China State Construction Announces 2008 Interim Results

    BEIJING, Aug. 19 /Xinhua-EMWNews/ -- China State Construction

International Holdings Limited ("China State Construction" or "the Group",

Stock Code: 03311) today announces its unaudited consolidated results for

the six months ended 30 June 2008.






    Highlight:

                                          1H08          1H07    YoY Change (%)

    Turnover (HK$ mm)                    5,408         5,202         3.9

    Gross Profit (HK$ mm)                  398           246        61.9

    Net Profit (HK$ mm)                    257           116       122.4



    Gross Margin (%)                       7.4           4.7        57.4



    Net Margin (%)                         4.8           2.2       118.2



    EPS (HK Cents)                       10.55          5.79        82.2



    DPS (HK Cents)                        3.70          2.25        64.4



    Note: 1. The EPS have been adjusted based on total 2.44bn outstanding

             shares after share split on 13 June 2008.

          2. 1H07 are figures unrestated.

    The Group's unaudited profit attributable to the shareholders for the

six months ended 30 June 2008 increased by 122.4% to HK$257 million, and

its turnover reached HK$5,408 million. Basic earnings per share were

HK10.55 cents, representing a growth of 82.2% from HK5.79 cents announced

in the corresponding period last year. Equity attributable to the

Shareholders increased by 126.2% to HK$2,355 million while net asset per

share amounted to HK$0.97, an increase of 86.5% compared to the

corresponding period last year. The Board declared an interim dividend

payout of HK3.70 cents per share for the six months ended 30 June 2008,

representing a growth of 64.4% compared to the corresponding period in

2007.



    Business Review



    Construction Business



    In the first half of 2008, the global economy was unstable. The

subprime mortgage crisis in the United States caused a distinct drop in the

global economy. While there was a clear economic depression in developed

countries, the economies of Macau and Hong Kong, as a whole, maintained

robust momentum. Economic growth in China and India remained rapid, and the

United Arab Emirates saw strong economic development, creating favourable

conditions for the implementation of the Group's strategies.



    During the period, the Group completed 12 projects, comprised primarily

of: (in Hong Kong) 1) foundation and cover of Choi Wan Road Phase I, 2)

foundation and cover of Choi Wan Road Phase II, 3) the Youth Development

Centre in Chai Wan, 4) Phase I of Tin Shui Wai Area 103 and 5) rebuilding

of St. Paul's Hospital, and (in Dubai) 6) Lease Office Building and

Shopping Arcade, JAFZA South.



    The Group secured 21 new contracts in the first half of 2008, with an

aggregated attributable contract value of approximately HK$7.63 billion, of

which the Hong Kong market accounted for 71.3%, the Macau market 19.3% and

Mainland China market 9.4%. New contracts awarded mainly included:






    in Hong Kong

     1) the Siu Sai Wan Complex,

     2) the Sun Yat Sen Memorial Park and Swimming Pool Complex,

     3) the Industrial Development at No. 2 Heung Yip Road,

     4) the Development at Anderson Road - Site Formation and Associated

         Infrastructure Works,

     5) the HAECO Aircraft Maintenance Hangar No. 3A,

     6) the Shopping Centre at Discovery Bay North Development,

    in Macau

     7) an extension project on Windsor Arch,

     8) mechanical and electrical support on The City of Dreams and

    in the Mainland China

     9) the Xi Jin Cheng Project in Chengdu.

    In the first half of 2008, the Group had a total of 87 projects in

progress, with a total attributable contract value of HK$38.01 billion, of

which HK$19.31 billion was from Hong Kong, HK$12.01billion from Macau,

HK$5.27 billion from UAE, HK$0.31 billion from India and HK$1.11 billion

from the Mainland China. The value of uncompleted contracts was HK$24.49

billion, of which HK$11.98 billion was from Hong Kong, HK$9.24 billion from

Macau, HK$2.54 billion from UAE, HK$0.06 billion from India and HK$0.67

billion from the Mainland China.



    Subsequent to the period under review, the Group was awarded two new

projects with contract value of HK$1.38 billion.



    In order to reduce the risk of rising costs, the Group uniquely divides

all project contracts into four categories: 1) cost-plus & project

management contracts (all costs are borne by the owners), 2) government

contracts (the owners, local governments, revise the material and staff

costs from month to month and award compensation to contractors), 3)

private projects with cost compensation mechanism and 4) other private

projects. Currently, 85% of our contracts in hand fall into the first three

categories which have a cost compensation mechanism.



    The Company has been engaged in the fully internationalized and

competitive construction business in Hong Kong for almost 30 years, and has

developed unique major competitive strengths and core competitiveness. Much

effort is put on the promotion of the '5+3' project management model, a

balanced development in five major aspects -- safety, environmental

protection, quality, progress and cost -- with a strong emphasis on the

practice of three assurance systems -- workflow, process and responsibility

-- at the decision-making, management and operating levels. This model

allows contract responsibility, operation responsibility and social

responsibility to be organically integrated, reducing the variation on

quality arising from management differences and, hence, efficiently

increases overall profitability and counters Company risk, boosting

shareholders' value to the largest extend.



    Related Investment Business



    The infrastructural construction of Tuanbohu District, Tianjin, a

primary land development project, is in full swing, and the project company

has made progress payments in respect to construction. The relevant primary

land development project in Chongqing is also being strictly monitored. The

primary land development projects will be established within regions such

as Tianjin and Chongqing, so as to accelerate the realization of strategic

transformation from construction-oriented business to the combination of

construction and investment businesses.



    Financial Management



    Management and control of finances, capital and external financing are

centralized at the head office level with adherence to the principle of

prudent financial management. As at 30 June 2008, the Group's bank balance

was HK$1.65 billion with HK$500 million bank borrowings, which showed a

healthy financial position. There are also sufficient committed but

unutilized bank facilities to meet the need for business development.



    A bonus warrant plan was announced on 8 January 2008. On 4 February

2008, the Group entered into a syndicated loan amounting to HK$1 billion

with the Bank of China, HSBC, Bank of Communications and the Bank of East

Asia. This syndicated loan laid the foundation for a more reasonable

capital structure for the Company as well as a solid basis for the

diversification of the construction and related investments.



    Outlook



    The Group is focusing its efforts on implementing the strategy of

"cross-region operation" to take full advantage from its experience as an

international contractor to build an operational platform for the three

major regions of Hong Kong & Macau, overseas regions and the Mainland China

and to avoid being overly exposed to any single market risk. With its

advantage of being familiar with the Hong Kong market over the past 30

years, the Group has adopted cost effective and different strategies to

maintain its position as one of the largest leading construction

contractors in Hong Kong. By leveraging the advantage of its local company,

China Construction Engineering (Macau) Company Limited, and its familiarity

with the local market and enhancing the model by integrating Hong Kong and

Macau, it has achieved complementary strength and resources sharing.

Through the proper execution of projects already awarded, the Group has

seized opportunities in Dubai's growing construction market, fully

displaying its competitive strengths in its ability to import Chinese

labour and expand the Dubai market. Where its resources are balanced, the

Group will further expand efforts in business development and wait to enter

the Abu Dhabi market. The Group will closely monitor and study the Indian

market, mainly through strategic alliances, prudently and selectively

tendering in construction contracting projects. The basic objective for the

expansion and operation of the construction business in the Mainland China,

and prudently selecting the construction contracting business, mainly

targeting foreign investment construction projects, is "achieving

sustainable growth in profit."



    Meanwhile, the Group is proactively pursuing related investment

business and striving to achieve a strategic transformation developed

between its construction business and its related investment business,

aiming at a stable recurring income and achieving an IRR no less than 12%.

The Group will seize every investment opportunity in the Mainland China,

mainly focusing on primary land development projects in Tianjin and

Chongqing. The feasibility of acquiring infrastructural projects in the

Mainland China from its parent company will be further studied and

discussed. The Group will also explore new areas to increase profit. The

Group will monitor construction-related investment markets in India to

achieve a complement of strength, optimization and resource deployment.



    At present, the operations in Macau and Dubai and the

construction-related investments therein have laid the foundation for the

Group's ongoing development in the future. Within the next three to five

years, the Group should improve its operating structure and significantly

enhance its profitability.



    By efficiently employing our human resources, making continuous

innovations and reinforcing our core competitiveness, we hope to create a

harmonious and win-win operating environment for the Group's products,

customers, shareholders and staff. To develop as an evergreen corporation

through strengthening strategies, we will focus on our core business,

actively expand related investment businesses and apply the principle of

prudent financial management to strengthen our cash management. We aim to

maintain our leadership position in the industry and to maximize

shareholders' value.

    About China State Construction International Holdings Limited



    China State Construction International Holdings Limited ("China State

Construction" or "CSCI", Stock Code: 03311) started its construction

business in Hong Kong in 1979. It is a vertically integrated construction

powerhouse, engaged in building construction and civil engineering

operations as well as other peripheral operations such as foundation work,

site investigation, mechanical and electrical engineering, highway and

bridge construction, concrete and pre-cast production. In July 2005, China

State Construction was listed on the Main Board of The Hong Kong Stock

Exchange.






    For further information, please contact:



    China State Construction

     Jacky Zhou (Investor Relations)

     Tel:   +852-2823-7066

     Fax:   +852-2527-5436

     Email: [email protected]



     Carrie Cheng (Public Relations)

     Tel:   +852-2823-3695

     Fax:   +852-2865-5939

     Email: [email protected]



     Doris Chung (Public Relations)

     Tel:   +852-2823-7333

     Fax:   +852-2865-5939

     Email: [email protected]



    PR China

     Jane Liu

     Tel:   +852-2522-1838

     Fax:   +852-2521-9955

     Email: [email protected]



     Henry Chik

     Tel:   +852-2522-1838

     Fax:   +852-2521-9955

     Email: [email protected]