Smart Buildings

Technovator Smart Buildings Business and 2021 Financials Examined

In this Research Note, we examine Technovator, a key player in the Chinese building automation market, based on their 2021 annual report, financial results and investor presentations. Technovator International Ltd designs, manufactures and distributes integrated building automation and energy management systems, including hardware, software & total solutions to system integrators and distributors. The group positions itself as a leading smart energy saving services provider in the Chinese market.   Founded in Singapore in 2005, Technovator was listed on the Main Board of the Hong Kong Stock Exchange on 27 Oct 2011. Inheriting technology and experience in the energy saving industry from its parent company Tsinghua Tongfang Co., Ltd. and Tsinghua University, Technovator has developed strong R&D capabilities and technology competencies. In 2021, the Group continued to be challenged by the COVID-19 pandemic and the market environment. Affected by the post-pandemic impact, the Group’s existing orders decreased, project construction periods were extended, and revenue settlement slowed. At the same time, […]

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In this Research Note, we examine Technovator, a key player in the Chinese building automation market, based on their 2021 annual report, financial results and investor presentations.

Technovator International Ltd designs, manufactures and distributes integrated building automation and energy management systems, including hardware, software & total solutions to system integrators and distributors. The group positions itself as a leading smart energy saving services provider in the Chinese market.  

Founded in Singapore in 2005, Technovator was listed on the Main Board of the Hong Kong Stock Exchange on 27 Oct 2011. Inheriting technology and experience in the energy saving industry from its parent company Tsinghua Tongfang Co., Ltd. and Tsinghua University, Technovator has developed strong R&D capabilities and technology competencies.

In 2021, the Group continued to be challenged by the COVID-19 pandemic and the market environment. Affected by the post-pandemic impact, the Group’s existing orders decreased, project construction periods were extended, and revenue settlement slowed. At the same time, as various major events occurred in the country, the bidding of many large-scale projects was postponed during the period and the number of newly signed orders dropped, which also affected revenue settlement. 

The Group recorded revenue of approximately RMB 1,619.1 million (USD 244.9 million) for the full year, representing a year-on-year decrease of 6.8%. Due to the rise in raw material prices, together with the significant increase in labour costs and various expenses as a result of post-pandemic effects, the Group recorded net profit of approximately RMB 45.6 million (USD 6.9 million) for the full year, representing a year-on-year decrease of 65.6%.

The Group is structured into three business units: Smart Transportation Business (STB), Smart Building and complex Business (SBB), and Smart Energy Business (SEB). A total of 812 employees were recorded as at 31 December 2021.

SBB provides integrated intelligence solutions and efficiency management services, namely integrated energy consumption monitoring, energy-saving consultation and renovation services, integration and product supply of intelligence systems for buildings and full life-cycle services which reduce energy consumption and operating costs of buildings. The business unit is the largest contributor to the group, accounting for 45% of total revenues.

2021 revenues for the smart buildings business of RMB 730.2 million (USD 110.5 million).  The negative impact of the pandemic on the Group’s smart buildings and complex segment was reflected in 2021, during which revenue declined 7.4% compared to 2020. However, due to accelerated R&D and the large-scale application of core software and hardware products, the profit margin of this segment increased significantly during the period to RMB 74.1 million (USD 11.2 million).

The building intelligence business has traditionally been an attractive segment of the Group. Technovator has been featured in national key projects, such as the “Tribute Project” for the 100th anniversary of the founding of the Communist Party of China, and the “Science and Technology Winter Olympics”. During the period, the segment overcame the impact of the pandemic to ensure the successful implementation of key projects such as the renovation of the “Ice Cube”, the Big Air Shougang Winter Olympics Jumping Platform, the Museum of the Communist Party of China, and the Central Gift and Cultural Relics Management Center. At the same time, the key application of core software technology in Beijing New Airport, Tongzhou Sub-center and the “National Stadium” projects contributed greatly to the improvement of the segment’s profit margin during the period.

The Techcon Neosys IoT control system has enabled smart interconnection from cloud management and control to the “last mile” of terminal equipment through continuous expansion and improvement, and realized energy-saving and efficiency improvement. During the period, it has been successfully applied in projects such as the Big Air Shougang Winter Olympics Jumping Platform, Pandingshan Smart Tunnel, Wuhan Dongxihu District Rehabilitation Hospital, and Wuyue Plazas across the country. It also extended the application to the Group’s heating business and subway safety door business. The Techcon series of software and hardware systems and products continues to be applied in hotels, exhibition halls, hospitals, industrial parks, film and television studios and other projects.

With three years of declining Group revenues and earnings, compounded by the continuing impact of the pandemic in China, Technovator Smart Buildings business has a challenging time ahead.  

This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.

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