SEG's 2024 Triumph: RMB 100 Billion in Contracts and Record Dividends

In the ever-evolving landscape of the engineering industry, SINOPEC Engineering (Group) Co., Ltd. (SEG) has emerged as a beacon of success and innovation. The company's recently announced 2024 annual results are a testament to its strategic prowess and market dominance. With a total value of new contracts exceeding RMB 100 billion and record dividend payouts, SEG has not only set new benchmarks for itself but has also redefined the standards for the industry.



A Milestone Achievement

SEG's achievement of exceeding RMB 100 billion in new contracts is a monumental milestone that underscores its market competitiveness and strategic positioning. This feat is not just a number; it represents years of relentless effort, strategic planning, and a commitment to excellence. The company's ability to secure such high-value contracts in a fiercely competitive market environment is a clear indication of its leadership in the engineering industry.

Key Factors Driving Success

Several key factors have contributed to SEG's remarkable success:

1. Double-Digit Growth in New Orders: SEG has maintained double-digit growth in new orders for three consecutive years, reaching RMB100.613 billion. This consistent growth is a testament to the company's ability to adapt to changing market dynamics and secure high-value contracts.

2. Increased Overseas Orders: The company's overseas new orders reached USD5.349 billion, representing a significant year-on-year increase of 79.6%. This growth in international orders demonstrates SEG's ability to expand its market reach and compete effectively in global markets.

3. Diversified Portfolio: SEG's portfolio of orders has been optimized, with new orders in the design consulting category exceeding RMB4.8 billion, a year-on-year increase of 16.1%. Additionally, new orders in the EPC (Engineering, Procurement, and Construction) category accounted for more than 70% of the total. This diversification shows SEG's capability to offer a wide range of services and meet various client needs.

4. Technological Innovation: SEG's focus on technological innovation has also contributed to its market competitiveness. The company secured contracts related to technology development, technology licensing, and technology transformation worth RMB1.1 billion, representing a year-on-year growth of over 30%. This investment in technology underscores SEG's commitment to staying at the forefront of industry advancements.

5. Industry Recognition: SEG's achievements have earned it industry recognition, including 9 provincial and ministerial quality awards, 9 provincial and ministerial design awards, and 9 first prizes of National Excellent Welding Projects. This recognition further validates SEG's high standards and quality of work.

Record Dividend Payouts

SEG's record dividend payouts for 2024 are another highlight of its annual results. The company proposed a final dividend of RMB0.208 per share, bringing the total 2024 dividend to RMB0.358 per share with a 65% payout ratio—the highest since listing. This record payout is a clear indication of the company's strong financial performance and its commitment to shareholder value creation.

Factors Contributing to Record Dividend Payouts

Several factors have contributed to SEG's record dividend payouts:

1. Strong Financial Performance: SEG achieved an annual operating revenue of RMB64.198 billion, a year-on-year increase of 13.9%, and a net profit of RMB2.474 billion, a year-on-year increase of 5.5%. This robust financial performance provided the company with the necessary funds to support higher dividend payouts.

2. High-Quality Development and Value Creation: The company has aligned its efforts for high-quality development and value creation, paying great attention to the capital market's expectations for the company's development and the concern for value enhancement. This focus on value creation has led to more transparent information disclosure and proactive capital market communication, making the company's achievements more prominent.

3. Consistent Dividend Policy: SEG has maintained a dividend yield of 65% for four years in a row, achieving continuous growth in the amount of dividends paid out. This consistent dividend policy has helped to build investor confidence and align the company's interests with those of its shareholders.

4. Share Repurchases: The company has actively safeguarded its value by conducting share repurchases for two consecutive years. This not only supports the stock price but also reduces the number of outstanding shares, increasing earnings per share and potentially leading to higher dividends.

5. ESG Performance: SEG is committed to building itself into an enterprise with leading ESG performance. The MSCI ESG rating has been upgraded to BB level, making it the highest and the only company in the Chinese engineering industry to receive this rating. This improved ESG performance has likely contributed to increased investor confidence and a willingness to support higher dividend payouts.

Technological Innovation and ESG Performance

SEG's focus on technological innovation and ESG performance has significantly influenced its operational efficiency and market recognition. The company's MSCI ESG rating upgrade to BB level, the highest and only rating in the Chinese engineering industry, is a testament to its commitment to sustainable development and high-quality technological supply. This upgrade has enhanced SEG's market recognition, as it is now seen as a leader in ESG performance, which has increased its attractiveness to investors and stakeholders.

SEG's technological innovation efforts have also contributed to its operational efficiency. The company has continued to promote technological innovation to create high-quality technological supply, with the amount of contracts related to technology development, technology licensing, and technology transformation reaching RMB1.1 billion, representing a year-on-year growth of over 30%. This focus on technological innovation has allowed SEG to improve its operational efficiency, as evidenced by its steady growth in revenue from EPC and front-end business, which has continued to increase and stabilize overall project profitability amid fierce market competition.

SEG's commitment to ESG performance has also influenced its operational efficiency. The company has maintained a dividend yield of 65% for four years in a row, achieved continuous growth in the amount of dividends paid out, and actively safeguarded its value by conducting share repurchases for two consecutive years. This commitment to shareholder returns and value creation has allowed SEG to maintain a strong financial position, which has enabled it to invest in technological innovation and other initiatives that improve its operational efficiency.

Conclusion

SEG's 2024 annual results are a testament to its strategic prowess, market dominance, and commitment to excellence. With a total value of new contracts exceeding RMB 100 billion and record dividend payouts, SEG has not only set new benchmarks for itself but has also redefined the standards for the industry. The company's focus on technological innovation and ESG performance has significantly influenced its operational efficiency and market recognition, making it a leader in the engineering industry. As SEG continues to innovate and adapt to changing market dynamics, it is poised for even greater success in the years to come.