Analogue Holdings Limited (1977) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for joining the 2021 Annual Results Investor Virtual Meeting of Analogue Holdings Limited. Today's meeting will be conducted in English. First, we will have the presentation by the management, followed by Q&A. We would like to invite you to turn on your camera so that our management can greet you face to face. Before we start, let me introduce Analogue's management team to you. They are Dr. Otto Poon, Chairman and Executive Director; Dr. Kin Mak, Deputy Chairman and Nonexecutive Director; Mr. Victor Law, Executive Director; Mr. Raymond Chan, Executive Director; and Mr. Peter Cheng, Chief Financial Officer. Now may I invite Dr. Poon to give you an overview of Analogue's results. Dr. Poon, please.

Good morning, everyone. Thank you for joining our investor presentation today. I'm going to share with you our company overview. Our management team will walk you through our financials and operations for 2021 and present highlights of our prospects. Let me provide a quick recap of our company for new participants joining us today. Analogue is a leading E&M engineering service provider headquartered in Hong Kong. This year marks our 45th year in operation. Our services cover 4 major segments: Building Services, Environmental Engineering, ICBT and Lifts and Escalators. Our customer base is intensive -- extensive, covering both the private and public sectors in different countries and regions around the world. Analogue has a long-term commitment to innovation, and we see it as a foundation of our success. We continue to enhance our unique capabilities through collaboration with world-class universities and have obtained 55 patents and design internationally. Despite the challenges we have faced over the years, we have maintained healthy and sustainable growth by leveraging strong foundation of our core businesses, providing us with a steady stream of high-value contracts. Our motto is we commit, we perform and we deliver. It is reflected in our every initiative we take. Our commitment to environment, social and governance initiatives drive us forward to create value for our shareholders and the community. In 2021, we made remarkable achievements in a number of areas. In terms of technologies, in addition to our well-developed MiC, MiMEP and BIM technologies, we continue to enhance our technologies, such as long range; Digital Twin technology; and ABSPM, ATAL Building Services Prefabrication and Modularization construction technology. I would like to highlight our proprietary ABSPM construction technologies is able to help improve the speed, cost, safety and quality of construction work. In terms of market expansion, we have tapped the U.S. market through an alliance with TEI and established our foothold in U.K. We will continue to explore further business opportunities in the U.S. Europe, Oceania and GBA. With regard to ESG initiatives, Analogue is the first E&M engineering group in Hong Kong to obtain CIC's Sustainable Finance Certificate and the Green Loan Pre-Issuance Stage Certificate under the Green and Sustainable Financial Certification Scheme. Our CFO will go into detail about this later. We reached a new milestone when we acquired Toppy Tower during the year. We plan to revitalize it as our new headquarters to integrate all our operations unit under one roof to enhance productivity and synergy. Our ATAL Training Centre was also launched last year. The center provide dedicated training space for our staff. It utilizes innovative technologies to help our staff improve learning efficiency and then aim to nurture talent for our group and the overall industry. We are proud to share with you that we achieved a total of 47 awards in 2021. It demonstrates our solid foundation and wide recognition from our stakeholders. These awards cover a wide range of areas, including corporate development, investor relationship, ESG projects and human resources. Among all of these recognitions, I would like to highlight a significant award. The CIC Outstanding Contractor Award organized by Construction Industry Council. It is claimed -- it is acclaimed as the Oscars of the Hong Kong's construction industry. The award achievement is a driving force for our continuous pursuit in contributing to the industry and the society. Our CFO, Peter Cheng, will present to you our financial reviews. Peter, please.

Thank you, Dr. Poon. Let's look at our highlights for the year ended 31st of December 2021. We achieved a solid performance despite continued impact of the pandemic and the global uncertainties. Our revenue reached HKD 5.35 billion, a net -- with a net profit of HKD 314.3 million. The group remains in healthy financial position with cash and bank balances amounting to over HKD 800 million and a gearing ratio of just 13.7%. We are committed to rewarding our shareholders, and our dividend payout ratio maintained at a high level of 50.2%. The following slide shows our key financial data, but let me just put one caveat on the table. As TEI revenue from April to July 2020 was consolidated into the group's total revenue in the financial year 2020, which wasn't the case for financial year 2021, we have added a column showing the changes of excluding TEI's impact to provide an apple-to-apple comparison. If we exclude TEI consolidation effect in financial year 2020, our revenue would have increased by more than 10%, near 11%, which was mainly driven by our Business Services and Environmental Engineering segments. Our gross profit would have increased by 4.2% with gross profit margin improving to 16.4%. In financial year 2020, the group received a grant of approximately $90 million under various government scheme, mainly, the employment support scheme. We did not receive any such grant of that size in 2021. But yet, but yet, our net profit still rose by 4.3% to $314.3 million in 2021 with basic earnings per share remained at $0.22. The Board has approved a second interim dividend of $0.0725 per share. Together with the first interim dividend, the total dividend for financial year 2021 will be $0.1127. Our 4 business segments all recorded revenue growth during the year, especially Building Services and Environmental Engineering segments. They were the main drivers for our overall revenue growth in 2021. In terms of project nature, if we were to exclude TEI's revenue contribution in 2021, contracting work and maintenance work would have achieved significant growth of 8.8% and 20.7%, respectively. It's worth noting that the contribution from the maintenance work continued to grow and our efforts in strengthening recurring income through expansion of these segments. I'd also like to highlight the fact that the revenue contribution from our maintenance business is increasing year-on-year. In 2019, it accounted for 15% -- just over 15% of our revenue, reported at $679 million. And in financial year 2020, it's $881.5 million; and then in financial year 2021, $944.7 million. Just over these 3 years, we can see the CAGR growth to be 18%. So we are -- we will continue to focus on growing this business as well as growing our revenue. With regard to the group's balance sheet and the key financial ratios, we maintained a sound financial position with sufficient cash to implement our expansion plan. The main change here I would like to highlight is the gearing ratio. This year, we're reporting 13.7% in comparison to 0 last year on 31st of December. The main reason is because we have acquired Toppy Tower, which will be our new headquarters as Dr. Poon has mentioned, and that's the reason for the increase on the gearing ratio. As mentioned, we are committed to rewarding our shareholders with a dividend payout ratio of no less than 50%. And as you can see that every year, we have achieved that since our IPO. And this year, the payout ratio was 50.2%, and the dividend yield as of 4th of April is 6.6%. And then you can see that the amounts that we pay the dividend is the CAGR growth, CAGR of over 12%. We established our first Green Finance Framework, which facilitates Analogue's entry into Green Financing Transactions to fund projects that deliver environmental and sustainable benefits while supporting our business strategies and vision. The group also obtained the Green Loan Pre-Issuance Stage Certificate from HKQAA Green and Sustainable Finance Certification Scheme and issued our first Green Loan instrument amounting to HKD 300 million to enhance our water and wastewater management. In addition, we won 4 awards from the Hong Kong Green and Sustainable Finance Awards in 2021 organized by HKQAA, another testament to our efforts in integrating ESG initiatives into our businesses. We believe we are setting new bars for the industry while demonstrating our industry-leading expertise and foresight. We will continue to map out our initiatives and further underscore our commitment to contributing to a sustainable environment. Now let's turn to Mr. Victor Law, who will share with you our business highlights. So thank you very much. Mr. Law?

Thank you, Peter. First, I would like to go through the performance of our Building Services segment during the year. The segment continues to be the group's largest revenue contributor in 2021. We had contracts in hand worth around $4.9 billion in total at the end of 2021. Revenue from the contracting, maintenance work and sales of goods subsegments increased by 6.6% year-on-year. In particular, revenue from maintenance work increased by 13.5% to around $270 million, demonstrating our ability to strengthen our recurring revenue streams. Our Building Services segment provides one-stop E&M engineering service to clients from institutional, industrial, health care, infrastructure, data center, residential and commercial sectors. We have pioneered the first high-rise building in Hong Kong using MiC and secured other MiC contracts worth $150 million during the year. In lieu of the increasing market demand for MiC, we are expanding our MiMEP facilities and developing our proprietary ABSPM, which significantly improves the quality and efficiency of construction work. We are actively exploring opportunities in Mainland China, where we won a major project from a Hong Kong horseracing club in Guangzhou. Macau is undergoing a transformation into a global leisure and tourism hub under the great -- GBA blueprint, and this presents a significant opportunity for us. We have secured a major hospital term contract, which strengthen our recurring income. Including other 7 residential project, we secured worth over around $800 million. This slide shows the significant projects we are currently working on, including reprovision of Fu Shan Public Mortuary. It's the government's pilot project pioneering the adoption of BIM from design to construction with a contract sum of around $240 million. Commercial project NKIL 6557 is another commercial project in Kai Tak, which -- with a contract sum of around $900 million. The photo in the middle shows the design of a major department store presented as Twin Towers, which is set to become a new landmark in the Kai Tak district. On the right side, AIRSIDE is the first commercial development project in Hong Kong to be awarded 5 Green Building accreditations at the highest level. This is also our first commercial mall project with full-scale deployment of BIM. The contract sum is around $700 million. We also see big opportunities in the health care services sector. Current projects including E&M engineering works for 7 public hospitals and 13 clinics within Hong Kong West hospital clusters and the installation of the latest security and ELV system at Queen Mary hospital, Phase 1. Installation of lifts and escalators service were also provided. As for private projects, we entered into an MoU with Chinachem Group to deliver comprehensive services to the health care industry in Hong Kong. This involves developing a new business model and exploring opportunities in areas such as medical tourism, telemedicine and IoT solutions. In lieu of the [ steady ] growth of 5G and IoT, we are also exploring opportunities related to data centers. Projects in hand include the construction of a government data center complex in Cheung Sha Wan, which will be completed in the third quarter of this year; a number of installation and maintenance projects for a major data center operators in Hong Kong. In addition to those in Hong Kong, we also see attractive opportunities arising from the rapid development of the GBA. Our Mainland team secured a major contract for a Hong Kong racehorse training facility located in Guangzhou in 2021 with a contract sum of CNY 170 million. We are also working hard for the MEP projects at the Galaxy Hotel based in Macau during 2021 with a contract sum of around $300 million. I will now hand over to Raymond, who will share with you performance of other segments. Thank you.

Yes, thank you, Victor. Hello, everyone. I'm going to walk you through the other 3 business segments, namely, Environmental Engineering, ICBT and Lifts and Escalators. For Environmental Engineering segment, we have contract-in-hand worth more than $4.9 billion at the end of 2021. Total revenue from contracting, maintenance work and sales of goods including -- increased significantly by 24.6% year-on-year. The Environmental Engineering segment provides total solutions covering the design, build, operation and maintenance of environmental engineering facilities ranging from water, sewage, sludge, solid waste and gas treatment. First, we develop and apply advanced technologies and innovative environmental solutions such as the Digital Twin technology, aerobic granular sludge, containerized sewage treatment process and state-of-the-art water and wastewater treatment technology. In addition to actively exploring overseas opportunities in countries such as Philippines and Vietnam, we sought to leverage suitable new business ventures and opportunities for quality partnerships, such as public private partnership for One Belt, One Road projects in Mainland China and Southeast Asia area, enable us to participate in projects in a more effective and sustainable manner. The Green Funding that we previously obtained [ aid ] our capabilities in the manufacturing of self-developed environmental products. It will also help realize our vision of delivering environmentally friendly and sustainable solutions that benefit both our clients and the community. We participate in a wide range of projects that have both social and economic benefits to the city during the year, which include the Hong Kong government icon project to upgrade the existing sewage treatment works in Yuen Long to create an effluent polishing plant with a contract sum of $1.2 billion. The project will ultimately expand the treatment capacity from 70,000 cubic meter per day to 150,000 cubic meter per day in order to meet the future development needs; operation and maintenance works of the power station in Castle Peak and Black Point with a contract sum of $107 million. Other significant projects include the upgrading of Cheung Chau sewage treatment plant and the disposal facilities with a contract sum of $306 million. This -- the other one is the upgraded plant and facilities will integrate the gradual expansion of the village sewage infrastructure network to other unsewered areas of Cheung Chau in the future, providing not only the sustainable disposal pathway, but also safeguarding public health and the environmental -- environment by restoring natural biodiversity into the surrounding water areas. And other significant projects include the MEP works for a new secondary sewage treatment works at San Shek Wan and a new sewage pumping station at Pui O, enhancing the average dry weather flow to 600 cubic meter per day [ with designed ] peak flow to 1,200 cubic meter per day. Contract sum was around $150 million. For other business sector, ICBT, our contracts-in-hand amounted to $877 million in 2021. The segment revenue amounted to around $495 million, representing an increase of 9.1% year-on-year. Our ICBT segment offers green and intelligent building solutions and integrates ICT technology with building energy and management technologies to facilitate Hong Kong's transformation into a Smart City supported by smart mobility, smart living, smart environment, smart people and smart economic initiatives, supported by our in-house R&D capability and in partnership with a market leader hardware and software partners, universities and research institutes. We have [ realigned ] our new technology strategy including the development and application of the cloud-based AI Energy Management Platform; proprietary IoT applications for smart washrooms, indoor positioning and video analytics. We are committed to seize opportunities in different areas to contribute to the development of Smart City and expand our business into new markets. We have adopted a subscription basis under the Software as a Service, what we call as SaaS, model for our energy and technology business. We have also streamlined the digital process and application to benefit social and accelerate the development of Smart City. During the year, ICBT segment recorded a number of new achievements. For example, the PV system will be installed in more than 100 schools and NGOs with a contract sum of $19 million. We also launched the city's first automated robotic parking system, what we call as the AGV technology, and EV charging and a proprietary mobile application at the Hong Kong Science Park. The system won the Asia Pacific Innovation Award at the IFMA Asia Pacific Awards of Excellence 2021. During the pandemic, air quality became a particular concern of the general public. In 2021, we built the IoT network infrastructure and utilized LoRa technology to provide real-time IEQ monitoring for a number of Swire's shopping malls. Our in-house developed cloud-based AI Energy Management Platform has attracted wide industry recognition and secured multi orders from reputable clients. By the end of 2021, our AI Energy Management Platform, IoT application and video analytics technology has been selected by more than 20 shopping malls in Hong Kong. Now we come to our last segment, Lifts and Escalators. Our contract-in-hand amount to HKD 563 million at the end of 2021. If we exclude the revenue contribution from TEI in 2020 of $296 million, our segmental revenue would have weighted by more than 16% to $360 million and contributing (sic) [ contracting ] work, maintenance work and sales of goods would have all achieved growth. Our Lifts and Escalators segment provide a one-stop solution for design, manufacturing, sales, installation, maintenance and modernization of lifts and escalators. Our Anlev brand is proof of our outstanding safety and quality performance. It continues to be a major contributor for this segment by offering one-stop solution for various transportation system in Asia, U.S. and Europe. On the new technology front, we launched the Predictive Maintenance & Remote Monitoring System for our Lifts and Escalators, the first commercial puzzle-stacking automated parking system in Hong Kong and award-winning AI Nylon Optical Fibre Sensing Escalator Combs. In terms of new market, our alliance with TEI, together with our first company in U.K., allow us to capture market opportunities both locally and globally with an enhanced product and service mix. We also continue to increase resources to strengthen our maintenance services capability to boost our recurring income. The signature projects we participate during the year include the Central-Mid-Levels Escalator and Walkway System with a contract sum of $128 million. The project is now under the final stage and expect to be completed by the second quarter of this year. The project won first place in Escalator (sic) [ Elevator ] World's 2021 Project of the Year. Anlev was the only Asian company among all winners, highlighting our industry-leading expertise in this segment. We also completed construction of the first puzzle-stacking automated parking system in Hong Kong. This system adopts innovative technology to provide 30% to 100% more parking space under the same project. Following the project's success, Anlev was awarded future contracts to provide an APS for the new government building in Kai Tak development area. We also design, supply and install heavy-duty freight lift for Hong Kong Palace Museum, which will be a new landmark in West Kowloon Cultural District. In terms of overseas market, Anlev serves millions of users across Asia, U.S. and Europe. We are accelerating our global expansion through our alliance with TEI and our new company in U.K., representing our first foothold in the Europe market. Our footprint include Melbourne Airport in Australia and a metro station in South Korea. To further strengthen our operation, we have invested CNY 60 million in enhancing our production capacity in Nanjing [indiscernible]. The expansion of Anlev manufacturing plant is expected to be completed by the fourth quarter of 2022. Our maintenance service cover all 4 business segments and serve the public and private sectors, including the public railway operation, water supply department, drainage service department, private commercial complex and also EMSD. We have made considerable efforts to enhance the recurring revenue from our maintenance business. As a result, the contribution to the group total revenue has weighted from 15.1% in 2019 to 17.7% in 2021 with [ CAGR of its ] revenue up to 18% over the same period. Looking ahead, we plan to put more efforts to growing our maintenance service business so they will contribute stronger, stable and recurring income to the group. This is all my parts in today's presentation. I will now invite Dr. Kin Mak to conclude our presentation with the group's market opportunities and also growth strategies. Thank you.

Thank you, Raymond. Looking ahead, the outlook remains positive for the group in view of the favorable government policies and increasing opportunities around the world. In Hong Kong, significant investment in infrastructure are expected to drive the recovery of the economy and growth. The construction output is expected to reach HKD 300 billion per annum across public and private housing and commercial developments. In areas such as the Northern Metropolis, Tung Chung, Hung Shui Kiu and Guangdong North, there will be a strong pipeline of infrastructure projects and critical land developments along new railway lines, which will enhance connectivity. New generation connectivity across the territories, combined with strengthened capabilities in Big Data analytics, artificial intelligence and IoT, will enable the evolution of digitally enabled urban applications. The popular adoption of IoT, Big Data and data analytics by many industries to enhance their performance is driving growth of the data center industry. It is worth noting that Hong Kong's data center market is ranked 2nd in Asia Pacific and among the top 6 in the world, offering excellent networks, all major cloud services and a robust development pipeline. Outside Hong Kong, Macau is to become a global leisure and tourism hub in the Greater Bay Area blueprint. This transformation presents significant opportunities to all business segments of the group. The group is well positioned to capitalize on these growth opportunities and take advantage of the rising demand resulting from this strong pipeline of infrastructure projects. Going forward, the group will continue to strengthen our leading position by implementing our 3 strategic pillars of new technology, new market and new business model. We will continue our effort in the development and application of new technologies in such areas as hospital facilities, lifts and escalators, smart carpark systems and Digital Twin technologies in water and wastewater plants. We will increase our investment in R&D of IoT, AI, Big Data analytics and Digital Twin as well as in construction technologies, such as BIM, MiC, MiMEP and robotic solutions, with the ultimate goal of benefiting our customers and the community by reducing costs, increasing productivity and improving safety, quality and sustainability. Regarding new market, as we start to witness the encouraging results from our strategic alliance with TEI and our operations in the U.K. and Europe, we'll continue to place an emphasis on the expansion of our footprint across the globe by exploring potential M&A opportunities with priority given to companies that can create synergies with our existing business and eventually accelerate growth. In terms of new business model, we will enhance our operations and maintenance capabilities to meet the increasing demand for our specialized solutions and deploy intelligent automation with state-of-art proprietary Predictive Maintenance & Remote Monitoring System to position ourselves as the O&M service provider of choice. We will identify new opportunities for equity partnerships, constantly review our business model and explore new models with potential, such as public-private partnership for One Belt, One Road projects to capitalize on the emerging opportunities in the market. But this is the end of our presentation. And well, I will now pass the floor back to our emcee for the Q&A session. Thank you very much.

Thank you, management, for the presentation. Now we come to the Q&A session. [Operator Instructions] Okay. Here's the first question. The first question is from [indiscernible]. I have seen the contribution from the maintenance business keeps increasing, generating recurring income to the company. Any particular strategies to allow the group to further capture the opportunities in this segment? How much room do you see? This is the first question. Any sizable projects upcoming -- sorry. Any sizable -- the whole question [indiscernible].

As we said earlier, production of construction is expected to increase to $300 billion per annum across different sectors of the market. So the associated volume of maintenance required will continue to increase. And the group has a track record of continuously enhancing our maintenance revenue at the rate of 18% over the last few years. Now we will continue on this strategy by capturing the strong demand for our specialized solutions. In particular, we will leverage our expertise across different segments, such as hospital facilities, lifts and escalators, automated smart parking and twin -- Digital Twin technologies for water and wastewater plants. And at the same time, we will deploy intelligent technologies and state-of-the-art systems, such as our Predictive Maintenance & Remote Monitoring System, to position ourselves as the O&M service provider of choice. Thank you very much.

Thank you, Dr. Mak. The next question is from [ Jeffrey Chan ]. The group would have recorded a drop in net profit if we exclude the gain from the disposal of Canatal. What is the group's bottom line if there was a drop? How to improve the profitability moving forward?

Well, actually, there are 2 major nonrecurring items. The first is Canatal. The other is government schemes, such as the Employment Support Scheme, in the previous year. Now if we exclude all these, the group's profit actually increased by 7.5%. And all our business unit saw an increase in revenue last year. Thank you.

The next question is from [ Patrick Right ]. Does Analogue incur a tax liability when disposing of its interest and managing Canatal shares? Or are these disposals tax-free?

Okay. Let me try to answer some of that. So when we dispose NCA shares, Nanjing Canatal shares, there are certain transaction costs as well as tax-related costs. The transaction costs, such as stamp duty, the exchange admin fees and the bank charges. And then for taxation, there is a VAT. There's a value-added tax or general sales tax at 6%. And then in addition to that, there is a local tax which is a little bit complicated, I apologize, a local tax which is based off the VAT of 12%. And then there is a tax on gains of capital income tax, which is 10%. So all of that is applicable in disposals of managing Canatal shares.

Okay. Thank you. The next question is from [ Jeffrey Tan ]. Can you tell us more about the market condition lately? How has the big wave of COVID-19 affect the group's developments? This is the first one -- the first part. The second part is, would like to know more about the growth -- Green Initiatives or the Green Finance Framework. What will the next step be since the group's first Green Finance Framework is established?

Let me start and then I'll invite Raymond and Peter to supplement. Now we have been working very hard to maintain our operation's continuity over the past period, including the last few months. And overall, we have established a dedicated task force to ensure our staff can continue to work with the appropriate protection measures and equipment. We have also encouraged vaccination. And so the result that we reported last year gave evidence of this operational continuity. Now looking ahead, the prospect, as I said earlier, remain cautiously optimistic because our contract-in-hand remains very high, tendering is active and we expect some of the tenders we submitted will lead to more awards. And our maintenance revenue has increased significantly, producing a stable recurring income. And the prospect of the market is good with $300 billion per annum production estimated locally, and there are opportunities in overseas markets as well. And I'll pass on to Raymond to talk about our Green Finance instrument.

Our first Green Loan is for 2 -- mainly for 2 projects. One is the [indiscernible] water treatment work, and the other is a Yuen Long sewage treatment work. And we also prepared to adopt this Green Loan for our potential future projects, whether in Hong Kong or in Mainland China. So Peter, any...

Yes. I think, yes, that we, as a group, has already established a green financing, green and sustainable financing framework, which has already been reviewed by a relevant third-party and accepted by Hong Kong MA for raising green financing. So we will continue with our framework and looking at all our applicable projects within that framework and work with all our financial partners to see whether we can continue to try to get better financing for the company.

Thank you, management. The next question is from [ Patrick ]. For the full year, Environmental Engineering's margins were 8.8% compared to [ 2.2% ] in financial year 2020 and 6.2% in financial year 2019. What is driving the improvement in margins? Are the current margins sustainable?

Yes, let me answer this question. In fact, I answered this question last year when one of our investors also asked this question in our annual meeting. For environmental business, there is a cycle. Normally, it's around 3 to 5 years. So in 2021, there are few sizable projects in their final stage of the -- final stage of the projects. So that we have reasonable revenue and also margin recognized in 2021. And I think in the near future, because we have around HKD 5 billion project in hand, so we foresee the coming year there will also be a good result. Okay.

Okay. The second part of question from [ Patrick ]. In the webcast for the financial year 2020 results, Mr. Peter Cheng disclosed that TEI earned net income of $64 million in 2020. What was TEI's net income for the year -- financial year 2021?

Okay. Let me -- unfortunately, this is a little bit complicated. I very well remember that I mentioned that the year 2020 that $64 million net income. In 2021, as I probably mentioned already, in TEI, they have a Payroll Protection Plan that was established by the U.S. government. The loan was taken out in 2020. And then in 2021, that USD 9.8 million loan was forgiven. So there is a one-off impact of about HKD 76 million, HKD 77 million to the bottom line. So to answer the questions now, the net income in 2021 is $137 million in comparison to $64 million in 2020 for TEI. But if we will take out the one-off items of PPP, then it is roughly the same in 2020 and in 2021, plus or minus HKD 2 million or HKD 3 million difference.

Thank you. Thank you, Peter. The next question is from [ Barry John. High ] management of ATAL has reported in the presentation, it seems the growth is positive following to the electronic vehicle charging-related business. Would you please explain more about this? And any plan for this asset? Thanks.

In fact, this vehicle charging-related business, also related to our automated car parking system, as we mentioned before, in fact, [indiscernible] we already complete 2 automated carpark system in Hong Kong: one in [ Kwai Chung ] and one in Science Park. And then we also have one more new project for this automated carpark system under construction. So we foresee this electronic vehicle charging business will be -- we will have more opportunity. And we also have our own design on this electronic vehicle charging system from our ICBT segment.

Okay. Thank you. The next question is from [indiscernible]. How much will the production capacity be boosted after the additional manufacturing plants of lifts and escalators in Nanjing completed? Which market will you focus on?

Let me answer again. For this expansion of our Nanjing factory, in fact, we already spent around CNY 60 million for this upgrading work, and we expect it will be completed by the fourth quarter of 2022. And after the completion of this expansion, our capacity will increase around 3 to 5x, and our market will be more concentrated on Mainland China and also outside Mainland China like U.S., U.K. and also Australia. So we foresee we have more opportunity in the near future after completion of our expansion of the factory.

Okay. And I have a question for Peter Cheng. The group has [ rich ] cash on hand. Why did you use a mortgage loan to purchase an investment property?

Okay. Let me try to answer that question. As everyone [ have seen ], on the 31st December 2021, the group has, on hand, over HKD 800 million. It is indeed very -- a lot of cash. However, about HKD 300 million of it is with -- is in Mainland China as well as Macau for the business working capital and capital that we have invested in those -- into those companies in PRC as well as Macau. So leaving about HKD 500 million in Hong Kong for our business, that is sufficient for our working capital to run the business as it stands at the moment. So we would continue to look at financing our business for expansions, et cetera.

Thank you. Next question is from [ Patrick ]. With regards to the acquisition of the Toppy Tower property, the company has set a plan to revitalize the building. Will there be cost involved in revitalizing the building? Does ATAL expect to occupy the entire building? Or will portions be rented out?

Well, the main point about Toppy Tower is it will provide a new headquarters building for us, allowing us to consolidate our operations from currently 5 different locations. We expect this to enhance synergy between business units and improve our efficiency. And I'll ask Victor to tell you more about the details of the revitalization project.

For the revitalization of the Toppy Tower, we have already hired all the consultant team and specialist team. And the construction work, the relevant approval from the relevant authorities is to be achieved. We plan to start the contract around the Q3 of 2022, and our target completion of the project will be by end 2023 to early 2024. We are planning to have the whole portion of the Toppy Tower will be occupied by our office without renting out any spaces.

Thank you, management, and thanks to all the questions from the investors. Since there is no further questions, we'll conclude our investor presentation today. Thank you for your participation and continuous support to Analogue. If you would like to get more information about Analogue, please visit the corporate website atal.com. Thank you very much again. You may now disconnect.