"The healthy profitability was mainly due to our continuous effort in cost reduction and adoption of innovative construction methods, as well as the ongoing decline in subcontractor prices due to the deflationary environment,” said Mr Vincent H S Lo, Chairman of SOCAM. "However, with the slowing down of the Hong Kong Housing Authority's housing programme and the construction materials market, it will be difficult to maintain this exceptional performance in the Hong Kong market in the foreseeable future. To sustain long-term growth, we have realigned our strategies and have already expanded into the fast-growing markets in the Chinese Mainland, focusing on five key business areas.”

According to Mr Lo, SOCAM's five key focus areas are: quality housing development in major cities in the Chinese Mainland; cement production in the Mainland's central and western provinces; building construction and construction materials supplies in Hong Kong and the Pearl River Delta; global online trading for construction and home improvement materials; and, in the longer term, planning, developing and promoting major development projects in the Mainland.

Four Key Business Areas Already Making Excellent Progress

SOCAM's first undertaking in quality housing development in the Mainland is Rui Hong Xin Cheng (RHXC), a large-scale domestic residential development project in Shanghai. With more than 16,000 residential units to be built over the next 10 years, RHXC will provide continuous growth opportunities and contribute significantly to the profitability of the Group. The first phase of SOCAM's RHXC development, which has a gross building area of 230,000 square meters, is expected to be completed by early 2004.

"With our expertise in building large scale housing estates in Hong Kong and the in-depth market knowledge gained by our privately-held sister company, Shui On Properties, in Shanghai over the past 16 years, we are confident of SOCAM's success as a housing developer in Shanghai. We will also expand into the housing market in other major cities when the right opportunities arise,” said Mr Lo.

SOCAM's TH Cement joint venture, already one of the three largest cement producers in Chongqing, has just signed an agreement to acquire 80% of Diwei Cement, which has an annual capacity of around 1.8 million tonnes. This will make TH Cement the largest high-grade cement producer in Chongqing, with a market share of more than 70 percent. Together with the two recently acquired plants and the construction of new kilns in Zun Yi of Guizhou Province, SOCAM will have an annual capacity of close to four million tonnes of high-grade cement when the planned expansion for these plants is completed in 15 months’ time.

While the Hong Kong market is expected to remain highly competitive, SOCAM's status as one of only six contractors in the Hong Kong Housing Authority's Premier League and a Quality Maintenance Contractor for public housing maintenance works gives it more tendering privileges and job opportunities. Further cost reduction will also be achieved when SOCAM.com is fully integrated into its operations.

"SOCAM will also actively pursue works from the Architectural Services Department and other major institutions,” Mr Lo added.

AsiaMaterials.com, SOCAM's B2B trading portal for building and home improvement materials, has been growing steadily since its launch in March of this year. In addition to its robust electronic platform, six AsiaMaterials Business Centres (ABCs) have been established in the Chinese Mainland to provide effective and better customer services. Three more business centres will be set up in the US, Europe and Asia Pacific by year end. According to Mr Lo, AsiaMaterials.com is also formulating plans to secure exclusive agency rights for selected products and to build a product range bearing brandnames owned by the company.

These plans are led by SOCAM's strong management team, which consists of executives with substantial experience in the construction, construction materials and property development businesses as well as knowledge of working in the Chinese Mainland. SOCAM is also able to take advantage of the rich Mainland experience and connections of the private arm of the Shui On Group, which today further strengthened its senior management by appointing Professor Chia- Wei Woo, the founding President of the Hong Kong University of Science and Technology, as Senior Advisor to the Board.

Mr Lo said, "I am very pleased to welcome Professor Woo to the Shui On Group. His knowledge and expertise in science and technology will help SOCAM speed up its adoption of new technologies in the information age and further boost the development of AsiaMaterials.com. His insight and extensive networks in Hong Kong and the Chinese Mainland will help create strong momentum for the future development of SOCAM and the Shui On Group.”

Shui On Construction and Materials Limited (SOCAM), a member of the Shui On Group, was listed on the Hong Kong Stock Exchange in 1997. Apart from SOCAM, the Shui On Group has a separate, non-listed property arm with investments in Hong Kong, Beijing, Guangzhou and Shanghai.