Extracted from Annual Report 2017
The Year in Review
The year in review was one of notable progress for the Group as our focus on mega and large size towercranes for infrastructural projects continues to be validated by stronger results and new milestones. Growing demand for our towercranes to be used in infrastructural projects in the PRC overcame uneven demand in the residential projects segment and the mixed performance in overseas markets.
Revenue for the financial year 2017 ("FY2017") rose by 26.3% to RMB574.5 million as compared to RMB455.0 million in the financial year 2016 ("FY2016"). In FY2017, the PRC, our largest market continues to show promises. The increase in revenue was driven largely by the sales of towercranes for large infrastructural projects in the PRC such as power plants, the Beijing New Airport in Daxing and the Beijing-Tongzhou Municipal Government Project. Higher revenue and gross profit margin in turn drove the Group's net profit attributable to equity shareholders to increase from RMB3.9 million in FY2016 to RMB28.1 million in FY2017.
One of our latest mega-sized models, the STT3330, launched in 2016, has been successfully deployed in Anhui Wuhu Power Plant (安徽芜湖电厂) and Hebei Caofeidian Power Plant (河北 曹妃甸电厂). It is one of the largest Topless STT towercranes in the world with a maximum lifting capacity of 160 tonnes and working radius of 85 metres. This state-of-the-art model has received positive reviews within the industry for its efficiency and performance in mega infrastructure projects. The success is a remarkable milestone of the Group, propelling the Group to the forefront of the towercranes industry.
Catering to the growing demand of mega-sized towercranes used in the construction of cleaner technology power plant, the Group has also launched a new model - STT2630 towercrane during the year. The STT2630 has a maximum lifting capacity of 120 tonnes and working radius of 80 metres. It has been successfully deployed in Shanxi Changzhi Power Plant (山西长 治电厂).
In addition to the above noteworthy projects in the PRC, we also set new milestones in other countries. We managed a significant breakthrough in Indonesia market, where we are delivering our STT2630 towercrane to take part in the construction of a 2,000 megawatt coal power station in Banten Province.
Further west, another project of note is the commissioning of our STT1330 towercrane for the construction of a new terminal at the Helsinki Vantaa International Airport in Finland. The STT1330, with a maximum lifting capacity of 64 tonnes, is the very first large-sized Topless STT towercrane to be exported to Finland.
Driving Long-Term Growth in the PRC
The Group's long-term strategy has always involved strengthening our operations in our core market – the PRC. Our multi-pronged strategy involves capitalising on the PRC's numerous development programmes that focus on augmenting infrastructure around major cities and business hubs. These infrastructure programmes provide the Group with opportunities to participate in various projects and further build our presence and strengthen the brand.
The PRC is often regarded as home to the world's largest construction market, but growth is likely to decelerate over the next 10 years as the government implements reform to address the debt risks and move the economy toward a consumptionled model. Research reports estimate the PRC's construction sector is likely to grow by about 6.8% in 2017 and 6.0% in 2018, supported by ongoing investment in the infrastructure sector outlined by the 13th Five-Year Plan. Nevertheless, the sheer scale of the government's development plan provides companies, such as our Group, business opportunities and involvement on the back of demand for infrastructure and property.
An essential component to the 13th Five-Year Plan is boosting international trade and stimulating economic growth across the region. With the "One Belt, One Road" initiative, the PRC endeavours to enhance its relations with other Asian nations, the Middle East, Africa and Europe as part of its strategic development of trade ties. The initiative also aims to create a platform for economic cooperation, trade and policy coordination, and social and cultural collaboration. With modern infrastructure projects playing a key role in attracting more investment and trade along the "One Belt, One Road" route, the Group foresees opportunities to deploy its mega and big size towercranes and actively contribute in the execution of the programme in the region.
The Group will also be looking to tap on the PRC's ongoing National New Urbanisation Plan which is a people-focused urbanisation initiative that aims to transform rural residents into urban residents. The plan involves developing cities and small towns to accommodate some 100 million new urban residents by 2020. This should alleviate overcrowding in major cities and promotes consumption to boost GDP. In particular to the high level of urbanisation within the Yangtze River Delta (YRD) Economic Zone, a number of the region's provinces are currently engaged in building several urban clusters, including construction of individual cities, cross-regional transportation systems and other infrastructure development projects.
The April announcement of the Special Economic Zone (SEZ) in Xiongan, located at the centre of Beijing, Tianjin and Hebei portends stronger construction spending and suggests authorities are likely to remain reliant on investment to help support long-term growth. As part of the PRC's development strategy, the project involves the systematic relocation of non-essential functions from Beijing to neighbouring locations and aims to promote better economic structure and regional development. This government-led initiative augurs positively for our Group since the plan will also coordinate with the development of infrastructure, industrial upgrading, and transportation integration.
Intensifying Our Global Outreach
Demand for higher-end towercranes continues to grow globally in line with the construction industry trends focusing towards sustainability as well as energy and labour efficiency. The use of offsite construction, also called modular or prefabrication, is likely to continue to grow in 2017 as quality, time and labour concerns make alternatives to traditional construction methods more attractive.
In Singapore, the Building and Construction Authority (BCA) is encouraging wider adoption of Prefabricated Pre-finished Volumetric Construction (PPVC), by having the Public Sector, in particular The Housing & Development Board (HDB), to take the lead. PPVC is a construction method whereby free-standing volumetric modules (complete with finishes for walls, floors and ceilings) are constructed and assembled in an accredited fabrication facility. The game-changing technology will gain savings in time and manpower at the construction site. We believe our track record and wide array of towercranes with various lifting capacity are well poised to meet the industry needs and that of our customers.
Meanwhile, prospects for other Asia markets are mixed. Countries like Macau will likely remain stagnant in construction activities while we see more opportunity in Myanmar and Indonesia markets where urbanisation continues to drive primary infrastructure needs. In FY2017, we have deployed our luffing cranes STL420 in Myanmar. The country expects a more vibrant post-election economy and we intend to gain growth momentum in such emerging market.
In Taiwan, we recognise the growing opportunity to expand our market share as the upcoming replacement needs urged by more stringent regulation enforced on the age of towercranes and more focus on industry safety. Since 2015, our large crane models – STL420, STL660C and STL720 – have been successfully deployed in Taiwan for various infrastructure works.
Capitalising on Our Technical Expertise
To reinforce our competitive edge within the industry, the Group continues to make strides in product innovation, design and quality. We remain committed in innovating and developing new solutions to meet the ever-changing needs of our customers. Our capable research and development team of engineers and technicians constantly seek to push the limits in design and functionality, as well as finding ways to improve production and control costs.
Furthermore, our business emphasizes on adhering to international safety standards by putting in place a stringent quality assurance system. We pride ourselves by securing all key safety certifications for our towercranes in different countries.
This year, the Group had successfully launched 2 new models, the STT2630 and STT1330 and filed four new patents, which will help in broadening our already extensive product range, and allow us to remain competitive and uphold our leadership position.
Sustaining Our Forward Momentum
The Group will continue to effectively manage operating costs and business risks to remain competitive. It will also continue to explore strategic collaborations and leverage on its research and design capabilities and track record as a leading towercrane manufacturer, design specialist and solution provider to target complex and high value projects to grow the business further.
At Yongmao, we consider our human capital as indispensable towards sustainability and progress. The Group also places strong emphasis on the training of its employees to improve technical capability so as to provide better services to our customers.
In our continuous efforts to spur product design towards international levels, we will further optimise and upgrade our products and accelerate the implementation of smart manufacturing initiatives to improve production standards.
Moving forward, we continue to unlock new avenues of building a sustainable and thriving business. Against such a dynamic background of economic activity, we will continue to effectively manage costs, develop marketing and brand strategies, and extend our strategy of creating value for our customers. This is in line with our vision to build the Yongmao brand into an innovative and competitive corporation.
Dividend and Acknowledgements
On behalf of the Board, I would like to express my gratitude to the management, employees, joint venture partners and shareholders for their continued support and contribution, particularly given the significant investments and development we have made, and the strides at which we have executed on our vision.
To show our appreciation, we are rewarding our shareholders with a final dividend of 1.0 Singapore cents for FY2017 to be approved at the upcoming Annual General Meeting.
We are driven towards creating a robust and resilient company that can consistently deliver long-term value to our shareholders. Let us continue to bring Yongmao forward, as we continue to seek out new growth opportunities beyond.
Sun Zhao Lin