Continental Holdings Corp. (CHC, TWSE stock symbol 3703) today reported its 2015 financial results and 2016 operational plans. In 2015, CHC and its subsidiaries had consolidated revenue of NT$21.777 billion and net profit of NT$573 million, translating into earnings per share of NT$0.65. CHC plans to distribute per-share cash dividends of NT$0.5.

 

Due to a lukewarm global economy, Taiwan’s real estate market continued to be sluggish. As a result, CHC’s 2015 overall operation and earnings were not in line with expectations. Compared to 2014, CHC’s revenue slid by 2.98%, but turned a profit in 2015.  For 2016, CHC will continue to move civil/building construction, real estate development, and environmental project development businesses forward, while strengthening management and initiating various training programs.

 

Real estate development: to maximize economic profit

Construction remained to be the main source of CHC’s 2015 revenue, accounting for 75.03% of the total; real estate development and others, meanwhile, accounted for 21.28%. Real estate development income mostly came from Continental Development Corporation (CDC), totaling approximately NT$4.634 billion. Due to various negative factors such as the government’s housing control policies, the increase of property tax, and joint filing of property/land taxes, a wait-and-see attitude will prevail in the short term.  The real estate market in 2016 is expected to be slow. In the meantime, CDC will continue to strengthen its brand image and develop new projects in premier or newly developed sections in Taipei, New Taipei, and Taichung Cities.  While the primary focus is to maximize the economic profit for real estate development, we may consider to expand into commercial buildings, malls, and hotel development in addition to high-end residential complexes.

 

Construction: to focus on metro and building construction in Taiwan while strengthening our footprint in Hong Kong

Of the NT$16.339 billion revenue for civil/building construction, revenue from metro projects and building construction projects accounts for 49% and 34% respectively. For 2016, Continental Engineering Corporation (CEC) is going to focus on turnkey metro contracts for civil construction in Taiwan.  The target development for building construction is going to be hotel and industrial projects other than residential.  Overseas, we’ll slow our pace in India and focus mainly in Hong Kong.

 

Environmental project development: new business amid steady income

The environmental business has brought a steady source of income for CHC though with limited contribution to the total revenue. Besides the existing sewerage system BOT project in Danshui, we are going to find new business opportunities and participate in more tenders in 2016. We’ve already taken part in the bidding of two chartered projects – a BTO (build-transfer-operate) wastewater treatment plant water recycling project, and a BOT (build-operate-transfer) sewerage system construction project.