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Extracted from Annual Report 2024

Dear Shareholders,

The Year in Review

逆水行丹，不进则退
If You Are Not Progressing, You Are Regressing.

The financial year ended 31 March 2024 ("FY2024") saw a positive start with a COVID-19 reopening rebound as countries adopt measures to adapt to endemic living, together with progress on inflation reduction. The World Health Organization had also declared an end to the COVID-19 global health emergency in May 2023. The PRC’s economic activity rebounded in 2023 following the post-COVID reopening with real GDP increasing by 5.2% year on year. The recovery was driven by domestic demand, particularly private consumption, and assisted by supportive macroeconomic policies, including further relaxation of monetary policy, tax relief for firms and households, and fiscal spending on disaster relief. Still, significant uncertainties impede on the recovery, such as the continued weakness of the property sector as well as slower global activity and demand as a result of ongoing geopolitical tensions during the year.

Performance varied across our business markets outside of the mainland PRC. Asia (excluding mainland PRC) and Middle East & Others segments reported a decline in revenue compared to the previous corresponding period ("FY2023"), while the USA & Europe segments saw an increase. In Singapore, the delivery of tower cranes has slowed due to a maturing market, resulting in reduced demand for new units of large and mega-sized tower cranes.

Group revenue in FY2024 dipped by 13.6% to RMB790.8 million from RMB915.7 million recorded in the previous financial year. Gross profit dropped by a smaller margin compared to the fall in revenue, decreasing 9.9% to RMB228.9 million in FY2024 compared to RMB254.0 million in FY2023, attributable to a higher average gross profit margin in the financial year. For FY2024, the average gross profit margin inched up marginally from 27.7% in FY2023 to 28.9%. This increase was led by a higher sales proportion of luffing tower cranes, together with a higher proportion of rental income, in turn generating a higher sales margin. As a result of the foregoing, net profit attributable to equity holders recorded for FY2024 decreased from RMB51.3 million in FY2023 to RMB43.0 million.

Contributing to the Industry Through Innovation, Building on Our Prestige and Value

Yongmao, as one of the leading players in the business, stands at the edge of innovation, contributing to the tower crane industry through our committed research and development to push out various crane models with diverse capabilities, and our involvement in many major projects within and outside of the PRC.

In the mainland PRC, Hebei Province, our STT3930-200t tower crane which is currently the largest flat-top tower crane in North China, was deployed for the construction of Hutuo River Grand Bridge ("滹沱河特大桥"). It has a total length of about 2,208 metres and a 146.5-metre-high main tower. The bridge has a total of 62 stay cables, and the maximum width of its steel box girders reaches 73 metres, the widest of its kind in China.

The STF3080 wind turbine tower crane had been engaged for its third wind turbine power plant project at Jiangsu Jushi Lianshui 233MW Wind Power Project (江苏巨石涟水233兆瓦风电项目) for the installation of wind turbines. The project is the tallest of its kind with a 180 metre immense concrete-and steel tower and wind turbines of 97 metre length, surpassing the previous Bei’an wind power project in Heihe City, Heilongjiang Province. This engagement has strengthened our leadership in the wind turbine power plant arena.

In Taiwan, our cranes, including 8 units of large and mega-sized luffing cranes, were currently deployed for the construction of Taipei Twin Towers. This project is part of Taipei’s ambitious initiative to enhance its city-west gateway, featuring two skyscrapers, one standing at 74 stories and the other at 55 stories near Taipei Main Station. Situated adjacent to the historic Taipei North Gate, these towers aim to revitalise the heart of the city. The complex will serve as a crucial link in Taipei’s extensive transportation network, connecting Taiwan Railways, Taiwan High-Speed Rail, Taipei Metro, Taoyuan Metro, and the Taiwan Taoyuan International Airport MRT.

We continue to strengthen our market outreach, focusing on large and mega size tower crane projects. The participation of Yongmao tower cranes in the Taipei Twin Towers, one of the upcoming iconic landmark in Taipei City will significantly increase our brand recognition and advance our foothold in Taiwanese market.

Successes and Achievements

Yongmao has once again been included in the top 10 global tower crane manufacturers as the sixth on the list, marking the eleventh consecutive year since 2013. As for the top 10 in China, Yongmao has improved its ranking to the 3rd position. This is a testament to our capabilities and strengths, which drives us to further excel in what we do.

Further affirming our leading position in the industry, we secured the following noteworthy awards during the year:

We are honoured by all the acknowledgements and will continue to innovate in terms of quality, service, and technology to further enhance Yongmao’s brand value.

Market Development

China is undergoing a profound transformation from the traditional coal-dominated energy landscape to a model of clean energy leadership. Motivated by environmental concerns, energy security, and international climate commitments, China has accelerated its adoption of renewable energy sources such as solar, wind, and hydropower. Furthermore, nuclear power has played a crucial role in this transition, with China rapidly expanding its nuclear energy capacity to diversify its energy mix and reduce carbon emissions.

In 2023, the clean energy sector emerged as the primary catalyst for China’s economic growth, accounting for 40% of its overall expansion. Beijing allocated $890 billion towards renewable energy infrastructure during the year. Looking ahead to 2024, China is projected to invest approximately $675 billion in clean energy technologies, a figure nearly equivalent to the combined investments expected from the United States and Europe. These estimates are based on data from the International Energy Agency.

Yongmao has established itself as a trusted supplier of tower cranes crucial for wind turbine power plant and nuclear power stations, where crane performance and capacity are paramount. As these sectors demand robust infrastructure for construction and maintenance, our commitment to delivering reliable equipment has solidified our reputation. Looking ahead, we are intensifying our focus on these sectors, leveraging our expertise and expanding our market presence. By actively participating in major projects, we enhance our brand recognition and consolidate our position as a leader in providing specialised solutions for critical energy infrastructure. This strategic alignment not only underscores our dedication to supporting sustainable energy initiatives but also reinforces our role in advancing technological standards within these key sectors.

In terms of construction demand, the downturn in the property market in China continued to drag on economic performance, with real estate development investment declining and new home prices falling hence exerting pressure on the overall economic momentum.

Meanwhile in Singapore, the Building and Construction Authority (BCA) of Singapore projects that the total construction demand in 2024 would be between $32.0 billion and $38.0 billion. The public sector is expected to drive approximately 56.3% of the contracts to be awarded, of which the main bulk would be from public housing (Built-To-Order (BTO) developments) and infrastructure projects (MRT lines, Changi Airport Terminal 5, Tuas Port developments and others). The public sector would take up the remaining 43.7% of contracts with demand coming from mainly residential developments, expansion of the two Integrated Resorts, commercial premises redevelopment as well as development of mixed-use properties and industrial facilities.

As for Hong Kong, according to research report, the construction industry is forecasted to contract in 2024, owing to tight financial conditions, high inflation and elevated interest rates. However, growth from 2025 to 2028 is expected to register an annual average growth of 2.3%, supported by investment in the transport, electricity, housing, and industrial sectors. The industry’s output will be supported by the government’s commitment to the development of three major road schemes and three strategic railway projects to drive and support the city’s development by 2030. The government’s focus on healthcare teaching facilities and its Long-Term Housing Strategy would also boost opportunities for the market.

The International Monetary Fund stated that the forecast for Asia and the Pacific in 2024 has improved. It is anticipated that the region’s economic slowdown will be less pronounced than previously expected, as inflationary pressures continue to ease. Global disinflation and the potential for lower central bank interest rates have made a soft landing more likely, hence risks to the near-term outlook are now broadly balanced. However, numerous challenges and key risks still remain.

Currently, global trade is experiencing a shortage of ocean containers, leading to a substantial rise of around 30% in freight rates in recent weeks, with expectations of further increases. The increase in shipping costs has been attributed to a variety of factors, including geopolitical tensions in Middle East, adverse weather conditions in Asia, supply chain disruption and rising fuel prices.

Amidst these trying operating environment at large, Yongmao will remain vigilant and committed to exercising cost discipline as we work on ways that we can better deliver greater value to our stakeholders through improvement in our product quality and performance.

Dividend and Acknowledgements

To thank shareholders for their long-term support, the Board of Directors is proposing a first and final cash dividend of S$0.01 per ordinary share for FY2024, subject to approval by shareholders at the forthcoming Annual General Meeting.

On behalf of the Board, I wish to welcome Mr Soh Chun Bin who comes onboard as an Independent Director. We look forward to tapping on his insights and experience in steering the Group. We would like to express our heartfelt appreciation to our Independent Director, Dr Steve Lai Mun Fook who will not be seeking reelection during the upcoming AGM. We have benefitted greatly from his leadership as Chairman of the Nominating Committee, member of the Audit committee and Remuneration Committee. We wish him every success in all his future endeavours.

In closing, I would like to express my thanks and gratitude to our stakeholders, business partners, staff and shareholders for standing by us through thick and thin through the years. The fight against the global COVID-19 pandemic has now shifted towards a balance of safety and management, but we should not be complacent. In the same spirit, Yongmao will not be resting on our laurels – we will be further building up our capabilities to innovate and stay in the leading position amidst the challenging operating environment.

Sun Zhao Lin
Executive Chairman