Company contracted for work on Wynn Palace, The Parisian Macao and Morpheus sees 45 pct drop in fiscal year revenue due to completion of construction projects in MSAR
The completion of projects in Cotai is driving a significant drop in revenue for construction companies operating in the area, as seen in the recent financial annual report for construction company FSE Engineering Holdings Limited, published with the Hong Kong Stock Exchange.
The company saw a 45.6 per cent year-on-year drop in revenue for its full financial year, ended June 30, reaching HK$380.26 million. ‘The decline mainly resulted from the reduction in the revenue contribution from two major projects, namely Wynn Palace and The Parisian which had been substantially completed in full year 2016,’ notes the filing.
The group notes that over the past two years ‘the construction and electrical and mechanical engineering sectors in Macau performed very well […] however, with several sizable casino projects completed in 2017 and the flagging tourism and the gaming industry, the construction and engineering sectors in Macau are expected to go through a stage of consolidation’.
Despite this, the group notes that ‘there is constant demand for renovation and improvement works for hotels and casinos’, while other emerging business opportunities for the group are ‘the robust demand for public and private residential housing, the development of Galaxy Macau Phase 3 and 4 (about a HK$43 billion investment), and the construction of the Islands District Medical Complex’.
Apart from its construction arm, the group operates the Yau Fai Building Materials shop in the MSAR, which sells ceramic tiles imported from Europe. The shop was opened in May of this year.
New contracts awarded to the group during the fiscal year amounted to HK$3.03 billion, with eight of the projects awarded each saw a net contract sum ‘equal to or more than HK$100 million’. One such project was the electrical installation for Morpheus Hotel at City of Dreams. Six of the other contracts were based in Hong Kong, including two for Hong Kong International Airport, while one was on the Mainland.
During the fiscal year the group also completed the heating, ventilation and air conditioning installation for the Hotel Tower of The Parisian Macao.
Overall, revenue generated by Macau during the fiscal year amounted to 10.3 per cent of the group’s overall revenue during the period, a significant drop from the 20.1 per cent it had contributed in the previous fiscal year. Revenue generated in Hong Kong during the year increased 20.1 per cent during the year, reaching HK$2.84 billion, ‘mainly attributable to the substantial revenue contribution from a number of sizeable installation projects,’ notes the filing.
Revenue generated on the Mainland posted a 17.7 per cent year-on-year increase during the year, reaching HK$476.8 million.
