China: Xiangyu Dredging Posts 2011 Results

Xiangyu Dredging Holdings Limited, the largest privately owned dredging company in China in terms of dredging volume in 2010, has announced the consolidated annual results of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2011 (the “Reporting Period”).

– Revenue of RMB 1,137 million, representing a year-on-year increase of 203%

– Consolidated net profit was RMB 303.2 million, representing an increase of 219% as compared with 2010

– During the fiscal year of 2011, Xiangyu Dredging has obtained new dredging contracts and extension of existing contracts amounted to about RMB 3 billion

– Earnings Per Share amounted to RMB 0.43, representing a year-on-year increase of 13%.

During the period, attributable to capital and reclaimed dredging activities in the PRC, which led to increased demand for the Group’s dredging services, the Group recorded a sparkling full year result as compared to 2010. The revenue achieved was about RMB 1,137 million, representing an increase of 203% as compared with last year. Consolidated net profit surged to RMB 303.2 million, representing an increase of 219% as compared with 2010. Earnings per share amounted to RMB 0.43, representing a year-on-year increase of 13%.

During the year, the Group achieved robust growth in both financial and operational performance. For the capital and reclamation dredging projects, the Group remained as one of the most influential privately owned dredging contractors in the PRC. The Group continued to engage in several major dredging projects. These dredging projects have contributed to a significant portion of the Group’s total revenue, and are expected to have a huge sum of continual contribution to its future business.

On the other hand, the Group acquired two cutter suction dredgers with an aggregate consideration of around RMB342 million that boost company’s capacity to cope with its back-log orders on hand.

The Group entered into an agreement with a Swiss equipment supplier for the establishment of an exclusive strategic alliance for a term of five years. Under the agreement, the Group is appointed as the exclusive agent/distributor of the equipment supplier in certain Asian territories, including the PRC for a series of de-watering and sludge processing equipment. These equipments include the world’s first container-size mobile autonomous sludge processor. By entering into such alliance, the Group could effectively secure the availability of the de-hydration technology bring along with this equipment in the PRC exclusively.

Furthermore, the Group entered into agreements for the purpose of conditionally acquiring an effective 51% equity interest in Jiangsu Jiaolong Salvage. Jiangsu Jiaolong Salvage is principally engaged in the business of salvaging sunk objects and contractor of provision of engineering services for ports and channels and is recognized as one of the leading enterprises among domestic peers in China by China Diving and Salvage Industry Association. The acquisition would not only enable the Group to create synergy to its existing business, but also broadening the Group’s income stream as well as customer stream.

Looking forward, Mr. Liu Kaijin, Chairman, Executive Director and Chief Executive Officer of Xiangyu Dredging, commented, “The Group sees huge demand in the dredging industry of PRC. There is an exponential growth in international trading activities in the PRC. As one of the integral parts of port investments, the dredging industry is set to benefit substantially from the industry boom in the next five years, the Capital and Reclamation Dredging Business is expected to experience growth in this respect. For the Environmental Protection Dredging and Water Management Business, according to the Ministry of Water Resources, there will be extensive investment in the next ten years in water resources and related projects, where the Group is expected to gain further business. We expect the proportion would keep increasing as an important global trend. For the Dredging Related Construction Business, the Group will continue to seek contracts in this segment that offer reasonable returns to the Group.

The financial results we have achieved reflect both an increase in demand from the PRC dredging market and the effective implementation of our overall business strategy. This strategy is to ensure a continuing focus on the enhancement of the Group capital and reclamation business, accompanied by the target market of environmental protection dredging in the PRC.”

About Xiangyu Dredging

Xiangyu Dredging has been listed on the Stock Exchange of Hong Kong (sehk:0871) on 20 June 2011. The Company is the largest privately owned dredging company in China in terms of dredging volume in 2010, according to the Frost & Sullivan Report. The Company is engaged in providing capital dredging, reclamation dredging, maintenance dredging and environmental protection dredging services. The Company has cultivated strong client relationships and has a strong project pipeline including large-scale projects with prestigious clientele. The Company has strong ability to evaluate project profitability and selectively engage in profitable projects, and have undertaken contract work on dredging projects such as Caofeidian Industrial Area Project, Dalian Changxingdao Harbor Project and Tianjin Port Project. The Company achieved an average dredger working efficiency rate of approximately 83% in 2010, which was higher than the industry average of 70% in China.

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Dredging Today Staff, March 26, 2012; Image: xiangyu