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SCMP Reporter

Civil construction firm is in talks over possible joint ventures in China

Civil construction firm Build King Holdings is seeking to expand its business in the mainland and overseas to counter a shrinking local market.

Chairman Derek Zen Wei-peu said his company would tap the mainland's growing demand for urban and infrastructural improvement to boost earnings after seeing Hong Kong's construction market halve from its heyday.

'We hope to grow our outside-Hong Kong business to one-third of turnover in five years from the present 20 per cent,' Mr Zen said.

Build King is the former  financially troubled  I-China Holdings, which was rescued by  Wai Kee Holdings with an injection of its civil construction business and cash.

Build King is targeting urban projects such as metros, roads, bridges, landfills, sewage treatment and water purification plants funded by the  central government, World Bank and Asian Development Bank.

Mr Zen said his company was  in talks over possible joint ventures with, or equity acquisition of, two  civil construction firms, in Zhejiang and Jiangsu provinces, for two projects with  contract values of between 100 million yuan and 200 million yuan each.

'We are targeting mainland construction firms with a national licence for partnership or acquisition and hope to conclude one or two deals this year,' Mr Zen said.

The company makes the move  with the annual local construction market  now worth just $50 billion, having shrunk from the $100 billion of better times, when major projects such as the  international airport and  associated bridges were being built.

Public outcry against landfills  and the government's retrenchment policy to stem the budget deficit also do not bode well for the local construction market.

In contrast, the mainland's appetite for civil construction projects is growing. As a case in point, Shanghai's annual construction market size has been about 200 billion yuan in recent years, according to Mr Zen.

'For example, the demand for subway transportation in Shanghai, which has a population of 17 million, is projected to grow at 50 kilometres annually in the next five years.' The company has undertaken some design-and-build projects in joint ventures with mainland construction firms for the Shanghai metro.

It also intends to tender for a site formation project at Dayangshan port, off the coast of Shanghai, with a construction fee of 30 million yuan.

'In the next decade or two, the mainland's demand will be surging because urban and environmental improvement is high on the government agenda,'  Mr Zen said.

In the first half, the mainland operation made a maiden contribution of $2 million to the company's turnover, or 0.52 per cent of the total. The Hong Kong business contributed $334 million, or 86.97 per cent of  revenue, but t it showed a 47 per cent year-on-year decrease in revenue.

In the overseas market, the company is venturing into Dubai, which is transforming itself into a tourist hub.



Build King looks over the border