Wing Lee Development Construction Holdings (9639) H1 24/25 earnings summary

Executive summary

• H1 FY24/25 revenue rose 77% YoY to HK$400.8m and profit rose 14% to HK$37.5m; basic and diluted EPS increased to HK$0.05 from HK$0.04.

• Growth was led by civil engineering and larger average contract sizes, while lower-margin projects reduced gross margin to 20.0% from 22.8%.

• Backlog was HK$746.6m across 25 projects at 30 September 2024; a subsequent eight-year cable contract is expected to exceed HK$1bn, subject to measurement of actual work completed.

Financial highlights

• Revenue was HK$400.8m versus HK$226.5m; gross profit was HK$80.3m versus HK$51.5m; operating profit was HK$48.5m versus HK$40.6m.

• Profit before tax rose to HK$47.0m from HK$39.5m; profit for the period was HK$37.5m versus HK$32.9m; basic and diluted EPS was HK$0.05 versus HK$0.04.

• Gross margin fell to 20.0% from 22.8% as projects with relatively lower margins contributed a larger share of revenue.

• Administrative expenses rose 77% to HK$20.5m from HK$11.6m, mainly due to higher donations, employee benefits and business-expansion entertainment costs.

• Net finance costs increased to HK$1.5m from HK$1.2m, reflecting higher bank borrowings and machinery and vehicle lease liabilities.

Outlook and guidance

• The Third Runway Projects are expected to finish by mid-2025; completion is expected to enable tenders for airport maintenance and upkeep work.

• The eight-year transmission cable trenching and laying contract is expected to exceed HK$1bn, subject to actual-work measurement, with completion expected in H2 2032.

• Fixed-term contracts on hand are expected to support income and cash flow; priorities include tender follow-up, project coordination and cost control.

• Plans include pursuing renewable machinery and related-components distribution, while developing solar PV and sustainable construction practices.