On June 18, 2026, ST Mingcheng (600136) responded to investors’ concerns on the investor relations platform.
Some investors raised questions about whether the company’s subsidiary Hubei Jizhao Construction Engineering Co., Ltd.’s turnover continued to exceed 100 million. However, as an engineering decoration company, its profits were negligible or even suffered losses. They questioned whether there was a suspicion of selling sheep’s meat to dogs.
ST Mingcheng responded in detail.
As a wholly-owned subsidiary of the company, Ji Zhao Construction’s business is centered around the main business of engineering decoration.
High revenue and low profits are common phenomena in the current construction and decoration industry.
First of all, the industry as a whole is in decline and market competition is extremely fierce.
In order to compete for market share, many companies have lowered prices, which directly compressed profit margins.
In this general environment, it is difficult for Ji Zhao Construction to survive alone. Even though the business volume is large, profits are difficult to increase.
Secondly, the industry generally has the problem of long payment cycle.
Engineering decoration projects often involve a large amount of capital investment, and it takes a long time from project initiation to final payment.
This results in a large amount of capital being occupied and the enterprise needs to bear higher financial costs.
For example, to keep projects afloat, businesses may need to borrow funds, and interest payments can further erode profits.
Furthermore, rising material and labor costs are also an important factor.
As market prices fluctuate, the prices of materials required for building decoration continue to rise, and labor costs also continue to increase.
This has caused the company’s costs to rise significantly, further compressing profit margins.
The company also deeply realizes that the profitability of Jizhao Construction needs to be improved urgently.
In order to improve this situation, the company is taking a series of measures.
On the one hand, optimize project screening.
By conducting more stringent evaluation and screening of projects, we select those projects with larger profit margins and lower risks, and avoid undertaking projects with low benefits or even losses.
On the other hand, strengthen cost control.
Conduct refined management of all aspects of the project to reduce unnecessary costs.
At the same time, we will speed up the payment collection process, shorten the payment collection cycle, reduce capital occupation, and reduce financial costs by negotiating with customers and optimizing the payment collection process.
In short, when ST Mingcheng faced the profitability problem of its subsidiary Ji Zhao Construction, it actively faced it and took effective measures to improve it.
It is believed that with the company’s efforts, Ji Zhao Construction’s profitability will gradually increase and make greater contributions to the company’s development.
