Shanxi Installation Group (2520) H1 2024 earnings summary

Executive summary

• H1 2024 revenue rose 16.4% YoY to RMB6,127.1m on peak power-construction activity; net profit increased 5.0% to RMB115.7m.

• Gross margin fell to 11.7% from 15.3% as competition and lower bids pressured prices; profit before tax declined 6.2% to RMB113.5m.

Financial highlights

• Cost of sales rose 21.3% to RMB5,410.5m, outpacing revenue growth; gross profit declined 10.7% to RMB716.6m.

• Management expenses fell 10.4% to RMB224.6m and R&D expenses fell 26.9% to RMB135.5m; finance expenses rose 2.6% to RMB177.3m.

• Operating profit was RMB113.6m versus RMB135.4m; attributable profit was RMB89.5m versus RMB84.5m.

• Basic EPS was RMB0.07 versus RMB0.08; excluding extraordinary items, EPS was RMB0.06 and attributable profit was RMB85.2m.

• Income tax was a RMB2.3m credit versus a RMB10.7m expense, mainly due to an H1 tax refund.

Outlook and guidance

• Unfulfilled performance obligations totaled RMB38,057.2m at June 30, 2024: RMB10,387.6m due within one year, RMB27,313.2m in one to five years and RMB356.4m after five years.

• 2024 priorities include quality and efficiency, specialized construction and overseas markets, with project selection based on risk, profitability and cash flow.

• Development focus includes energy storage, offshore wind, hydrogen, clean energy and heat, solid waste, water treatment and distributed energy; plans include improving distributed PV profitability and overseas project delivery.