Hyder targets income boost from mainland

PUBLISHED : Thursday, 29 January, 2009, 12:00am
UPDATED : Thursday, 29 January, 2009, 12:00am

Two key developments on the mainland - urbanisation and the government's multitrillion-yuan stimulus package - will boost contributions from Hyder Consulting's operations in the country in the next few years, the company says.

'We see continued growth in China. A key to our Asia business is the mainland,' said Ivor Catto, the chief executive of the London-listed design consultancy, which focuses on infrastructure, property and the environment.

'The two big drivers in China are urbanisation and the stimulus. I expect mainland revenue to move towards half of East Asia revenue in the next two to three years.'

The mainland accounts for about 25 per cent of Hyder's East Asia business, which is based in Hong Kong.

In the six months to September last year, the company's global revenue rose 39 per cent to GBP151.6 million (HK$1.68 billion), while its Asia-Pacific revenue rose 51 per cent to GBP42.9 million.

Revenue from the mainland grew 30 to 40 per cent last year and should expand at a similar rate this year, said Stephen Porter, Hyder's East Asia managing director.

Although not large, the company has played an important role in infrastructure design around the world in its 150-year history.

The company designed the Yang Shu Pu water treatment plant built in Shanghai in 1883, the country's first such facility. It still supplies water to Shanghai today.

One of the things that brought Hyder to Hong Kong more than 40 years ago was the planning and design of the MTR network, Mr Porter said.

The recent upsurge in the company's mainland business stemmed from the stimulus package, Mr Catto said.

'The shift in the coming year is to focus on the stimulus package,' the chief executive said.

Of the 4 trillion yuan (HK$4.53 trillion) stimulus package announced by Beijing in November last year, 1.8 trillion yuan will go to transport infrastructure, including railways, while 350 billion yuan will go to biological conservation and environmental protection.

Hyder is involved in a rail project in the country's east, where it is advising a Sino-foreign consortium in talks with the government to win the rights to develop and operate hundreds of kilometres of passenger and freight rail line, Mr Porter said.

'There is a lot of pressure from the Chinese government on building infrastructure. The Chinese design institutes are seeing a big wave about to hit them, ' Mr Catto said.

'The amount of work that is coming up is stretching even the biggest Chinese design institutes, which are asking us to supply some capacity.'

Some of the institutes are state-owned bodies that employ thousands of engineers and architects.

The other development is urbanisation, according to Mr Porter. The mainland's urban population will grow from 572 million in 2005 to 926 million in 2025 and one billion by 2030, according to a report by consultancy McKinsey.

By 2025, the country will have 219 cities with more than 1 million inhabitants (compared with 35 such cities in Europe today) and 24 cities with more than 5 million people, it predicted.

'For companies, the scale of China's urbanisation promises substantial new markets and investment opportunities,' McKinsey said.

According to the consultancy, the growth would imply severe pressure for many cities on the issues of land, energy, water and the environment.

'We've seen more demand in the transport sector and master planning of urban centres. We're talking to a number of provincial governments on designing urban centres, such as transforming industrial land to residential and commercial use,' Mr Porter said.

'We're focusing on second-tier cities, as these are where we see the most development in the coming years. The government is supporting second-tier cities to accommodate the migration of people from rural to urban areas.'