Analogue Holdings Limited Announces 2020 Interim Results
Strives for Innovative Development and Overseas Expansion for Sustainable Business Growth
Hong Kong, 28 August 2020
• Total revenue increased by 17.4% to HK$2,441.1 million
• Profit attributable to owners of the Company reached HK$106.9 million
• Satisfactory order intake in 1H2020 valued at HK$2.6 billion
• Record high value of outstanding contracts in hand amounted to HK$10.8 billion, up 21.4% year-on-year
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, mainland China and United States, today announced the interim results for the period ended 30 June 2020 (“the Period” or “1H2020”), demonstrating sustainable business growth under the adverse market situation. During the Period, despite the challenging macro-environment due to the COVID-19 pandemic, the Group’s total revenue rose by 17.4% to HK$2,441.1 million year-on-year, with the revenue growth across all business segments, namely Building Services, Environmental Engineering, Information, Communications and Building Technologies (“ICBT”), and Lifts and Escalators. The overall maintenance contracts rose by 39.1%. Gross profit increased by 11.6% to HK$407.4 million, with gross profit margin at 16.7%. Profit attributable to owners of the Company reached HK$106.9 million.
In 1H2020, the Group was awarded 155 tenders at a value totalling approximately HK$1.9 billion. All four business segments achieved a record high value of outstanding contracts in hand, including maintenance works, contracting works and sales of goods, amounted to approximately HK$10.8 billion, up by 21.4% compared to the same period last year. The Group has also secured a total order intake of HK$2.6 billion. The Board has proposed an interim dividend of HK3.82 cents per share, representing a dividend payout ratio of 50%.
Dr Poon Lok To Otto, Chairman and Executive Director of Analogue Holdings Limited, said, “The first half of 2020 saw some very challenging times with the COVID-19 pandemic stifling economic activities worldwide. We are pleased to see that our tremendous efforts put into businesses had achieved reward with an order book of record high amount. During the Period, the Group was dedicated to improve the maintenance business which is less susceptible to the ups and downs in the economic cycle and construction cycle of large contracting projects, and thus able to provide a stable income stream. We will adhere to pursuing the New technology, New Market and New Business Model strategy to capture new orders and market opportunities, while strengthening our leading position in the market to fuel sustainable growth of the Group.”
During the Period, revenue of the Building Services segment rose 4.7% year-on-year to HK$1,350.5 million. Value of outstanding contracts in hand increased 19.7% year-on-year to HK$6,028.5 million as at 30 June 2020. The Group has continued to invest in developing innovative and new technologies for applications. Leveraging its integrated Building Information Modelling (“BIM”) technology, the Group was able to develop prefabrication and modular construction for E&M works. Its proprietary ATAL Building Services Prefabrication & Modularisation Construction Technology (“ABSPM”) has been adopted in the Fu Shan Public Mortuary project which is making good progress with prefabrication and modular units in the production stage. Modular Integrated Construction (“MiC”) for the first time in the InnoCell project for the Hong Kong Science and Technology Parks, which is expected to be completed by the end of 2020. Other upcoming contracts will continue to adopt similar innovative construction methods to enhance safety, quality and productivity of the projects.
Environmental Engineering segment recorded a revenue of HK$498.8 million during the Period, representing a year-on-year growth of 10.8%, with value of outstanding contracts in hand at HK$2,068.1 million as at 30 June 2020. The Group won six contracts in mainland China to upgrade existing plants already using its technologies to comply with the new environmental standards in the country. A sewage treatment project was also secured in Vietnam, the second of such projects undertaken outside Hong Kong and mainland China. The Group also participated in establishing a new standard of advanced sewage treatment called “Fenton Oxidation Process for wastewater treatment (芬頓氧化法廢水處理工程技術規範)” included in the environmental protection standards of the PRC (中華人民共和國國家環境保護標準). This achievement will open the Group to more business opportunities for providing services to high concentration organic wastewater treatment facilities.
During the Period, the ICBT segment recorded a revenue of HK$241.3 million, up 11.9% year-on-year. Value of outstanding contracts in hands reached HK$887.8 million, representing an increase of 35.5% year-on-year. Analogue actively promoted a self-developed Cloud-based AI Energy Management Platform to the market. This monthly subscription platform has caught the eyes of many reputable clients, some of whom have already placed orders while others are discussing further orders. The Group also actively promoted intelligent transport and has received its first order on Automated Guided Vehicular (“AGV”) smart parking system and has progressed to in the installation stage. The Group is also pursuing Free Flow Tolling, Electronic Road Pricing and other intelligent transport business opportunities.
Leveraging the highest safety and quality performance ratings among the Lift and Escalator Contractors by the Hong Kong Electrical and Mechanical Services Department (“EMSD”), the Lifts & Escalators segment continued to see huge growth in order intake. The segment recorded a revenue growth of 183.8% to HK$350.6 million during the Period, with value of outstanding contracts up 345.6% to HK$1,784.4 million. In 1H2020, the Group received the second order from Hong Kong Housing Authority (“HKHA”), the single largest customer in the lift market in Hong Kong, after the first order won in 2019. Furthermore, new agreements were signed with distributors in Eurasia and Eastern Europe regions. The Group will continue to actively pursue overseas markets and support its overseas distributors in bidding for projects, including metro or railway tenders in South Korea, Australia and Mexico. In March 2020, the Group entered into an alliance with Transel Elevator & Electric Inc., (“TEI”), one of the largest independent lift and escalator companies in New York, United States. Going forward, the Group will explore other promising opportunities of overseas acquisitions.
Dr Otto Poon concluded, “The second half year is expected to remain under the cloud of COVID-19. Nevertheless, we remain confident in the Group’s capability to harness opportunities amid adversity, particularly as there remain a variety of new prospects from both the public and private sectors. On top of striving for organic growth by constantly taking our technologies and skills to higher levels, we see merger and acquisition of businesses with strengths complementary to our own as an effective way to quickly grow our business. This together with identifying partners and joint venture opportunities for the different business segments, they will enable the Group to widen the scope and geographical footprint of its business. With eyes set on fortifying our market leadership and maximising return to shareholders, we will continuously invest in innovation & technology, process improvement and talent development, so as to heighten productivity and competitiveness for seizing new business opportunities.”
For further details of the 2020 Interim Results, please refer to the announcement that has been filed with The Stock Exchange of Hong Kong Limited.
About ATAL Engineering Group
Established in 1977 and headquartered in Hong Kong, the Group is a leading E&M engineering service provider in Hong Kong with operations in Macau, mainland China and United States. 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 public and private sectors. The Group also manufactures and sells Anlev lifts and escalators internationally and owns 49% equity interests of Transel Elevator & Electric Inc., one of the largest independent lifts and escalators companies in New York, the United States. The Group’s associate partner, Nanjing Canatal Data Centre Environmental Tech Company Limited (603912.SS), is specialised in manufacturing of precision air conditioners.