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CHC enjoys leap in net profit : 2018 consolidated net income of NT$1.942 billion; EPS of NT$2.36

Continental Holdings Corporation (CHC, TWSE stock code 3703) today announced its 2018 financial results and 2019 business directions. In 2018, CHC had consolidated revenue of NT$25.154 billion and a gross margin of 14.8%, higher than the 8.3% achieved in the previous year. The consolidated net income in 2018 was NT$1.942 billion, and earnings per share (EPS) was NT$2.36. CHC’s Board of Directors proposed a cash dividend of NT$0.9 per share.

“We have seen enhanced gross margins across all of our member companies in 2018, which contributed to CHC’s 146.5% year-over-year increase in net profit,” said Ms. Cindy Chang, CEO of CHC. “Contintental Engineering Corporation (CEC) was able to increase its gross margin through effective cost control of construction projects. Continental Development Corporation (CDC) saw higher gross margin in the real estate porfolio from which it recognized revenue in 2018. Operational-phase projects as well as effective project management contributed to the higher gross margin of HDEC Corporation (HDEC).”

Succession plan in place

Ms. Cindy Chang took office as CEO of CHC in October 2018 and CEC’s CEO Mr. Simon Buttery joined the company in January 2019.

“CHC’s main objective is to manage its investment portfolio. CHC’s Board of Directors valued Ms. Chang’s extensive management and financial experience when appointing her CFO back in 2017. After a one-year transitional period, Ms. Chang was appointed CEO by the CHC’s Board of Directors in October 2018.” said Ms. Nita Ing, CHC’s Chairman.

“CEC has a presence in Taiwan, Hong Kong, Macau, and India and competes with international players. Mr. Simon Buttery’s expertise in the construction sector and experience in managing multi-national teams are exactly what CEC needs. CEC’s Board of Directors believes CEC under Mr. Buttery’s leadership will continue enhancing its core competencies and implementing its strategic initiaves.” said Ms. Ing.

In 2019, CHC will continue managing its subsidiaries, planning the group’s overall strategic directions and optimizing the group’s resource allocation. The 2018 performance and 2019 plan of each business group are discussed below:

Construction: Leveraging core competencies to drive growth

In 2018, CEC’s Taiwan Office secured the GC01 Taoyuan Green Line contract, bringing the total value of CEC’s awarded contracts over NT$23 billion in 2018. At the end of Q1 2019, CEC’s backlog amounted to NT$67 billion, representing an increase of NT$14 billion from Q1 2018. CEC’s Taiwan Office will focus on rail, high-end residential, and hospitality sectors while exploring opportunities in energy related projects. In addition, CEC will continue developing BIM as well as other technologies, optimizing project management systems, and enhancing safety in construction sites.

In Q1 2019, CEC’s Hong Kong Office was awarded the construction contract of Station Square at Kai Tak (Phase 1). The business will take advantage of its Public Works Contract Permit for Contract C in the cateogry of roads and drainage and continue exploring related opportunities. CEC’s Hong Kong Office is also evaluating the feasibility of entering the tunnel and building sectors in the longer term. CEC’s India Office currently works towards completing the Jaipur Metro project by the end of 2019, and is closing outstanding claims.

Real Estate Development: Diversifying the portfolio and creating value

In 2018, CDC sold NT$5.3 billion worth of properties in Taiwan, representing a growth rate of 25% over 2017. CDC also invested in new projects in 2018. In Taiwan, CDC will build a commercial and residential complex in Kaohusing with its partner Daiwa House of Japan. As for overseas markets, CDC made inroads into the US market by investing in a hotel and condo project in San Francisco, and is working on its second project in Kuala Lumpur, Malaysia.

In view of market trends, CDC will put more emphasis on products for first-time home buyers and those who buy apartments for self use. Furthermore, the company also seeks to add value to its customers through developing mixed-use projects.

Environmental projects: Growing water business and exploring other environment project areas

HDEC focuses on sewage and reclaimed water treatment projects. The operation of the Tamsui project has been on track, and piping for the Chungli and Puding projects is ongoing. Moreover, the first-phase construction of the Fengshan River project was completed in August 2018 as scheduled. In October 2018, HDEC and its JV partner were awarded the Linhai project, another BTO project in the reclaimed water sector.

As for new business development, HDEC is evaluating entering the biomass energy market by leveraging its existing anaerobic capability and the incinerator business by collaborating with its technology partners.

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