September 27, 2021, Beijing, the PRC - China State Construction Engineering Corporation (“CSCEC”, 601668.SH) published the CSCEC 2021 Interim Report (English Version) on its Chinese and English official websites. After voluntarily publishing the English version of 2020 Annual Report early this year, CSCEC continued to proactively publish periodic reports in English to meet the needs of international investors and partners.
The 2021 Interim Report demonstrated that CSCEC’s performance indicators reached record highs. In the first half of the year, CSCEC achieved total revenue of RMB936.716 billion, up 28.6% period over period; net profit attributable to the parent company was RMB25.643 billion, up 29.2% year-on-year. CSCEC ranked 13th on the list of Fortune Global 500, moving into the top 15 for the first time.
High growth in newly signed contracts and revenue and numerous highlights in principal business
According to the Interim Report, CSCEC’s newly signed contracts increased by 21.0% year-on-year to RMB1.83 trillion. In particular, new infrastructure contracts reached a total value of RMB392.7 billion, an increase of 50.5% year-on-year, hitting a record high. Its revenue increased significantly by 28.6% period over period to RMB936.716 billion. The revenue remained balanced among different segments, in which the housing construction engineering, infrastructure construction and investment, and real estate development and investment business accounted for 63.63%, 20.67% and15.64%, respectively.
During the reporting period, CSCEC made sustained efforts to enhance its core competitiveness in the fields of super-high-rise buildings, large-span space structure, rapid construction, green construction, etc. Revenue from the housing construction business was amounted to RMB596.1 billion, an increase of 24.6% year-on-year. Newly signed contracts in exhibition centers and industrial plants, educational and cultural facilities as well as medical facilities increased significantly. The company also accelerated digital transformation, actively promoting green construction, intelligent construction and construction industrialization.
CSCEC firmly dedicated itself to serving the national strategies, displayed its advantages in resources from the whole industry chain, and recorded revenue of RMB193.6 billion from infrastructure construction, an increase of 33.9% year-on-year. CSCEC achieved breakthroughs in railway construction and won the bids for the newly-constructed Sichuan-Tibet railway Ya’an-Linzhi section project (section 6). The company continued to invest in infrastructure technology innovation. In particular, the intelligent assembly bridge-building machine (IABM) independently developed by CSCEC initiated the new model of prefabricated construction of overpass, and the first generation of “CSCEC block machine” product has entered the new stage of industrial application. CSCEC firmly implemented the national regulation policies, consistently made efficient and accurate investments, and recorded revenue of RMB146.5 billion from the real estate business, an increase of 33.4% year-on-year. CSCEC actively explored urban renewal and other diversified development models, continuously improved its asset holding and operation capabilities, vigorously expanded to the sectors of commercial properties, elderly services, education and logistics, and continued to improve the operation and management capabilities and profitability of investment properties.
Strengthening technological innovation and adhering to green development
During the reporting period, CSCEC established the first batch of “CSCEC technological innovation platforms”, launched 20 youth research and development projects, published 4 “leading role” major projects, passed the interim assessment on “key and core” technology projects, and conducted multiple major tests on the 10,000-ton multifunctional test system. CSCEC was granted 4,191 patents (including 403 invention patents); and took the lead in preparing 4 national standards, and developed 601 provincial and ministerial engineering construction methods. Thirteen staffs were recognized as the 2nd Outstanding Managers in Construction Design Industry in China, ranking first among design enterprises by the total number of awardees. The first self-adaptable and flexible straddle rail beam welding robot and BIM light engine of China independently developed by CSCEC improved working efficiency by 10 times greater and saved construction costs by approximately 80%.
CSCEC integrated the concept of green and low-carbon throughout the entire production and operation process and focused on building a green and low-carbon circular development system. The company established the “Green and Low-carbon Development Research Center”, explored the establishment of construction carbon emission database and statistical monitoring platform, developed the intelligent construction platform based on integration of BIM + Internet + Internet of Things, carried out research and development of “zero-carbon” photovoltaic power generation technology, photovoltaic wall integration + energy storage technology and photovoltaic shade system technology, issued the first “green + carbon neutrality” bond of a domestic real estate enterprise and a green asset-backed special program, which effectively facilitated the green and low-carbon transformation and upgrade of CSCEC.
Promoting operating quality and corporate governance reform
During the reporting period, CSCEC continued to work on the “six special actions” and significantly improved the quality of its operations. In particular, it achieved a 32% growth year-on-year in net profit after non-recurring gains and losses to RMB24.538 billion. CSCEC strengthened cash flow management and took multiple measures to accelerate the collection of payments such as construction sums, and its operating cash flow position continued to improve, with an increased inflow of more than RMB20 billion compared with the same period of the previous year. CSCEC’s weighted average return on net assets rebounded significantly, reaching 8.15% in the first half of the year, an increase of 1.15 percentage points compared with the same period of the previous year, which remained at a high level in the industry. The total asset turnover ratio was 0.82 times/year (annualized), an increase of 0.13 times year-on-year.
CSCEC fully promoted the corporate governance reform, the construction of the board of directors, the appointment of external directors, the reform of three systems, the improvement of market-oriented operation mechanism, the acceleration of development in new sectors, the improvement of industrial chain and other key special reform tasks. CSCEC has improved the special committee under the board of directors, deepened the tenure system and contractual management of executives, made overall scientific plans and solidly promoted the preparation of the “14th Five-Year Plan”, and continuously improved the corporate governance standard, thereby advancing high-quality corporate development.
2021 marks the first year of 14th Five-Year Plan. CSCEC will adhere to the general guideline of making progress while maintaining stability, implement new development philosophy in new development stage, serve the establishment of a new development pattern, promote high-quality development, and focus on building a better life for the people. CSCEC endeavors to achieve total revenue of RMB1.76 trillion and newly signed contracts of RMB3.50 trillion, and focus on the strategic goals of “one creation and five aspects of strength”, thereby providing better returns to the shareholders and investors of the company.