- US$119.6 Million in New Projects Initiated -
TORONTO, Nov. 14, 2013 /CNW/ - Boyuan Construction Group, Inc., (TSX: BOY, BOY.DB, BOY.DB.A) a fast-growing construction company in China of commercial,
residential and municipal infrastructure projects, reported today its
financial results for the three-month period ended September 30, 2013.
All figures are in U.S. dollars unless otherwise stated.
Selected Fiscal Year Financial Highlights
In thousands except share and % data
Gross profit margins
Earnings per share - diluted
Sept. 30, 2013
June 30, 2013
Cash, cash equivalents and restricted cash
"Our results for the first quarter of fiscal 2014 reflect the tight
liquidity for developers and the restrictive central government
policies that continue to characterize the current real estate market
in China," said Mr. Cailiang Shou, Chairman of Boyuan Construction
Group. "However, the market fundamentals that generated two consecutive
years of record revenue growth in 2012 and 2013—the continued growth of
China's middle class and the ongoing development of tier two cities as
a result of urbanization—remain unchanged. The projects undertaken in
the quarter demonstrate our commitment to actively pursue high value
opportunities in spite of market conditions, while validating our
strategic decision to remain selective in choosing which new
construction projects we accept in order to minimize risk, preserve
capital and ensure profitability."
Q1 FY2014 Operational and Financial Highlights
Revenue of $49.0 million, down 5.9% from $52.1 million in FY2013
EBITDA of $6.0 million, down 10.6% from $6.8 million in FY2013
Net income of $2.3 million, or $0.09 per diluted share
Initiated four construction projects in Sanya City on the south coast of
Hainan Island: a multi-family residential complex valued at US$17.0
million; a multi-family residential complex valued at US$15.6 million;
a mid-size hotel valued at US$3.4 million; a water theme park valued at
Initiated two construction projects in Wanning City in the southeast of
Hainan Island: a multi-family residential complex valued at US$38.9
million; a commercial complex valued at US$24.8 million
Initiated a construction project in Qiongzhong in the central region of
Hainan Island: a multi-family residential complex valued at US$7.9
Review of Financial Results
Revenue for the three-month period ended September 30, 2013 was $49.0
million, down 5.9% from $52.1 million for the same period in FY2013.
Boyuan recognizes revenue on the percentage-of-completion method.
Measures introduced by the Chinese central government two years ago in
an effort to cool down the real estate market have adversely impacted
business activities resulting in slower growth in revenue and a smaller
gross margin. The Company has also become more selective in taking up
new construction projects in the current uncertain economic
environment. Most of the Company's projects have a duration between one
to three years.
Cost of construction for Q1 FY2014 was $41.8 million, up/down 5.6% from
$44.3 million for Q1 FY2013. The decrease was primarily due to lower
expenses associated with lower project volume. Cost of construction
includes all direct material, labor, subcontract and other related
costs, such as equipment repairs. The two major components of the cost
of construction are direct material and labour costs. Direct material
costs were $29.9 million and labour cost was $10.3 million in Q1
FY2014, compared to direct material costs and labour costs of $32.7
million and $11.1 million respectively in Q1 FY2013.
Gross profit for Q1 FY2014 was $7.2 million, which represented a margin
of 14.7% on revenue. Gross profit for the same period last year was
$7.8 million, which represented a margin of 15.0% on revenue. The
Company has experienced a slight downward pressure on margins under the
current real estate market situation in China. Developers are becoming
more price-sensitive and have longer development cycles, thus eroding
some of the Company's normal margins. Historically, Boyuan's gross
profit margins have been in the range of 15% to 17%.
G&A expenses were $1.2 million in Q1 FY2014 compared to $1.1 million in
Q1 FY2013. The slight increase was mainly due to annual salaries
adjustments and was in line with inflation during the period.
Interest expense for Q1 FY2014 was $1.8 million, a small decrease of
$0.1 million from $1.9 million in Q1 FY2013. The decrease was mainly
due to the maturity of the secured convertible debentures.
After-tax net income for Q1 FY2014 was $2.3 million, or $0.09 per fully
diluted share, compared to net income of $2.7 million, or $0.10 per
fully diluted share in the same period in FY2013. The decrease was
principally due to a small decrease in construction activities during
The Company had working capital of $87.1 million, including cash, cash
equivalents, and restricted cash totaling $11.2 million as at September
30, 2013. This compares to $78.9 million and $13.3 million respectively
at June 30, 2013.
"In the near term, the restrictive measures imposed by the central
government on the residential market and the tightening of financing
facilities to property developers will continue to result in a slower
pace of growth for us," added Mr. Shou. "Therefore we will continue to
be very selective in which new construction projects we take on in
order to minimize risk and preserve capital. Over the longer term, we
believe that growth will be driven by expanding our reach in tier-two
cities and increasing our focus on high-margin, specialty construction
Boyuan's consolidated statements for the three-month period ended
September 30, 2013 and related management's discussion and analysis
(MD&A) will be filed with securities regulatory authorities within
applicable timelines and will be available via SEDAR at www.sedar.com.
Conference Call Notice
The Company will hold a conference call to discuss its first-quarter,
fiscal 2014 financial results on Friday, November 15, 2013 at 5:00p.m.
ET. Mr. Paul Law, Boyuan's Chief Financial Officer, will host the call.
All interested parties can join the call by dialing 647-427-7450 or
1-888-231-8191. Please dial in 15 minutes prior to the call to secure a
The conference call will be archived for replay until Friday, November
22, 2013 at midnight. To access the archived conference call, please
dial 1-855-859-2056 or 416-849-0833 and enter the reservation number
About Boyuan Construction Group, Inc.
Based in Jiaxing City, China, Boyuan Construction Group, Inc. is in the
business of commercial building and residential construction, municipal
infrastructure and engineering projects. In its last three fiscal years
ending June 30, 2013, Boyuan completed 46 projects for a number of
private and public sector clients. Boyuan's current project backlog
includes residential, commercial, industrial and mixed-use
developments. From its operating bases in Zhejiang Province and in
Hainan Province, Boyuan focuses on construction projects in China's
fast-growing regions of the Yangtze River Delta, Hainan Province and
Shandong Province. For more information visit www.boyuangroup.com.
Caution Regarding Forward-Looking Information:
Certain information contained in this press release constitutes
forward-looking information, which is information relating to future
events or the Company's future performance and which is inherently
uncertain. Forward-looking information involves known and unknown
risks, uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking information. The Company believes the expectations
reflected in the forward-looking information are reasonable but no
assurance can be given that these expectations will prove to be correct
and readers are cautioned not to place undue reliance on
forward-looking information contained in this press release. Some of
the risks and other factors which could cause results to differ
materially from those expressed in the forward-looking information
contained in this press release have been identified in the Company's
AIF for the fiscal year ended June 30, 2013 and in the Company's other
public disclosure documents filed with certain Canadian securities
regulatory authorities and available at www.sedar.com. The forward-looking information contained in this press release is
made as of the date hereof and the Company undertakes no obligation to
update publicly or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as
otherwise required by law.
1 EBITDA is defined as earnings before interest, income taxes,
depreciation and amortization. EBITDA is not a defined performance
measure under IFRS.
SOURCE: Boyuan Construction Group, Inc.
For further information:
Boyuan Construction Group, Inc.
Mr. Paul Law, CFO
+(852) 9329 5088
(416) 815-0700 ext. 233