New stock news | Rongli Construction Holdings pass the hearing of Hong Kong Stock Exchange, with main clients including China Electric Group.

According to the news from the Hong Kong Stock Exchange on September 25, Rongli Construction Holdings Limited conducted a listing hearing on the main board of the Hong Kong Stock Exchange, with Guorong Finance Limited as its exclusive sponsor. According to the prospectus, Rongli Construction Holdings is a large-scale Hong Kong contractor engaged in civil and cable engineering, as well as CECEP Solar Energy photovoltaic system engineering. The company's civil engineering focuses on land leveling and road and drainage works, while its cable engineering focuses on cable trenching, laying, and connection works. As for CECEP Solar Energy photovoltaic system engineering, the company specializes in the design, installation, and maintenance of CECEP Solar Energy photovoltaic systems. Additionally, during the historical period, in its participation in a few projects, mainly the #01 project, the company temporarily leased machinery to contractors and subcontractors and bought construction materials. The company's land leveling works usually include earthworks, excavation works, and steel structure installation. Its road and drainage works mainly involve road construction and rehabilitation, sidewalk and footpath construction, covered pedestrian walkway construction, tunnel renovation, provision of smooth traffic facilities for pedestrian walkways, elevated pedestrian walkways, and tunnels, construction of drainage systems, manholes, cable trenches, and installation of water mains and sewer pipes. Rongli Construction Holdings' cable engineering typically includes cable trenching, laying, and connections, involving excavation, repair, miscellaneous construction (such as concrete pouring), traffic impact assessment, and emergency and cable fault repairs. According to industry reports, Rongli Construction Holdings is the largest cable and civil pipeline installer subcontractor in Hong Kong by revenue for the fiscal year 2023/24, with a market share of approximately 13.6%. Additionally, since 2019 and during the historical period, the company also engaged in the design, installation, and maintenance of CECEP Solar Energy photovoltaic systems under the CECEP Solar Energy photovoltaic system business segment. During the historical period, the various segments of Rongli Construction Holdings participated in several major infrastructure projects in Hong Kong. For example: (i) Regarding the company's land leveling works, the company was one of the subcontractors involved in the Hong Kong International Airport's Third Runway Infrastructure Project (i.e., the Third Runway Project); (ii) In terms of its road and drainage works, the company was the main contractor for the government's rural sewage collection project in Mui Wo, with a contract amount of approximately HK$99.1 million; (iii) For its cable engineering, the company directly contracted with China Light and Power Group (a group company that provides electricity to over 80% of Hong Kong's population) to provide cable trenching, laying, and connection works, and emergency and cable fault repairs under the total agreement A, covering the Sham Shui Po and Wong Tai Sin areas. The company also served as a subcontractor to Gammon Construction (one of China Light and Power Group's main contractors) under total agreement B, providing cable trenching, laying, and connection works, and emergency and cable fault repairs, covering the Tsuen Wan area. The company was the sole direct subcontractor to China Light and Power Group and Gammon Construction, responsible for the scope of works specified in total agreement A and total agreement B (i.e., cable trenching, laying, and connection works, and emergency and cable fault repairs). In terms of clients, during the historical period, the main clients of Rongli Construction Holdings included China Light and Power Group (a company providing electricity to over 80% of Hong Kong's population) and its main contractors, construction contractors in Hong Kong, joint ventures established by state-owned enterprises through their subsidiaries, and various government departments. In terms of finances, for the fiscal years ending March 31, 2022, March 31, 2023, and March 31, 2024, the company's revenues were approximately HK$520 million, HK$361 million, and HK$526 million respectively. Meanwhile, the company's annual profits during the same period were approximately HK$59.05 million, HK$40.56 million, and HK$76.907 million respectively. According to Rongli Construction Holdings' statement in the prospectus, during the historical period, the company mainly engaged in public sector projects in Hong Kong. The company's public sector projects mainly involved land leveling works and road and drainage engineering projects. In the fiscal years 2021/22, 2022/23, and 2023/24, the service revenue generated by the company's public sector projects accounted for approximately 65.6%, 58.4%, and 73.2% respectively. The nature, scope, and timing of obtainable public sector projects generally depend on multiple factors' interplay, including the government's policies on infrastructure and public facilities development, its land supply and public housing policies, and the general economic conditions and prospects of Hong Kong. If the government reduces its spending on infrastructure, public facilities, and public housing development or changes its relevant policies, the number of obtainable public sector projects may decrease, and the company's business, financial condition, and operating performance may be significantly adversely affected.