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Wison Engineering Achieves Y-O-Y Increase of 34% in 2019 Revenue and Substantial Growth in New Contracts and Backlog Value

Release time:2020-03-25

 (25 March, 2020, Shanghai) 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”) on 24 March 2020.

 

 

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 reached approximately RMB408.2 million, representing a year-on-year decrease of 18.2%. During the Period, profit attributable to owners of the parent company reached approximately RMB50.6 million, representing a year-on-year decrease of 10.1%. The decrease in profit attributable to owners of the parent company was mainly due to implementation of strategic projects in new markets, which have a low gross profit margin in 2019, and accounted for a 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, also resulted in profit decline.

 

During the Period under Review, total new contract secured by the Group reached 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% comparing to the total backlog value as of 31 December 2018. The 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 the energy and chemical market were deeply affected by the geopolitics and global trading relations. With uncertainty in global economic growth and slowdown of crude oil demand, the global chemical market has been lackluster and China domestic chemical market has been a key pillar for both demand growth and capacity expansion. With the domestic oil and gas industries are further opened up to private and foreign investment, the market potential has attracted numerous domestic private enterprises and multi-national companies to look into investment opportunities and thus generate more opportunities for EPC companies.

 

Responding to the challenges and opportunities, the Group has leveraged its nimbleness as a private enterprise to achieve technological breakthroughs and innovations. During the Period, the Group established a Key Customer Care Division, Emerging Market Division and Strategic Growth Center. In respect of new market development,the Group achieved the breakthrough in securing several EPC projects for Saudi Aramco, the first Front-End Engineering Design (FEED) Project in Russia, and undertaking the first municipal and environmental project in China. In respect to technology innovation, the Group achieved a full digital delivery of a million-ton ethylene project design, joint licensing C5-C6 Isomerization technology, completing the first integrated MTO and butadiene technology.

 

Strengthening domestic market share, while expanding global presence

 

As an engineering company rooted in China with extensive experience in overseas projects, the Group implemented a strategy of strengthening domestic market and expanding into global market. In response to the needs of various clients, the Group constantly enhances its project management skill, digitalization and modularization to create greater value for customers. During the Period, the Group secured a total of 65 new domestic projects, with total contract value of approximately RMB12.09 billion. These new projects involved various types of engineering works, including refining and petrochemical integrated complexes, ethylene crackers, coal chemicals, PTA and PDH, in which the Group has made significant progress in several key domestic projects. For example, the Group entered into a general contractor contract with Zhejiang Petrochemical for 2# 1,400 KTA ethylene cracker project. By strengthening the control over the project’s safety and construction management, the project was awarded the title of “2019 Exemplary 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, the Group secured 10 new projects, mainly from two core markets - North America and the Middle East. Following the establishment of the Middle East Operations Center, the Group established the North American Operations Center during the Period, which will help to swiftly respond to the local market demand. In 2019, the Group has been awarded a polypropylene FEED project in Louisiana, US, which was Wison Engineering’s first FEED project in the United States. In addition to the key regions, the Group has established branch offices in Russia, the Commonwealth of Independent States, Southeast Asia, Africa and other regions 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 has adhered to the strategy of “Technology-driven Development”, and has actively promoted the application of digitalization,smart plant and modularization. Modular prefabrication could effectively control the project schedule 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, labor shortage and higher construction risks. During the Period, the Group has completed and delivered three modularization projects in the United States.

 

Digitalization and smart plant is the trend for future development in the energy and chemical engineering industry. During the Period, the Group persistently promotes digital transformation. By enhancing digital capability in EPC, project management and other processes, the Group gradually developed “Intelligent Factory” through conducting “Smart Project”. Wison Engineering has improved its contents and depth of automatic completion system, which has been successfully proven in the million-ton ethylene design project. The Company is capable of meeting the domestic and overseas owners’ demands with industry-leading digitalization capability, which will put the Group in a leading position in the industry transformation.

 

Build on past success, explore new opportunities

 

The recent COVID-19 pandemic outbreak has brought a huge challenge to the economy and the industry. In view of the development of the pandemic, the Group took a number of measures and proactively implemented prevention work to ensure the health and safety of the employees. The Group’s work has gradually gone back to normality through staggered working hours and working from home to mitigate the impact of the pandemic. In addition, trade friction, geopolitical conflicts and clasp of the crude oil market will lead to huge uncertainty and volatility to the energy and chemical market.

 

The Group will continue to implement its growth strategy and actively explore new growth opportunities despite current uncertainties and challenges. Ms. Vicky Rong, the Executive Director and Chief Executive Officer of Wison Engineering, said, “There will be plenty of challenges and opportunities in 2020. Wison Engineering will constantly pay attention to these changes, and respond accordingly. Focusing on the market with large potential and high gross margins, the Group will continue to attract top-notch talents, further improve management efficiency, and strengthen research and development,project management and financing capabilities. Meanwhile, we strive to expand our business into 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. ” 

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