Boyuan Reports First Quarter FY2014 Financial Results

- 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 Q1 FY2014 Q1 FY2013 Change
Revenue $49,039 $52,096 (5.9%)
Gross profit $7,218 $7,814 (7.6%)
Gross profit margins 14.7% 15.0%  
EBITDA1 $6,045 $6,765 (10.6%)
Net income $2,338 $2,688 (13.0%)
Earnings per share - diluted $0.09 $0.10 (10%)
  Sept. 30, 2013 June 30, 2013  
Total Assets $198,775 $194,347 2.3%
Cash, cash equivalents and restricted cash $11,171 $13,321 (15.8%)

"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 US$12.0 million
  • 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 million

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 period.

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 projects."

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

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 line.

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 63780410#.

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

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  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     

TMX Equicom
Frank Condron
(416) 815-0700 ext. 233


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