China State Construction International Holdings Ltd – a contractor on Macau infrastructure schemes including the US$3-billion MGM Cotai casino resort project (pictured) – saw its 2014 gross profit margin (GPM) from Macau work fall by 11 percentage points, said two investment analysts.
“[China State Construction International] GPM in Macau declined substantially from 15 percent in 2013 to 4 percent in 2014,” said a note on Friday from Jamie Soo and Adrian Chan of Daiwa Securities Group Inc.
“GPM from both Hong Kong and Macau declined as some of the major housing and casino projects did not reach full swing. Therefore it [China State] couldn’t recognise part of the profits under the accounting rule for cash construction,” added Daiwa.
Nonetheless, across all the construction firm’s international operations, net profit attributable to shareholders of China State Construction International rose 25.7 percent year-on-year in 2014, to approximately HKD3.46 billion (US$446.1 million). Reported earnings per share for 2014 rose 25.5 percent, to HKD0.89 per share.
On September 10, the firm said its backlog of Macau building projects in progress – judged by value – had leapt by 178 percent year-on-year as of end-August. It didn’t give reasons.
Anthony Wong and Angus Chan of UBS Securities Asia Ltd said in a note in early February that another Cotai casino project – the US$4.1 billion Wynn Palace, where the main contractor is a unit of Australia’s Leighton Holdings Ltd – had been subject to “some government pacing” on approvals of construction labour.
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia