Focus on Intelligent Rail Transit, Improve Industrial Layout and Create the Best Returns for Shareholders

From March 26 to 27, 2019, BIITT held 2018 annual board meeting, conference on annual performance and future development strategy and acquisition of Huaqi Intelligent in Hong Kong. Chairman Zhang Yanyou and director Guan Jifa led the leading group, including CEO Xuan Jing, CFO Wang Xinjiang, Vice President Wang Yuzhe and Assistant President Wang Yongtian, to elaborate the 2018 performance and latest developments of the Group to its investors and the media.

Performance highlights:

l   Profits and gross profit margin increased.

l   Earnings per share were 2.3 HK cents in 2018, up 0.5 HK cents from 1.8 HK cents in 2017.

l   The board of Directors recommended maintaining a 30% dividend rate with a special dividend of 1 HK cent per share.

l   Huaqi Intelligent M&A project is expected to contribute to the company in 2019.

l   At present, the company has sufficient business reserves, with orders in hand totaling RMB 1.5 billion (including that of Huaqi Intelligent).

Dr. Zhang Yanyou, Chairman of the board of directors of the group, said: 2018 is the third year of the 13th Five-Year Plan of China’s urban rail transit, and the peak period of China’s urban rail transit construction. Since the implementation of the 13th Five-Year Plan, the cumulative length of newly added operating lines in three years reaches 2148.7 kilometers, with an average annual length of 716.2 kilometers. Under the guidance and support of macro-policy, China’s urban rail transit will enter a new era of steady and rapid development, and the investment, construction, operation and equipment industry chain of the entire rail transit will continue to maintain a great prosperity.

In 2018, first, in terms of intelligent rail transit service, the Group has successively won the bidding of the electronic and intelligent project of the underground comprehensive pipe gallery project in Beijing World Horticultural Exposition Park, the project of Beijing New Airport Highway, the procurement project of Zhengzhou Urban Rail Transit ANCC system, and the project of accessing ACC/TCC system in the Phase III and IV of Beijing Metro Line 8. At the same time, the Group has obtained the PIS subcontract for the communication system integration and purchasing of special communication system equipment for Nanning Rail Transit Line 3 Phase I Project.

Second, in terms of civil communication transmission service, based upon the current charging standards, the Group continued to negotiate with China United Network Communications Limited (“Beijing Unicom”) on the cooperation of civil communication 4G transmission system of 127 underground stations on nine lines, including Beijing Metro Line 5. In order to ensure the Group’s revenue, a 5-year agreement was signed on the premise of maintaining the original charging standards; and a new 4G communication transmission service agreement for Beijing Subway Line 7 was signed with Beijing Unicom. At the same time, based upon the current charging standards, a framework agreement on 4G transmission services for BII-TDBJ self-built lines was signed with China Mobile Communications Group Beijing Company (“Beijing Mobile”). In order to ensure the Group’s revenue from civil communications transmission services, a 5-year agreement was signed on the premise of maintaining the original charging standards. In terms of expanding new fields, taking advantage of the high security and full coverage of metro optical fibers, the Group signed a cooperation agreement with Beijing Metro Information Development Co., Ltd. on optical fiber interconnection in Beijing Metro in 2018. Civil telecommunication transmission service business will continue to provide the Group with sustained and stable income.

Thirdly, in terms of investment in business expansion, the Group has expanded new business and implemented industrial chain layout by means of equity investment, joint venture and cooperation, and obtained investment returns, so as to create greater returns for its shareholders. In 2019, the company entered into acquisition agreements with NetPosa Technologies Co., Ltd., Suzhou Huaqi Intelligent Technology Co., Ltd. (“Huaqi Intelligent”) and Mr. Liu Guang. Accordingly, the company acquired 95% of Huaqi Intelligent’s equity at a maximum cost of RMB 1.045 billion. Huaqi Intelligent is a leading enterprise in the field of vehicle-mounted PIS, one of the six major information systems in rail transit. It has outstanding technical capability, obvious competitive advantage and leading market share. Through this acquisition, the company and Huaqi Intelligent will form complementary advantages and jointly create domestic first-class PIS products, which is an important measure to complement and strengthen the PIS business sector of the company. This acquisition is conducive to supplementing the existing product lines of the Group, realizing effective complementation of the two sides in terms of customer types and distribution areas, realizing the sharing and development of the markets of both sides, accelerating the development of the business through business synergy and resource integration, further enhancing the core technical strength and technological content of the Group, and enhancing the overall market competitiveness. In addition, it will help the Group form new profit growth areas and improve the overall operating performance.

Chairman Zhang pointed out that since BIITT became the controlling shareholder of the Group in 2016, it has been determined to reform and start the work of strategic planning. 2018 is a transition year for the Group to clarify the development strategy of “New Journey - Reshaping 2021”. The acquisition of Huaqi Intelligent is the first step of the Group’s journey. Looking into to the future, the Group will implement the overall strategic plan for the transformation and upgrading of BIITT, closely focus on the three strategic themes of “one theme, one platform and one center” of BIITT, accelerate the extensions of business fields, industry chain and market areas, focus on the five core systems of intelligent rail transit, empower urban rail transit with smart technology, so as to become the leading provider of urban rail transit intelligence system services in China.