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Edited Transcript of 3311.HK earnings conference call or presentation 23-Aug-19 7:00am GMT

Half Year 2019 China State Construction International Holdings Ltd Earnings Call (Chinese, English)

HK Aug 30, 2019 (Thomson StreetEvents) -- Edited Transcript of China State Construction International Holdings Ltd earnings conference call or presentation Friday, August 23, 2019 at 7:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Haipeng Zhang

China State Construction International Holdings Limited - CEO & Executive Director

* Hancheng Zhou

China State Construction International Holdings Limited - Financial Controller & Executive Director

* Jacky Zhou

China State Construction International Holdings Limited - General Manager of Corporate Finance

* Jianguo Yan

China State Construction International Holdings Limited - Chairman

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Conference Call Participants

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* Eric Lau

Citigroup Inc, Research Division - Head of Asia-Pacific Small & Mid-Cap Equity Research and Director

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Presentation

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Unidentified Company Representative, [1]

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Analysts, investors, good afternoon. Welcome to the 2019 Interim Results Analyst Presentation of China State Construction International Holdings Limited. We have in attendance, Mr. Yan Jianguo, Chairman and Non-Executive Director; Executive Director, Mr. Zhang Haipeng; Financial Controller, Mr. Zhou Hancheng; and General Manager of Corporate Finance Department, Mr. Jacky Zhou.

There are a few parts in this meeting. First, Mr. Zhou Hancheng will go through the first half results of the company. And then Mr. Jacky Zhou will make an analysis of the market situation, and then Mr. Zhang Haipeng will go through the company strategies and objectives and targets, then there will be a Q&A session. First, may I defer to Mr. Zhou.

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Hancheng Zhou, China State Construction International Holdings Limited - Financial Controller & Executive Director [2]

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Good afternoon. Thank you for coming. First of all, I would like to go through our 2019 interim results. Overall speaking, we enjoyed growth and stability. GP margin rose.

If you look at our income statement in 2019 first half, our revenue was HKD 27.54 billion, up 1.6% year-on-year. Gross profit of HKD 4.35 billion, up 6% year-on-year. GP margin, 15.8%, up 0.7 percentage points. Net profit, HKD 2.86 billion, up 13.5% year-on-year. EPS, HKD 0.57. We follow the established dividend policy to pay out dividend. In the first half 2019, dividend per share is HKD 0.16, equivalent to 28.2% of our net profit.

On this chart, you can see the revenue and gross profit of various regions. In first half 2019, Mainland China contributed 48.9% to revenue and 73.2% of gross profit. It is the biggest source -- or biggest contributor. And under the strategy of our company's transformation and restructuring, there is adjustment to our revenue. And there is recognition of infrastructure projects that accumulated in the past with longer cycle so gross profit increased, and as a result, GP margin was also up from before. And in Hong Kong, revenue grew as compared to same period of last year. And in the past 2 years, our contract value continued to grow fast in Hong Kong, and this maintained a fast turnover. And as a result, we are able to develop in a very stable way.

In first half 2019, talking about our balance sheet. We controlled leveraging and there is improvement to our cash flow. As of the end of June 2019, our total assets, comparing with the end of 2018, was up 7.7%, reaching HKD 146.6 billion. Shareholders' equity comparing with the end of 2018 was up 5.6%, reaching HKD 45.47 billion. Interest-bearing debt, as compared to the same period of last year, increased HKD 7.05 billion. At the same time, cash was HKD 21.03 billion. Net gearing ratio, 49.9%, so down 3.8 percentage points from the end of last year. We actively strengthened cash collection management. And we completed securitization of assets of USD 500 million and also reverse factoring. So we successfully maintained net gearing ratio to within 50%.

For operating cash flow in the first half 2018, net expenses was HKD 4 billion. And then in 2018, first half and second half, there was the polarization situation. And then in 2019, first half, we tried our best to balance profit growth and cash flow, and then we got HKD 1.4 billion operating cash outflow. Now we believe that our cash flow can continue to further improve with the upgrading of our business scale and innovation in financing. Now overall speaking, we saw stable development of our investment in financing and construction.

In first half 2019, in Mainland China, revenue for our investment in financing and construction segment was HKD 13.47 billion. And then in this segment, I also gave an explanation already. There is a recovery in revenue mainly because of business restructuring. Gross profit was HKD 3.18 billion, up 11.3%. Now there is a new economic situation, market opportunities, so we will insist on increasing our scale. And so that together with leveraging and cash flow balance, these strategies will work together in order to reduce the proportion of orders with long cycle.

In first half 2019, our infrastructure segment was stable. Revenue -- or actually, profit -- operating profit was up 3.8% at HKD 218 million, and it contribute to our cash flow. With recovery in the infrastructure operation markets, we'll continue to consider the right opportunities to strengthen this segment.

In terms of Hong Kong and Macau, cash projects or cash construction, if you look at projects on hand, the progress is stable. It's normal. So we will reinforce the existing advantage. In the past, we have accumulated some quality investment projects, and now we are in the harvest stage. We gained rich investment gain. In first half 2019 for Hong Kong and Macau markets, revenue was HKD 9.84 billion and HKD 2.65 billion, respectively. GP margin was 6.8% and 9%, respectively. They are on a normal level. And in Macau for the Nova Grand project, in first half 2019, on [GC] year level, this project contributed profits of around HKD 600 million so it drove net profit improvements for Macau. The cash is already in our book already. We made full use of our competitive advantage and brand value in the professional area to make breakthrough in terms of government hospital works. We took active part in redevelopment of districts, and we seized market opportunities. In first half 2019 for Hong Kong and Macau, a new contract book new record. At the same time, we actively optimized our resource allocation and reached our investment model, so we believe that the effects will be gradually realized.

And then for 830. On Tuesday, the 2019 interim results were announced. As the parent company, we hope that the capital market will give more support and care for China State Construction Development. In first half 2019, they adhered to high end premium -- or premium curtain wall engineering business line, and there were very good effects. Revenue was HKD 2.03 billion, up 15.2%. Net profit, HKD 1.09 billion (sic) [HKD 109 million], up 19.8%. We'll continue to support the development of China State Construction Development. They will enhance their management to improve their overall competitiveness. They will integrate resources, enhance efficiency and achieve synergy among Hong Kong, Macau, North America and China. They will go for -- they will seek opportunities for integration of resources and M&A.

For new contracts and order backlog. In first half 2019, new contract value was HKD 58.41 billion. China accounted for 42%; Hong Kong, 37%; Macau, 17%, China State Construction Development, 4%. So the half yearly new contract value of Hong Kong for the first time exceeded HKD 20 billion, up 33.9%. For Macau, the half yearly new contract also exceeded HKD 10 billion up 52.5% year-on-year. As of end of June 2019, order backlog in -- was HKD 398.5 billion. Contract value yet to be completed, HKD 244.8 billion.

Then concerning capital management and financing, while RMB accounted for bigger share in our borrowing. And then there is volatility in [high bar], so weighted average financing interest rates came up to 4.7%. However, it's still at a high -- at a low level compared to our peers. At the same time, Mainland RMB borrowing increased to 63%. And for currency mix, it ties in with our business development. As a result, we are better able to withstand macro exchange risk. Since 2019, we completed USD 500 million innovative asset securitization financing and RMB 390 million receivable reverse management. So in this way, we enhanced our capital turnover and also returned to shareholders. Now I will defer to Jacky to analyze the market.

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Jacky Zhou, China State Construction International Holdings Limited - General Manager of Corporate Finance [3]

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Thank you, Mr. Zhou. Investors, analysts, let's take a look at the market from a macroeconomic point of view. After moving into 2019, the mainland economy had shown some resilience. For infrastructure markets, there are more and more opportunities in January to July 2019. The growth rate was stable, up 3.8%, and there is improvement from second half of 2018. So here, you can see that this has achieved the effects of supporting the economy at the bottom. And then if you look at Mainland China, this year, the government, the state, would like to make use of local government specific bond of 200 -- of JPY 2.15 trillion, so an increase by JPY 800 billion from last year. So this can offer some funding support. In the past few months, infrastructure projects increase was stable. Now 70% of the newly issued specific bond was completed. And there are papers issued by the state council and authority allowing the local government to do legal financing. In the second half, there would be further push to infrastructural projects by this kind of financing.

For Hong Kong and Macau, there is uncertainty in the market and economy, but there is still demand for infrastructure. There are more and more opportunities coming up. If there is significant economic downturn then the effect of infrastructure projects supporting the economy at the bottom will be even more significant. In Hong Kong market in recent 10 years, there is hospital development, revitalization of industrial buildings, Hong Kong International Airport, West Kowloon Cultural District, Central Kowloon traffic improvement and so on. These will bring about a lot of opportunities.

And in Macau, there are also works including reclamation, public housing and also gambling license-related projects. So we believe that there will be more and more driving force, and that we will see further increase in terms of new contracts and also recognized profit.

Since we have the Greater Bay development outline, in February 2019, there are a lot of new opportunities and also guarantee for fast developments in the area. We were among the earliest enterprises making plans in GBA, in Guangdong, Hong Kong and Macau. We have good market position and also very rich construction experience. Right now, we are promoting the use of prefabricated construction both in Hong Kong and Mainland China. So the construction of hospitals in Hong Kong, this experience will be brought into Guangdong and Macau, and we will deepen this approach and dig deeper into the potential, hoping to innovate the business model in the Greater Bay Area.

Now I will defer to Mr. Zhang.

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Haipeng Zhang, China State Construction International Holdings Limited - CEO & Executive Director [4]

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Thank you. In the long run, we will adhere to the dual-core business model with EPC and also related investment. So we'll continue to innovate in terms of business model, financing method and management system in order to create value for shareholders.

For our guidance, first, for net profit growth target by 2020, CAGR should not be lower than 20%. Last year in the first half, there is a higher base figure. So this year, for the first half, net profit growth was 13.5%, which is in line with expectation. Number two, half yearly dividend payout, 28.2%. This is in line with our 30% dividend payout, which is our established policy. Number three, cash expenses target. In first half 2019, we achieved cash expenses of HKD 10.5 billion. It is expected that for the whole year, it will be within HKD 20 billion. So we need to maintain the fast growth of net profit, so cash expenditure will have to come down. For new contract value -- for new contract targets, we will maintain the targets announced at the beginning of the year, and that is, it should be HKD 120 billion. In the first half, we have achieved almost half of it. Especially in Hong Kong and Macau, the contract -- the new contract progress is very good. We will actively look for high-turnover and high-return, very formalized quality projects.

In terms of investment, we will enhance investment in GBA. We will dig deeper into segmentized market. And at the same time, we will go for some smaller investments to stimulate big EPC projects. In terms of construction, we will further enhance our technology and management capability to optimize our organization structure, and we will also do refined management.

In terms of management, we will strengthen our cash recovery. We will very prudently select good products to improve project turnover and also cash flow. Since first half this year, we had developed the resettlement housing for the government. These are new business models. So we take into active consideration those investment projects with fast turnover.

So on Page 20, you can see these 2 different business models, PPP and also resettlement housing for the government, where even though comparing with PPP, the first model has lower GP margin. However, in terms of cash flow, there is an advantage, and it can boost IRR and ROE. So we will also make use of prefabricated construction and related technology in order to differentiate our business.

In Hong Kong and Macau, we will continue to develop the market. So for existing projects, we will make sure that we will deliver high quality to property owners. In Hong Kong, we will strive for a large, official and semi government projects like hospital, traffic infrastructure and so on. We will also develop private residential property development and commercial properties. In Macau, we'll continue to follow up large-scale government projects. We will also strive for projects related to gambling license. At the same time, we attach importance to technological innovation. We will enhance the implementation and promotion of prefabricated construction and continue to follow up with the Hong Kong government in terms of the housing construction.

Now we will try our best to use capital operation to serve production operation. So we will continue to make use of perpetual capital instruments and asset securitization, supply chain financing and so on in order to get more financing channels and improve our liability portfolio so that we can get a lower funding cost. Thank you.

That's all in our presentation. Now it's time for Q&A.

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Questions and Answers

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Unidentified Company Representative, [1]

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(Operator Instructions) The one on the second row, please.

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Eric Lau, Citigroup Inc, Research Division - Head of Asia-Pacific Small & Mid-Cap Equity Research and Director [2]

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I'm Eric from Citibank. I have 2 questions. First, regarding Hong Kong, in the first half, order growth is 30-odd percent, which is good. But if you look at LegCo in Hong Kong, it seems that they are slow in approving funding. So will that be a time gap? Or is that not related, not relevant? This year, your target is HKD 120 billion, 30% from Hong Kong. And in the first half, you already achieved a lot. Next year in 2020, will there still be growth in order in Hong Kong? That's my first question.

Second question, in Mainland China, just now Jacky said that there is a specific bond, there is 60% growth this year. If you look at Mainland sales and orders, well, they came down, they did not grow. Is this again because of time difference? Or that is not really related to you because you go for short-duration projects with good cash flow. On Page 20, GTR and PPP. For Mainland China, for loans. Can you let us know the breakdown for Mainland loans?

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Haipeng Zhang, China State Construction International Holdings Limited - CEO & Executive Director [3]

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Okay. Thank you, Eric. If you look at the situation in Hong Kong, well, you can see the situation in LegCo for us, will that be impact? At present, there isn't a big impact. In the future, there may be some impact on some projects. In the past, most of the projects are private projects, and private projects are not related to LegCo. And now we are focusing on a few projects, for example, hospital authority and airport authority and housing. While housing authority has this money, it doesn't need the approval of LegCo. So overall speaking, there will be a decline because of the situation in LegCo. But if you look at projects on hand, or those that we had just won the contract, well, I don't think there would be big impact. The impact will only be very minimal.

Last year, we said to investors that in Hong Kong and Macau, we have our advantages. We want to make our EPC business in Hong Kong and Macau bigger. In the first half of this year, you can see that we have the capability. And you are worried that in Macau, there won't be any more casino, well, I think we had already answered you with our first half results. Now in the past 40 years, we had accumulated enough management and human resources and financial advantages. And in this market, I believe that we had gone through different types of cycles, whether the economy is good or bad. We still can grab a share. So for this year and next year, we are still confident for Mainland China. Decline in orders is related to our business adjustment. In these past 2 years, investors have been talking about funding pressure in relation to PPP. So when we select our PPP, we hope that return indicators will be higher than the past. And we said already -- we made this point last year. And this year, we were very prudent in our selection. We only selected good quality projects with good return and then also from long cycle to short cycle.

In terms of contract value and our gearing ratio, well, this is not one single indicator. If it is a single indicator, yes, it is easy to get more from the past -- more than the past, but I want growth, and at the same time, good situation on all indicators, then we have to put in place some control. So at the beginning of the year, we said already that we want to achieve HKD 120 billion target. We don't want to all of a sudden raise it. I need to raise the quality, not the quantity. Thank you.

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Unidentified Company Representative, [4]

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The one on the second row.

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Unidentified Analyst, [5]

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I'm [Jo Jiang Fung] from HSBC. My question is about cash flow. In first half of this year, overall cash flow improved quite well. In China, cash recovery was HKD 10-odd billion. It's very good. And in the coming 2 to 3 years and second half of next year, perhaps HKD 8.9 billion and even more in 2020. So it seems that cash recovery is faster than expected. So first, in the first half of the year, can you give a breakdown of cash recovery? How much is because of securitization? How much is because of some special handling? Or is it because the projects themselves are faster in cash recovery for next year and the year after next year? Will you -- do you think that it will exceed your expectation and then it will continue to increase?

My next question is, this year, cash expenditure will be expected at HKD 20 billion lower than last year. In the future, do you think you can further reduce it because you will do more and more business and projects in Hong Kong and Macau? And so perhaps the amount of funds you need will also come down.

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Hancheng Zhou, China State Construction International Holdings Limited - Financial Controller & Executive Director [6]

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Thank you for your question. No, I think for the first half of the year, cash flow contribution is good. Comparing with first half last year, I think there is significant improvement in revenue and expenditure. Now last year, in terms of revenue, comparing with first half this year, there is an increase of 50%. For expenses, it came down 30%. So for net expense, it is HKD 4 billion, and last year is HKD 4 billion net expense so the expense is quite significant.

Of course, for our company, we had adopted various measures to speed up cash recovery. Just now, Eric asked about bond issuance in China. Overall speaking, it is helpful to our faster cash recovery. Of course, this depends on projects as well. Secondly, in the past, there is investment driving EPC business, and we said last year that we are gradually moving into cash recovery stage. And now there is cash dividend coming in. So in the coming period in the second half and next year, well, these won't be one-off. Perhaps I can give you the exact data later.

In terms of expenditure, it is now HKD 20-odd billion. We are keeping this within our control and we will make sure that our scale will develop in a stable way. It won't come down a lot. As Mr. Zhang said, in terms of types of business for long-cycle business, it will decrease in share. For short cycle, fast-turnover projects, they will increase in share. So now we are trying to keep a control of that. In the second half, for short-cycle projects, for example, buyback and then the industrial parks, we will increase investment. But overall speaking, it will be around HKD 20 billion.

You asked about next year and the year after next year. For PPP projects, some time ago, we had a lot of BT projects. In next year and the year after next year, I think we will gradually stabilize the situation, and cash recovery will also increase steadily. For expenditure, it will be kept within HKD 20 billion. In the second half, we started to work on budget for next year and the year after next year. The Chairman asked us to work on strategic plan for the coming years, so the details will be announced later on. Okay? So thank you very much for the question.

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Unidentified Company Representative, [7]

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The one on the second row.

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Unidentified Analyst, [8]

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I'm [Lo Di]. My question is concerning orders in Mainland China, so there is some contraction. And for PPP, you will slow it down. And for GTR, which gives faster turnover, you will increase it. So do you have a breakdown how much is the share of PPP, and what is your subsequent plan. So I don't think there will be a big decline in the coming period in terms of the share of PPP, but what is the actual breakdown?

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Hancheng Zhou, China State Construction International Holdings Limited - Financial Controller & Executive Director [9]

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Concerning orders in the first half, we got HKD 18 billion. Hong Kong and Macau performed well. We got some big projects in Macau. There are hospitals in Hong Kong. There are hospitals and some other projects. In Mainland China, more than 20 billion-odd. In the second half, I believe that we will put in more efforts in Mainland China. As mentioned just now, for PPP, we will acquire good quality projects. And then for industrial parks, GTR and also other types of projects, infrastructural investment in China, we are working hard in all these areas. We hope Mainland China will still maintain a certain scale and our situation in Macau and Hong Kong is quite good. So in the period to come, we will step up efforts in Mainland China.

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Unidentified Company Representative, [10]

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Next question will be asked by investors online. There are 2 questions. In the first half this year, Mainland revenue came down on a year-on-year basis. Why? Is this because of your active adjustment or other objective conditions, for example, government investment or low funding in bank?

My second question is, this year, revenue in Macau came down quite a lot year-on-year. Why? Is it because last year in the first half, there was some consolidated settlement? Now Macau orders increased quite fast in first half last year. So in the future, for revenue and profit, what you think will be the growth?

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Haipeng Zhang, China State Construction International Holdings Limited - CEO & Executive Director [11]

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Thank you. In Mainland China, at the beginning of this year, we talked about a balance between cash flow and business growth, and in this process, we have to find a suitable range. We have been keeping the situation under control. And overall speaking, there's decline in China. This is because of our active or proactive efforts. I think you know about the market for infrastructure and also government efforts, like the issue of specific bonds by the government. Well, the total volume is big. So if you go for quantity, no matter whether you are talking about order value or what, the quality can be huge. But then in terms of your resources and funding, there is also a big impact. Then starting from second half last year and first half this year, well, in second half last year, our Mainland cash flow was negative 5.6 billion. And in first half this year, we controlled the situation and as a result, we have positive HKD 1.9 billion cash flow.

After doing that, we can see that we are able to control the situation. So in the first half of this year, well, of course, there will be impact on my profit. So I want to do things within reasonable range. So in the first half of this year, we tried to identify a reasonable range. And then after satisfying all the indicators, I may expedite the work. And then for GTR, security housing, it poses bigger demand on my cash. Otherwise, my financial indicators will look even better. Now when we work on BT for settlements -- for security housing, I only need to pay construction fee. And then after 2 to 3 years, then I will get back cash. But then for GTR, I have to acquire land in auction, and then I have to pay land premium and construction costs. But the good point is the government will pay me the first batch of funds earlier. So turnover is faster than BT.

However, at the beginning, there is bigger demand on my cash flow. So I have to maintain very good financial indicators. So how much of this kind of business should be done? We are making some adjustments. But from long cycle to short cycle originally for PPP, I pay cash. And at the same time, I can have profits but now for GTR for the prevailing year, I pay cash. However, my revenue and profit will not be realized. But the good point is next year, all the money can come back. Revenue, profits, cash can all come back. Turnover is much faster for PPP, you know that it takes more than 10 years. So that's about the revenue decline in China. That's a result of our active control. But we are increasing our investment gradually. We hope to find the right balance.

And then in Macau, there's revenue decline last year, MGM Casino. Well, when the foundation was built -- well, it is HKD 16 billion project, but then during foundation stage, HKD 1-odd billion; and then afterwards, HKD 3 billion, HKD 4 billion. And then when you work on renovation and so on, more than HKD 10 billion. So at the end of last year, 2018, when renovation and so on of MGM project was booked, then there is a big increase in revenue. And this year, for new projects, well, if you look at contract value this year and last year, it's quite good. But why is it that the revenue was not realized? Because the work is very slow so the results are not reflected in the revenue.

But overall speaking, the quality of the project is very good. So looking at the long term, contract turnover in Hong Kong and Macau is very good. So within a short period, the contract can be turned into revenue. As Jacky just said, in Macau, for new rounds of casinos and also so on Nova Grand and so on and other projects, more and more projects are being introduced. In the past, there won't be government projects of over HKD 2 billion, but now, we have seen more than HKD 7 billion of hospitals and so on. So the best way to go for fast development is for the government to hand over the project to one same company, and we have a lot of advantage in Macau. So I think the situation is beneficial to us.

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Unidentified Company Representative, [12]

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The next question is from Guangfa Securities. First question, for net profit guidance, in 2020, CAGR should be 20%. Now it is more than half in 2019 -- half way in 2019. So do you think that growth will be quite even? Or will there be higher growth in the front end and lower growth in the back end or vice versa? In Hong Kong for order mix, there are more private projects. But then in Hong Kong, there is economic downturn pressure and some other impacts. So do you think that the economy will do an impact on private projects in Hong Kong in the coming period?

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Hancheng Zhou, China State Construction International Holdings Limited - Financial Controller & Executive Director [13]

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Let me take your first question. Regarding net profit growth, our goal is 20%. This is our goal. And if you look at the present expectation in 2019, we are confident to achieve this goal. What will happen in the second half? It all depends on our hard work. Whether there will be still growth on the basis of the first half or what, it all depends on progress in Hong Kong and Mainland China. For the 20% target, we are confident that we can achieve it. For next year, the target is also 20%. It hasn't changed.

If you look at order on hand and also investment-driving EPC projects, I am confident in the contribution from it.

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Jianguo Yan, China State Construction International Holdings Limited - Chairman [14]

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For private investment situation in Hong Kong, my colleague is also the Chairman of 688. And now we are still auctioning land in Hong Kong, and there is impact but not much has been shown yet. Different participants will have different views. Some people don't find the situation problematic. Some people will be more prudent. So there are mixed views. There isn't really a consensus. So from an investment point of view, we are still making active investments through 688. And for our company, for private project, there are quite many projects in hand so they can still support our coming construction for 3 to 5 years. For new projects, well, so far, we haven't seen big impacts. So that's all I can say for the time being.

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Unidentified Company Representative, [15]

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Because of time, let's take the last question here.

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Unidentified Analyst, [16]

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I'm [Sherry] from Daiwa Securities. Just now, you said that demand is adequate for PPP projects, then for fixed asset investment being stable and also government-specific bonds. Can you talk about government funding, the local governments are exploring a new model for infrastructure projects. Can you shed some light on it?

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Jacky Zhou, China State Construction International Holdings Limited - General Manager of Corporate Finance [17]

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Thank you for your question. Yes, PPP demand in China is still robust. At the end of 2017 in December, that was the #92 paper. And then in 2018, there was clearance of inventory of HKD 2-odd trillion. And now there is still a RMB 12-odd trillion PPP projects in the pipeline so demand is adequate. This is quite certain. And looking at fixed asset increase right now. Well, we have gone through the gloomy days in the second half of 2018. There are a few months in 2018, which -- there was negative 3%, negative 4% growth for several consecutive months. While there is still volatility, but there is still 4% growth year-on-year. And at the end of the year for infrastructure investment in China, growth rates will be mid- to high single-digit growth. And then for local governments, exploration of the new models, we talked about GTR, it is a new model being explored for PPPs. While there are requirements and it is highly regulated and project commencement is low. So from project establishment, all the way to GDP or fixed asset investment, the pace is rather slow. In order to solve these difficulties, the local governments are looking into new models. The local government shares the same view as us. We also want to speed up turnover. This is favorable to the unleash of funding. And at the same time, project rate of return can also be enhanced to attract more social capital to take part in government infrastructure building. Thank you.

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Unidentified Company Representative, [18]

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The 2019 Interim Results Announcement of China State Construction International Holdings Limited will be concluded here. Thank you for coming and also thank you, audiences online.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]