Firm focuses on Dubai and India, with more modest plans for HK and Macau China State Construction International Holdings, the local construction arm of state-owned China State Construction Engineering Corp (CSCEC), has said it hopes to derive 20 per cent of its revenue from overseas markets by 2008. The main board listing candidate, one of Hong Kong's largest construction companies, now generates more than 95 per cent of its revenue from the territory. 'Overseas business will be one of our strategic focuses as our company keeps expanding in the future,' vice-chairman and chief executive Sammy Zhou Yong said yesterday. 'We are looking for opportunities in Dubai and India - two of the fastest-growing economies in the world.' The company has already secured a $666.4 million contract to build three towers at Jumeira Lakes in Dubai. It also plans to bid for 10 other projects worth about $6 billion in the emirate this year, Mr Zhou said. In India, it has successfully tendered for the $605.8 million East-West Corridor highway project in Madhya Pradesh through a 50-50 local joint venture. Hong Kong's construction sector, the city's third-biggest industry, which accounts for more than 10 per cent of gross domestic product, has been shrinking in value terms since the Asian financial crisis in 1998. Property prices have rebounded on the back of an economic upturn but a contraction in public sector housing programmes and a reduction in big infrastructure projects has left the sector struggling. Nonetheless, China State Construction still sees opportunity in Hong Kong and is convinced that the construction sector will gradually revive. 'The worst is over,' said Mr Zhou. 'The government deficit has been improving and we expect more public works projects, as well as private developments, to come in future.' He cited the proposed West Kowloon Cultural District and Hong Kong-Zhuhai-Macau Bridge as examples of major projects likely to commence in the next few years. The firm has uncompleted construction contracts at hand worth a total $14 billion, offering estimated gross profit margins of between 4 and 5 per cent, Mr Zhou said. Its proposed initial public offering passed a milestone yesterday when shareholders at sister firm China Overseas Land & Investment approved a plan to incorporate its project management arm into China State Construction for $788.1 million. After listing, CSCEC's stake in China State Construction will fall to 64.3 per cent from 100 per cent, with public shareholders owning the remaining equity. Including contributions from the project management division, the listing vehicle would have posted net profits of $87.66 million on sales of $7.03 billion last year, compared with earnings of $73.92 million on sales of $3.36 billion in 2003, which excluded that division's contributions. 'To reward shareholders, our dividend payout ratio will not be lower than 40 per cent in future,' said chairman Kong Qingping. No offer price has been set for the company's shares, because it is listing by way of introduction. The net tangible asset value per share stood at $1.62. China State Construction will debut on the main board next Friday. HSBC is sponsoring the listing.