Continental Holdings Corp. (CHC, TWSE stock code 3703) , parent holding company of HDEC, today announced the group’s 2019 performance and 2020 outlook. CHC had consolidated revenue of NT$22.665 billion with a gross margin of 12.1%. All three subsidiaries exhibited stable performance; though recognition of loss from overseas investments led CHC’s 2019 consolidated net income after tax to be NT$97 million, translating into earnings per share (EPS) of NT$0.12. CHC decided to distribute a cash dividend per share of NT$0.5.
“In 2019, each subsidiary recalibrated its business focus and confirmed future strategic directives,” said Cindy Chang, Chief Executive Officer of CHC. “From 2020, CEC’s Indian projects and overseas investments will no longer impact overall financial performance. CEC has begun to assess potential in business sectors where its core competencies may be applied. As for CDC, its project portfolio is more diverse in segmentation and geography. La Bella Vita (丽格), CDC’s newly completed residential project, will also generate profit in 2020. HDEC will continue to cultivate its core business in water treatment, while carefully assessing other environmental engineering areas.”
CEC: Backlog reaches new high while assessing new opportunities
CEC closed 2019 with the highest value of backlog in its 74-year history, which at NT$70 billion, is equivalent to three and a half years’ turnover. A significant proportion of the backlog was contributed by new contracts such as Taoyuan MRT GC03 Project (NT$19 billion), and Nangang Depot Public Housing Project (NT$7.3 billion).
In the last 12 months in Taiwan, CEC has completed significant contracts like C2 Reishui Tunnel in Hualien and Keishen Shengkai Residential Project in New Taipei City. There is confidence Taiwan will continue to see further investment in civil infrastructure including rail and metro projects in line with the government’s “Forward Looking Plan”. In addition, CEC will also continue to explore civil opportunities related to conventional and renewable energy. In the Taiwan building sector, demands in the residential and hospitality sectors shall bring more business opportunities to CEC.
In 2019, CEC completed a number of significant projects in Hong Kong, including Mui Wo Water Treatment Facility and tunnel and carriageway works at Liantang. CEC was also awarded G506 contract– construction of Station Square at Kai Tak. However, civil unrest and the COVID-19 pandemic have impacted Hong Kong’s construction market, and we anticipate the market to stabilize in the second half of 2020 and return to slow growth beyond 2020. CEC will exercise more caution and continue to be selective, giving priority to contracts with budget approval in place.
CEC continues to position itself as a leader in Health and Safety and will invest in new technology to enhance site safety and management efficiency. To mitigate the worldwide shortage in construction manpower, CEC is also looking at a number of exciting opportunities where technology, modularization, and prefabrication could be implemented to provide real value.
CDC: Expanding product portfolio while focusing on creating value
In 2019, CDC sold NT$5.9 billion worth of properties in Taiwan (NT$7.0 billion if including JV partners’ portions), which translated into year-on-year growth of 28%. CDC is planning to introduce projects worth NT$28 billion in 2020, including completed projects, projects under construction and four new projects. Over 80% of Drawing the Dream Life (鐫画), CDC’s new residential project in Yangbei Redevelopment Zone, New Taipei City, has been sold since the project was launched in Q1 2020, while other new projects are to be launched starting from Q2 2020.
In 2019, CDC completed 55Timeless (琢白), an iconic upscale residential project in Xinyi District. Apart from large-sized luxury residences, CDC has also been shifting its focus to small-and medium-sized projects in response to market demand. While Bountiful Journey (琢豐), CDC’s first hotel residence project, is almost sold out, the company has been looking into developing other new “hotel residence” projects, including the Fullerton Hotel joint-development project as well as a hospitality project in Kaohsiung, developed in conjunction with Daiwa House.
As for overseas markets, CDC made inroads into the US market by investing in a hotel and condo project in San Francisco. In Malaysia, CDC has invested in Capri by Fraser, a high-end service apartment project in the Bukit Bintang district of Kuala Lumpur as well as a residential JV project in Bangsar District of the same city, targeting customers with upper-middle to high income.
HDEC: Diversifying water treatment while exploring new opportunities
In 2019, HDEC achieved a milestone in completing the Second Phase of Fengshan River Wastewater Reclamation project, which has begun full-scale operation. Meanwhile, the Linhai Sewage Treatment and Reclaimed Water BTO project has entered peak construction. In April 2020, HDEC was awarded Tongluo Science Park Wastewater Treatment Plant Phase II project, a turnkey project adopting highly sophisticated Zero Liquid Discharge technology. Client’s objective of this project is twofold: facilitate the industrial development and protect the environment. Through this project, HDEC not only further builds its credentials but also enhance its integration capabilities in the water treatment business.
In 2020, HDEC continues to focus on its core water treatment business, and will explore new sectors such as biomass power generation and solid waste disposal. The company will also continue to enhance its EPC and project management capabilities.