Achieves Breakthroughs in Market and Technology Development with Substantial Growth in New Contracts and Backlog Value
SHANGHAI, March 27, 2020 /PRNewswire/ -- Wison Engineering Services Co. Ltd., ( 'Wison Engineering', HKEX Stock Code: 2236, together with its subsidiaries, the "Group" ), a leading engineering, procurement and construction (EPC) service provider in China, announced its annual results for the twelve months ended 31 December 2019 (the "Period under Review").
Significant growth on new contract representing a y-o-y increase of 34.1% to RMB 12,777 million
During the Period under Review, revenue of the Group amounted to approximately RMB4,367.3 million, representing a year-on-year increase of 34.1%. The increase in revenue was mainly attributable to the increase in revenue recognized during the Period as a result of the satisfactory progress achieved by the Group's key projects, and the overseas petrochemical projects in North America and Middle East have entered into the peak construction stage. The gross profit amounted to approximately RMB408.2 million, representing a year-on-year decrease of 18.2%. During the Period, profit attributable to owners of the parent amounted to approximately RMB50.6 million, representing a year-on-year decrease of 10.1%. The decrease in profit attributable to owners of the parent was mainly attributable to the fact that the Group's implementation of strategic projects in new markets which obtained a low gross profit margin in 2019, and which projects recorded relatively large proportion of the Group's revenue during the period. In addition, the investment increase in research and development, market expansion, new business development, talent and capacity reserves, as well as increase in spending on overseas income tax, which also resulted in the decline of the profit.
During the Period under Review, total new contracts secured by the Group amounted to approximately RMB12,776.6 million (net of estimated value added tax), representing a substantial year-on-year increase of 78.3%. As at 31 December 2019, the Group's total backlog value was approximately RMB21,868.0 million (net of estimated value added tax), representing an increase of 65.7% compared to the total backlog value as of 31 December 2018. The continually substantial increase in new contract and backlog value will lay a solid foundation for the Group's future development. The Board of directors recommended a final dividend of RMB0.0037 (equivalent to HK$0.0040) per ordinary share. The Board is committed to returning for the long-term support of shareholders, and will implement the dividend policy based on the Company's business performance, strategic development and market changes.
Prompt reply to the market change with continual breakthroughs in technology and market development
During the Period, the global economy and energy and chemical market were deeply affected by the geopolitics and global trading relationships. With sluggish global economic growth and slowdown of crude oil demand, the overall international chemical market dropped and the domestic chemical market became a key pillar for the expansion of global production capacity. With the domestic oil and gas industries further open to private and foreign enterprises, the huge potential in the Chinese market has attracted numerous major domestic private enterprises and renowned international companies to actively establish their presence, thus generating market opportunities for the EPC companies.
Responding to the challenges and opportunities, the Group took full advantage of flexible operating mechanisms of a private enterprise, and continued to achieve breakthroughs and innovations. During the period, the Group established "Major Customer Department", "Emerging Market Department" and "Strategic Growth Center" which will mainly focus on the clients of foreign-funded companies in China. In respect of new markets development, the Group achieved the breakthrough in conducting EPC projects for Saudi Aramco; secured its first Front-End Engineering Design (FEED) contract in relation to the MTO Project in Russia; and achieved breakthrough in the business of municipal and environmental projects in China as well. In respect of technology innovation, the Group achieved digital delivery which had been successfully verified in a million-ton ethylene design project; achieved the promotion of self-developed technologies and technology transfer of C5-C6 Isomerization; applied a combined technology of MTO and butadiene for the first time. The Company obtained outstanding performance in talent and technology reserves, while extending the industrial chain and establishing presence in markets.
Building on local market and grasping new opportunities in domestic market, while committed to the internationalization strategy
As an engineering company rooted in China with extensive experience in overseas projects as well, the Group upheld the strategy of building on local market and expanding into the international market. In response to the needs of various clients, the Group increased its application in refined project management, digitalization and modularization to create greater value for customers. During the Period, the Group secured a total of 65 new domestic projects, with an aggregate contract value of approximately RMB12.09 billion. These new projects involved various types of engineering works, such as refinery-petrochemical integration, ethylene, coal-to-chemicals, PTA and PDH, in which, the Group had made significant progress in several key domestic projects. For example, the Group entered into a general contractor contract with Zhejiang Petrochemical for 2# 1,400kta ethylene plant. By strengthening the control over the project safety and construction management, the project was awarded the title of "2019 Exemplary Civilized Construction Site of Zhejiang Petrochemical Phase II Project" by the owner, which fully demonstrated Wison Engineering's remarkable capabilities in project management, and built the world's leading brand of project execution capabilities..
For the international markets, during the period, the Group secured 10 new projects, mainly from two core markets, namely North America and the Middle East. Following the establishment of the Middle East Operations Center, the Group established the North America Operations Center during the period, which will help to swiftly response to the local owners and develop the North America market. In 2019, the Group has been awarded a polypropylene FEED project in Louisiana, the United States, which was Wison Engineering's first FEED project in the United States. In addition to the key regions, the Group has established more than ten branches in Russia, the Commonwealth of Independent States, Southeast Asia and Africa as well as those districts along the "Belt and Road" initiative, laying the foundation for expanding new markets.
Accelerating the implementation of digitalization and modularization to boost the industry transformation
Wison Engineering adhered to the strategy of "Technology-driven Development", and actively promoted the application of digitalization, intellectualization and modularization. Modular prefabrication could effectively control the projects progress and quality, significantly shorten construction period and improve work efficiency, which is a highly effective solution for large-scale petrochemical plants, especially in the regions with high construction costs, resource shortage and higher construction risks. During the period, the Group completed and delivered 3 modularization projects in the United States.
Digitalization and intelligence will be the future development directions in the energy and chemical engineering industry. In particular, the outbreak of the novel coronavirus epidemic in early 2020 underscores the importance of digitalization. During the Period, the Group insisted in promoting digital transformation. By enhancing digital capability involved in EPC, project management and other processes, the Group gradually developed "Intelligent Factory" through conducting "Smart Project". Wison Engineering improved its contents and depth of automatic completion system, which has been successfully verified in a million-ton ethylene design project. The Company is capable of meeting the domestic and overseas owners demand with industry-leading digitalization capability, which will put the Group in a strong position to take advantage of the industry transformation.
Forging ahead despite challenges while actively exploring new opportunities
In 2020, the novel coronavirus epidemic outbreak has been casting challenges to the economy and industry. In view of the development of the epidemic, the Group rolled out a number of adjustment measures and strictly implemented the epidemic prevention work accordingly to ensure the health and safety of employees. The Group's works have gradually resumed normal now and overtime works have been arranged to push ahead with the progress and reduce the impact of the epidemic. In addition, affected by the tense trading relationship, geopolitical conflicts and the breakdown of the crude oil production reduction agreement, global economy will witness a discernible slowdown and crude oil price sharply declined to its lowest level since 2016. It is anticipated that international oil price will remain volatile in 2020, but the global production capacity will maintain growth in the medium and long term.
The Group will forge ahead despite there are a series of uncertainties and challenges, and actively explore new opportunities as well. Ms. Rongwei, the Executive Director and Chief Executive Officer of Wison Engineering, said, "2020 will be full with challenges and opportunities, Wison Engineering will constantly pay attention to the changes in the epidemic and economy, and adopt responsive measures flexibly and calmly. Focusing on the market with large potential and high gross margins, the Group will continue to build 'Highland of Talent', promote innovation in management mechanisms, and strengthen research and development, project management and financing capabilities. Meanwhile, we strive to extend the industrial chain to the fields of catalysts, new materials, and energy-saving and environmentally-friendly business. Wison Engineering will implement the strategy of 'Customer Value as the Core' and 'Technology-driven Market'", and devote to increase the Company's overall competitiveness and profitability."
About Wison Engineering
Wison Engineering, headquartered in Shanghai, was established in 1997 and listed on the Hong Kong Stock Exchange in 2012 (stock code: 02236.HK). As one of the leading chemical EPC service and technology providers in China, Wison Engineering specializes in serving petrochemicals, coal-to-chemical and oil refining industries. From project planning, consultation and technology licensing to PDP, FEED, engineering design, procurement and construction management, as well as start-up and operational services, we provide services covering the entire lifecycle of the project.
For more information about Wison Engineering, please visit the Company's website: www.wison-engineering.com, or follow Wison Engineering's official WeChat.
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SOURCE Wison Engineering Services Co. Ltd.