42 slides from Horizon Construction Development's earnings presentation, March 2024
Slide 1: Investor Presentation Horizon Construction Development
Investor Presentation Horizon Construction Development March 2024
Slide 2: Disclaimer
Disclaimer This material is prepared by Horizon Construction Development ( “the company” or “HCD”， together with its subsidiaries, the “Group” ) and has not been independently audited. This document contains confidential and proprietary information, and its contents have not been verified by an inde
Slide 3: The company is an equipment operation service provider under Far East Horizon
The company is an equipment operation service provider under Far East Horizon • Based on the huge Chinese market, the company was incubated by Far East Horizon, which has comprehensive industrial operation capabilities, and specializes in equipment operation services Born in Far East Horizon with st
Slide 4: The company is in the leading position in China's equipment service industry
The company is in the leading position in China's equipment service industry • Horizon Construction Development is a leading equipment operation service provider in China – The company’s total asset is about RMB31.2 billion, and the volumes of Aerial Work Platforms, Neo-excavation Systems, and Neo-f
Slide 5: Company Vision: Devoted to becoming a world-class comprehensive equipment operation service provider
Company Vision: Devoted to becoming a world-class comprehensive equipment operation service provider • Through "3+3+3" strategy the company is committed to building a first-class comprehensive operation service provider across multiple national markets Phase 1 (current phase) Phase 2 Phase 3 Absol
Slide 6: Business Analysis
Contents 1 Business Analysis 2 Results Overview 6
Slide 7: China's equipment operation industry has a sound growth prospects
China’s equipment operation industry has a sound growth prospects • China's equipment operation industry has a huge space, and the market size is expected to exceed 1.5 trillion yuan in 2027 • Various factors drive Chinese customers to use equipment to replace labor, and the trend of using external
Slide 8: Room for improvement in growth potential and market concentration in China's market
Compared with developed economies, there is still room for improvement in growth potential and market concentration in China’s market • China's equipment operation industry is still not fully mature, and the penetration rate still has huge room for improvement • In the process of industry maturity,
Slide 9: Southeast Asia and other global markets are still in the growth stage
Southeast Asia and other global markets are still in the growth stage • The demand for fixed asset investment and construction in Southeast Asia, West Asia and North Africa continues to expand • It is expected that the demand for equipment operation services in these markets will continue to grow. I
Slide 10: Business Analysis
Business Analysis ① Forward-looking Market Layout ② Leading Service Capability ③ Steady Business Operating Style 10
Slide 11: Forward-looking Market Layout: Based on advantages of three major product lines
① Forward-looking Market Layout: Based on advantages of three major product lines, leading position has been firmed • The company has entered into the three core product lines from the early years, with a large scale and rich categories as well as a sufficient supply of equipment to meet the various
Slide 12: Forward-looking Market Layout: Domestic and overseas outlet network
① Forward-looking Market Layout: Domestic and overseas outlet network both deployed • The company has the largest outlet network in China, and meanwhile has deployed in overseas markets with a current focus on Southeast Asia China’s market Overseas market 4 main bases and 489 outlets in mainland Chi
Slide 13: Further consolidate the leading advantages in the domestic market
① Forward-looking Market Layout: Further consolidate the leading advantages in the domestic market • In China’s market, the company will further utilize the competitive strategy of market segmentation and the initiatives of expanding to new categories to further strengthen the leading advantages in
Slide 14: Implement the 3+3+3 strategy to accelerate overseas market penetration
① Forward-looking Market Layout: Implement the "3+3+3" strategy to accelerate the penetration of overseas markets • At the same time, the company implements the "3+3+3" strategy to accelerate the overall business layout in overseas markets as a China’s leading equipment operation service provider to
Slide 15: Business Analysis
Business Analysis ① Forward-looking Market Layout ② Leading Service Capability ③ Steady Business Operating Style 15
Slide 16: Leading Service Capability: Digital management with large professional business team
② Leading Service Capability: Digital management with large professional business team • A professional marketing team of over 1,000 people is close to clients through a dense outlet network across the country to meet clients needs promptly, and uses digitalized method to manage business processes L
Slide 17: Leading Service Capability: Outstanding technical strength and one-stop solution
② Leading Service Capability: Outstanding technical strength and one-stop solution • Based on the all-round and multi-dimensional service model covering the whole project cycle, the company can provide customers with tailor-made one-stop solutions Industry-leading Excellent research and One-stop com
Slide 18: Leading Service Capability: Fast response and efficient access
② Leading Service Capability: Fast response and efficient access • The efficiency of logistics and maintenance has been further improved through digital and intelligent methods, and thus the overall business operation efficiency has reached the best level in the industry Significant cost advantage i
Slide 19: Leading Service Capability: Cultivating strong asset management capability
② Leading Service Capability: Cultivating strong asset management capability • Based on the existing business framework, the company undertake resources from business partners and across industry chain, and cultivate a strong asset entrustment management capabilities, and take full advantages of sca
Slide 20: Business Analysis
Business Analysis ① Forward-looking Market Layout ② Leading Service Capability ③ Steady Business Operating Style 20
Slide 21: Steady Business Operating Style: Superior resources
③ Steady Business Operating Style: Superior resources • The company has a strong lineup of shareholders, including high-quality long-term strategic investors in the industrial chain, to help the company find a stable and progressive development path Controlling The company has unique resources share
Slide 22: Steady Business Operating Style – Financial policies and capital structure
③ Steady Business Operating Style – Financial policies and capital structure • The company focuses on the main business of equipment operation over long-term, adheres to a stable management style, and achieve long-term profit maximization and risk minimization Prudent financial policy Stable capital
Slide 23: Results Overview
Contents 1 Business Analysis 2 Results Overview 23
Slide 24: 2023FY Results: Maintained a solid growth
2023FY Results: Maintained a solid growth • In 2023, the company achieved a solid growth in overall performance, with a total revenue up by approximately 22% year-on-year, EBITDA up by around 10% year-on-year, and adjusted net profit up by 11% year-on-year. Revenue EBITDA Adjusted net profit(1) (RMB
Slide 25: 2023FY Profitability: Further enhanced
2023FY Profitability: Further enhanced • The full-year EPS was around RMB0.32, with a year-on-year increase of about 34%; book value per share was RMB3.37, with a year-on-year increase of about 43% • In 2023, ROA was approximately 3.1% and ROE was around 11.0%, both steadily increasing compared to t
Slide 26: Total Revenue: Continued robust growth
Total Revenue: Continued robust growth • In 2023, the company recorded revenue of approximately RMB9.61 billion, with a year-on-year growth of 22% • Revenue structure has been further diversified, and the proportion of non-operating lease services revenue has surpassed 45% Revenue Revenue Structure
Slide 27: Fundamental business maintained resilience
Fundamental business maintained resilience • The equipment volume of the Aerial Work Platform (“AWP”) and Neo-formwork System both increased, while Neo-excavation System remained stable. • The utilization rates of all three key equipment lines in 2023 were better than the previous year, maintaining
Slide 28: Superior platform-based comprehensive service capabilities
Superior platform-based comprehensive service capabilities • The full-year revenue of platform and other services reached about RMB1.51 billion, increasing about 173% year-on-year • Leveraging extraordinary platform service capabilities and client resources, the company has integrated and revitalize
Slide 29: Engineering solutions capabilities further improved
Engineering solutions capabilities further improved • With the enhancement of the company’s engineering technology and the improvement of project undertaking capacity, the company’s solution capabilities have been constantly strengthened. The company actively expanded the business scale of engineeri
Slide 30: Enhanced service ability drives clientele scale and stickiness
The enhancement of comprehensive service ability drives clientele scale and stickiness, thus maintaining a strong risk resistance ability • Thanks to the full-cycle, well-round multi-product and function service model, the company steadily increased the excellent and diverse clientele, enabling the
Slide 31: Significant reduction in core expense ratios
Significant reduction in core expense ratios • The major expense rates were considerably narrowed down, while the business scale kept growing. Unit price of logistic cost Logistics and lifting (RMB/km) expense ratio -0.5 11.4 10.2% -43bps 9.7% 10.9 2022 2023 2022 2023 Average funding cost rate(1) Fi
Slide 32: Prudent depreciation policy with stable depreciation expense ratio
Prudent depreciation policy with stable depreciation expense ratio • Adhering to the principle of prudence and conservation, the company adopted a 10-year depreciation method for the main asset categories used in operating lease as well as engineering and technical services, with a stable depreciati
Slide 33: Stable and healthy capital structure with reduced leverage
Stable and healthy capital structure with reduced leverage • The liquidity of the company maintained sufficient, and its proportion of current asset increased • The company’s equity has been enlarged after the initial public offering. The asset-liability ratio and leverage ratio were descending, whi
Slide 34: Free cash flow improved
Free cash flow improved • With the company's comprehensive operation services capability further enhanced, and by vigorously expanding the equipment management business with low capital occupation, the free cash flow has returned to positive in 2023 Operating cash flow CAPEX Free cash flow(1) (RMB'0
Slide 35: Appendix: Condensed Balance Sheet
Appendix: Condensed Balance Sheet (RMB'00 million) 31 Dec 2023 31 Dec 2022 Change Total assets 312 303 3.1% Equipment and material for leasing and services 176 184 -4.4% Trade receivables and contract assets 54 48 13.0% Total liabilities 205 236 -13.4% Total equity 108 67 61.5% Equity attributable t
Slide 36: Appendix: Condensed Income Statement
Appendix: Condensed Income Statement (RMB'00 million) 2023FY 2022FY Change Revenue 96.11 78.78 22.0% EBITDA 44.80 40.81 9.8% Adjusted net profit(1) 10.43 9.43 10.7% EPS (RMB/share) 0.32 0.23 34.5% ROA 3.1% 2.3% 0.8pct ROE 11.0% 10.5% 0.5pct Note: (1) Adjusted net profit is calculated after restoring
Slide 37: Appendix: Condensed Income Statement
Appendix: Condensed Income Statement (RMB'00 million) 2023FY 2022FY Change Net profit 9.62 6.64 44.9% Interest expenses and foreign exchange gains or losses from redemption liabilities on ordinary shares 0.68 2.38 -71.4% Listing expenses 0.13 0.40 -68.9% Adjusted net profit 10.43 9.43 10.7% Note: (1
Slide 38: Appendix: Condensed Cash Flow Statement
Appendix: Condensed Cash Flow Statement (RMB'00 million) 2023FY 2022FY Change Net change in cash and cash equivalents 0.1 16.5 -99% Net cash flows from operating activities 39.5 28.2 40% Net cash flows from investing activities -18.3 -34.6 -47% Net cash flows from financing activities -21.1 22.9 -19
Slide 39: Record of successful anti-cyclical high growth
Record of successful anti-cyclical high growth Revenue EBITDA Adjusted net profit(1) (RMB'00 million) (RMB'00 million) (RMB'00 million) CAGR=38.2% CAGR=38.7% CAGR=39.4% Note: (1) figures of 2018 and 2019 are net profit, while other years are adjusted net profit 39
Slide 40: Leading growth pace and great potential of valuation improvement
Leading growth pace and great potential of valuation improvement • The company’s overall growth is faster than other listing peers • PE multiple of the company has a significant discount compared to peers The company’s growth rate is The company’s PE multiple(2) is noticeably higher than peers(1) di
Slide 41: Q&A
Q&A 41
Slide 42: Contact US
Contact US Website：www.hongxinjianfa.com IR Email：hcd-ir@fehorizon.com 42