Broad Homes (02163.hk) Well-positioned for Revenue of RMB4.92 Billion in 2021, an Expected Increase of over 80%

HONG KONG, Mar 1, 2021 – (ACN Newswire) – On February 26, 2020, Broad Homes (02163.HK) released its annual results announcement for 2020. In 2020, it achieved total revenue of RMB2,613.9 billion, a year-on-year decrease of 22.4%, gross profit of RMB926.8 million, a year-on-year decrease of 19.0%, net profit of RMB216.4 million, a year-on-year decrease of 68.0%, and an increase in gross profit margin from 34.0% in 2019 to 35.5% in 2020.

Broad Homes remarked that the decline in revenue was on one hand attributable to delayed construction progress of certain of its joint factories due to the COVID-19 pandemic, and on the other, a decrease in gains from loss of significant influence in associates by over 70% in 2020 from the corresponding period last year as a result of an adjustment in management mode of certain joint factories, as well as the improving layout of joint factories nationwide with the progressing of the “Broad Homes United Program”.

However, it is noticeable that PC unit manufacturing business of Broad Homes secured remark performance in 2020, with new contract amount reaching RMB4.09 billion, up 31.7% from RMB3.106 billion the corresponding period last year, and backlog amount reaching RMB5.196 billion, up 38.6% from RMB3.749 billion the corresponding period last year. Sufficient orders of the PC unit manufacturing business pave the way for Broad Homes in 2021.

Looking into future, Broad Homes will embrace more opportunities leveraging the three advantages of rapid industry development, its data-driven and B+C dual-diver strategies. According to the Resolution in Relation to the Financial Budget Report for 2021 as set out in the appendix of Meetings to be Resolved at Annual General Meeting and Notice of Annual General Meeting published together with its annual report, Broad Homes budgets a revenue of RMB4.92 billion for 2021, a year-on-year increase of 88%.

PC Unit Business to Ride upon the Potential Industry Boom

In recent years, the state vigorously guides and encourages the development of the prefabricated construction industry. Thanks to the policy support of the central government, Ministry of Housing and Urban-Rural Development and other competent authorities, domestic prefabricated construction industry has embarked on rapid development. Pursuant to Frost & Sullivan, market scale of PC unit manufacturing business reached RMB65.4 billion in 2020, and is expected to reach RMB285.5 billion in 2024 at a CAGR (Compound Annual Growth Rate) of 44.5%.

With the progressing of the “Broad Homes United Program” and improving layout of joint factories, Broad Homes primarily generate revenue from its PC unit manufacturing business, which achieved revenue of RMB2.4192 billion, a year-on-year increase of 5%, and as a proportion of total revenue increased to 92.6% from 68.4% of the corresponding period last year. Riding upon its on-going rapid growth, PC unit manufacturing business has become the core business of Broad Homes. As of June 2020, Broad Homes had 15 wholly-owned PC factories and 88 joint PC factories accumulatively contracted for, making it China’s largest PC unit and PC equipment manufacturer.

According to the “2020 China Real Estate Industry Chain Strategic and Integrity Supplier Research Report” issued by China Real Estate Chamber of Commerce, Broad Homes was the most preferred cooperator among “Prefabricated Structure – PC Structure” brands in real estate suppliers.

As an industry pioneer, after more than two decades of exploration, Broad Homes has been blessed with marked advantages amid the rapid development of the industry, which, the market believes, is well positioned to enjoy the dividend from the rapid growth of the prefabricated construction industry.

Comprehensive Establishment of Digital Platform to Focus on Intelligent Upgrading

According to information available, Broad Homes is the pioneer and leader in the industrialization of construction industry in China and the first to adopt full process digital information system and industrial chain technology system with exclusive intellectual property rights, which is capable of offering global, scalable professionalized and intelligent manufacturing of prefabricated buildings and services

As the only prefabricated construction enterprise having been selected for the Pilot Demonstration Project of Intelligent Manufacturing by the MIIT (Ministry of Industry and Information Technology of the PRC), Broad Homes has embarked on establishment of a prefabricated digital platform, upgraded digital development strategy and successfully forged two intelligent systems of PC-Maker software service strategy and PC-CPS system.

PC-Maker service strategy is able to enhance the design interactivity and optimize the design process. Through data collection, utilization and sharing, it promotes the virtuous circle of work done by different parties and continuously enhances the cooperation with and upgrading of strategic customers. As of the end of 2020, Broad Homes has provided comprehensive prefabricated construction solutions to almost 300 property developer, including Vanke, Country Garden, Evergrande, Jinke and Gemdale. The PC-Maker service strategy enables Broad Homes to realize the transformation from business cooperation to standard co-construction, and accelerates the comprehensive upgrading of prefabricated buildings to standardization, digitalization and intelligence at the product end.

Capitalizing on the mature PC-CPS intelligent manufacturing system, Broad Homes commences to transform into data-driven production at the demand end, and realized flexible demand-based manufacturing through digital definition of various elements of the industrial chain, which promoted and achieved efficiency, intelligence and visualization of the whole construction process, and further improved the product quality and construction efficiency. Providing full process digital solutions for prefabricated buildings with PC-CPS system helps to solve problems such as cost, logistics and supply chain management, and facilitates enterprises to achieve excess profit.

Consolidating Industry Leading Position Leveraging B+C Dual-driver Strategy

At the recent Central Rural Work Conference, General Secretary Xi Jinping emphasized that, the state had made it clear to comprehensively promote rural revitalization, accelerate the development of rural industries, deepen rural reform, implement rural construction, and improve the quality of rural housing construction. As a forerunner of construction industrialization, Broad Homes proactively responded to the national strategy to implement rural construction, and successfully realized the strategic transformation from TOB to TOB+TOC in 2020.

At the business end, Broad Homes remains committed to PC unit manufacturing and intelligent manufacturing research and development (R&D), and gradually shits focus away from construction contracting. Broad Homes developed PC Maker software and PC CPS to improve its production efficiency and cost control capacity. Meanwhile, Broad Homes was the first to realize the importance of data elements, and took the lead in the full process prefabricated construction intelligent-oriented development.

At the consumer end, taking advantage of the policy of “separation of ownership, contracting right and management right” in rural homesteads, Broad Homes is expected to get involved in the trillion-level rural housing construction market. In 2020, Broad Homes focused on developing TOC business and launched B-house and the new product B-BOX. B-house products mainly target C-end consumers and the rural villa market, under which Broad Homes introduced seven standardized products, such as Buttonwood Villa, Oak Manor and Camphorwood Villa, established and opened B-house parks in Changsha, Wuhan, Tianjin and other cities, and developed new housing supply schemes to meet the diversified and customized consumption needs of the market, which is transforming the development trend of the traditional rural housing market.

TF Securities predicts that Broad Homes will embrace rapid development in the prefabricated rural villa market segment, its product type design will satisfy the demands of the whole market in the future and TOC business scale (excluding B-BOX) will reach RMB5.25 billion in the next three years, thereby contributing to considerable performance growth. In view of the expansion of housing market demand and the leading advantage of digital intelligent technology, Broad Homes is well positioned to consolidate its leading position in the prefabricated construction industry.

According to expert analysis, in 2020, China further introduced a more detailed industrial digital development strategy. In the new development era, Broad Homes continuously increases investment in digital economy, promotes R&D and digital upgrading, focuses on the principal business of PC unit manufacturing, and specifies the TOB+TOC dual-driver development strategy, which has laid a solid foundation for the rapid expansion of its PC unit business and the leading position in the prefabricated industry, and its future performance is expected to gain remarkable growth.

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