprehensive E&M engineering and technology services in different segments, including Building Services, Environmental Engineering, ICBT and Lifts & Escalators to a wide spectrum of customers from the banking, property development, education, entertainment, hospitality, information technology, data centres, transportation and utilities sectors, as well as departments of the Hong Kong SAR Government. The Group also manufactures and sells lifts and escalators internationally. Nanjing Canatal Data Centre Environmental Tech Company Limited, an associate of the Group specialised in manufacturing of precision air conditioners, has been listed on the main board of the Shanghai Stock Exchange since November 2017.