OneConstruction Group Ltd

OneConstruction Group Ltd operates as a structural steelwork contractor in Hong Kong, specializing in the procurement and installation of structural steel for construction projects. The company serves both public sector projects, including infrastructure, public facilities, and public residential developments, and private sector projects, which are mostly private commercial, residential, and industrial developments. The industry is competitive and fragmented, with competition based on brand recognition, product quality, price, and innovation. According to the Construction Industry Council of Hong Kong, aggregate expenditure in Hong Kong for building works in both the public and private sectors and civil works in the public sector increased from $17.8 billion in 2022 to $23.7 billion in 2025, representing a CAGR of 10.1%, and is expected to further increase to $27.6 billion in 2030, representing a CAGR of approximately 3.0% from 2025 to 2030.

The company is one of the top service providers in the Hong Kong structural steelwork industry with an established reputation and proven track record. It is a Registered Specialist Trade Contractor for Reinforcement Bar Fixing under the Registered Specialist Trade Contractors Scheme under the Construction Industry Council of Hong Kong. In 2023, the operating subsidiary was awarded 'outstanding contractor' under the category of Domestic Sub-contractors (Reinforcement Bar Fixing) by the Hong Kong Housing Authority. Based on completed and active construction projects as of March 31, 2026, the company is engaged in the structural steelwork for 9,045 public residential units for certain public residential projects to be developed by the Hong Kong Housing Authority and the Hong Kong Housing Society, which account for 6.3% of the forecasted total of 144,500 residential units in the public sector in 2026 to 2030, by the Hong Kong Housing Bureau.

The company generates revenue by providing structural steelwork services as a subcontractor for construction projects in Hong Kong. Revenue is recognized when construction work is certified by the relevant clients and/or architects or consultants engaged by the clients. The business is project-based and non-recurring in nature, with project durations generally ranging from 8 months to 2 years. The direct clients are primarily registered general building contractors under the Buildings Ordinance. The company mainly focuses on project management and carries out site work by recruiting and supervising contract workers, subcontracting part of the work to third-party subcontractors if project work exceeds capacity.

The company's structural steelwork services involve the supply, cutting, bending, welding, and assembly of structural steel frames, trusses, and other components into structures in accordance with specifications provided in building plans and designs. Major responsibilities include performing site preparatory and preliminary works, developing detailed work schedules and work allocation plans, implementing construction site works, and conducting site safety supervision and quality control. For the fiscal years ended March 31, 2026 and 2025, the majority of revenue was derived from public sector projects. During the fiscal year ended March 31, 2026, revenue from public sector projects was $48,776,000 ¹, representing 98.8% ² of total revenue, while private sector projects contributed $582,000 ³, representing 1.2% ⁴ of total revenue. During the fiscal year ended March 31, 2025, public sector projects contributed $45,883,000 ⁵, representing 86.2% ⁶ of total revenue, and private sector projects contributed $7,322,000 ⁷, representing 13.8% ⁸ of total revenue.

The company completed four construction projects during the fiscal year ended March 31, 2026, and nine construction projects during the fiscal year ended March 31, 2025. As of the date of the annual report, the operating subsidiary has five active and ongoing construction projects expected to be completed between the second half of 2026 and 2028. The contract sums for these active projects range from $8,255,000 ⁹ to $47,679,000 ¹⁰. The company's structural steelwork service covers a wide range of building and infrastructure projects, including private residential and commercial building development, public housing development, hotel redevelopment, hospital redevelopment, and urban renewal projects.

On January 2, 2025, the company completed its initial public offering of 1,750,000 ¹¹ Ordinary Shares at a public offering price of $4.00 ¹² per share, raising gross proceeds of approximately $7.0 million ¹³ before deducting underwriting discounts and offering expenses. During the fiscal year ended March 31, 2026, the company granted an aggregate of 3,000,000 ¹⁴ share options to certain employees under its 2025 Equity Incentive Plan for 3-year services, with an exercise price of US$0 ¹⁵ per share. The company underwent a reorganization in June 2024, becoming the holding company of OneC Development and its subsidiaries. As of March 31, 2026, an aggregate of 16,000,000 ¹⁶ ordinary shares were outstanding.

For the fiscal year ended March 31, 2026, total revenue was $49,358,000 ¹⁷, compared to $53,205,000 ¹⁸ for the fiscal year ended March 31, 2025, representing a decrease of 7.2% ¹⁹. The company recorded negative gross profit and project losses during the fiscal year ended March 31, 2026, primarily due to cost overruns and losses on certain projects. Net income for the fiscal year ended March 31, 2026 was $1,119,000 ²⁰, compared to $3,419,000 ²¹ for the prior fiscal year. The company's largest shareholder, Rich Plenty, beneficially owns 56.25% ²² of the total issued and outstanding Ordinary Shares.

The company intends to increase its market share by deploying resources to compete for additional and more sizeable structural steelwork projects. Driven by various growth drivers including the increase in demand for structural steelwork generated from planned and ongoing infrastructural and property developments in both public and private sectors in Hong Kong, the increasingly common adoption of structural steelwork for construction in Hong Kong, and the growing emphasis and continuous support from the Hong Kong government for the development of the structural steelwork industry, the demand for structural steelwork in Hong Kong is expected to maintain steady growth. Several sizable infrastructure projects have been rolled out and commenced in Hong Kong, such as the Tung Chung New Town Extension, expected to be completed by 2030, Site 3 of the New Central Harbourfront development, expected to be completed by 2027, the Caroline Hill Road Causeway Bay commercial project, expected to be completed by 2026, the Kwu Tung North New Development Area project, expected to be completed by 2026, and the Yuen Long South New Development Areas project, expected to be completed by 2038.

The company plans to expand its workforce to enhance project management capabilities along with planned expansion in business scale and operation. As of the date of the annual report, all of the operating subsidiary's project management staff are deployed to ongoing projects, and the current scale of project management staff may not be sufficient to meet the project management needs arising from additional and more sizeable projects the operating subsidiary intends to undertake in the future. The company currently plans to hire additional project managers, quantity surveyors, and engineers to cope with the intended growth in business.

The company recorded negative gross profit and project losses during the fiscal year ended March 31, 2026, primarily due to cost overruns and losses on certain projects. Profitability depends significantly on the ability to estimate project costs accurately, control subcontracting, materials, labor and other costs, and complete projects on schedule. The company may be able to pass on certain increases in purchase costs to clients in the event of increases in the prices of materials or services purchased from suppliers, as the operating subsidiary generally obtains pre-bid quotations from structural steel suppliers during the tender bidding phase and factors in the pricing trend of steel when determining a proposed bid price.

The operating subsidiary relies on third parties to provide and lease equipment and supplies required for its projects. The company does not own heavy machinery and equipment and normally leases required equipment from approved equipment suppliers on its internal list. The operating subsidiary maintains an internal list of suppliers and subcontractors it approves that is updated on a regular basis. For the fiscal years ended March 31, 2026 and 2025, the percentage of total purchases from the largest subcontractor amounted to approximately 6% ²³ and 6% ²⁴ of total purchases, respectively, while the percentage of purchases from all subcontractors combined amounted to approximately 8% ²⁵ and 10% ²⁶ of total purchases, respectively.

The company intends to improve its financial management to ensure optimal finance costs and capital sufficiency. A strong capital base is essential to cope with increased turnover and support capital-intensive structural steelwork projects. Structural steelwork contractors generally experience net cash outflows as up-front costs at the early stage of projects. Based on experience, the average timeframe between when the operating subsidiary first incurs up-front project costs and when accumulated net cash outflows in respect of a project start to decrease from its peak is approximately seven to ten months from the commencement of the project. For the top projects initiated for fiscal years 2026 and 2025, the operating subsidiary generally received the first progress payments from clients seven to ten months after the commencement of the projects.

The company's revenue is highly concentrated among a limited number of clients. For the fiscal years ended March 31, 2026 and 2025, the revenue derived from the five largest clients of the operating subsidiary amounted to approximately 99.9% ²⁷ and 85.5% ²⁸ of total revenue, respectively. The percentage of revenue attributable to the largest client amounted to approximately 57.4% ²⁹ and 55.1% ³⁰ for the same periods. Any significant decrease in the number, size, or value of projects from such clients could materially and adversely impact financial performance.

The company faces risks related to the shortage or increase in global steel prices. For the fiscal years ended March 31, 2026 and 2025, the operating subsidiary purchased steel materials in the amount of $18.6 million ³¹ and $11.5 million ³², representing 33% ³³ and 23% ³⁴ of cost of sales for the corresponding years, respectively. According to the Census and Statistics Department of Hong Kong, the average wholesale price of structural steel reinforcements per tonne decreased from HK$5,477 in 2024 to HK$5,010 in 2025, representing an increase of 8.5% but increased by 2.8% to HK$5,150 in the two months ended February 28, 2026, due to the weakening demand of the property construction market in the PRC.

The company's revenue is highly concentrated, with the five largest clients accounting for approximately 99.9% ³⁵ and 85.5% ³⁶ of total revenue for fiscal 2026 and 2025, respectively, and the largest client representing approximately 57.4% ³⁷ and 55.1% ³⁸ for the same periods, creating significant dependency risk. The company recorded negative gross profit and project losses during fiscal 2026 due to cost overruns, and profitability depends on accurate cost estimation and project execution. Steel price volatility poses a material risk, as steel purchases were $18.6 million ³⁹ and $11.5 million ⁴⁰, representing 33% ⁴¹ and 23% ⁴² of cost of sales for fiscal 2026 and 2025, respectively. The company's operations are entirely in Hong Kong, exposing it to political and regulatory risks, including potential PRC government intervention and the impact of the Hong Kong National Security Law. The company is a controlled company with Rich Plenty owning 56.25% ⁴³ of voting power, which could adversely affect minority shareholder protections.

Management's message emphasizes the company's position as one of the top service providers in the Hong Kong structural steelwork industry with an established reputation and proven track record. The strategic priorities emphasized for the period ahead include increasing market share by deploying resources to compete for additional and more sizeable structural steelwork projects, improving financial management to ensure optimal finance costs and capital sufficiency, and expanding the workforce to enhance project management capabilities. Management believes the company is well-positioned to capture growing demand for structural steelwork in Hong Kong, driven by various growth drivers including the increase in demand from planned and ongoing infrastructural and property developments, the increasingly common adoption of structural steelwork, and the growing emphasis from the Hong Kong government for development of the structural steelwork industry.