At a residential precinct undergoing upgrading works, the CEO (left) shows Phillip Securities analyst, Peter Ng, the A-grade fire-retardant polystyrene panels that the Group uses to insulate old buildings.
April to October Seasonality
The climate in Harbin is so cold that temperatures are sub-zero 5 months out of 12. Construction work takes place only from late April to late October.
As revenue is recognized based on progress of completion, there is a seasonal lull during 1Q and 4Q due to winter months from November to March. This is one reason why there was no revenue contribution from the Group’s green technology business segment during 1HFY2015. The other reason was due to delays in obtaining government approvals for project commencement.
The polystyrene panels are plastered onto the building facade.
Project Management Specialist
The CEO is a management expert, having authored a management textbook used in many MBA courses, as well as being a prolific contributor at industry dialogues, such as the recent PRC infrastructure PPP summit.
As there is currently a supply glut of construction related services, the Group is able to use sub-contractors for all blue-collar manual work on profit sharing terms (60% to Green Build). There are two advantages in farming out work to sub-contractors: Firstly, work delivery is backed by a sub-contractor's deposit of about 10% of its sub-contracted project value. Secondly, the Group is relieved of excess payroll burden when there is no construction activity during winter.
Facade insulation is complete after paintwork is added.
It has a full-time headcount of about 50 management, research and administration staff. This year, it deployed about 2,000 construction workers through sub-contractors and expects to deploy about 7,000 next year.
Excavation work has commenced at several sites to construct the 12km segment secured by the Group. The underground utility tunnel will have a depth of 7 to 8 meters and be 12 meters wide. Ability to Scale Up
"Because we are using sub-contractors, it is very easy for us to scale up. It makes little difference whether we need to complete 1.2km, 12km or 120km within 180 days," said Mr Zhao.
He was explaining that the underground utility project can be completed on schedule even though most of the work can only be done from May to October next year.
Preliminary work has already commenced on the underground utility tunnel. The project was announced on 15 October. Work is expected to commence officially next June and is scheduled for completion by next December.
Welcome banquet hosted by Green Build management for the Singapore delegation.
