2020 is a year that shall be eternally remembered and recorded in the history of mankind around the world for the once-in-a-century COVID-19 outbreak, the ever-changing US election and, of course, the tumultuous capital markets. Against such severe pandemic and market conditions, CMIC adjusted and proactively responded to the sudden changes in the market environment with the development direction of “raising awareness of crisis and actively responding to challenges; strengthening internal management and deepening transformation and development”. On the one hand, the Group strictly implemented the local government’s pandemic prevention and control policies from its headquarters to local subsidiaries, maintaining a high degree of vigilance and taking proactive measures to protect against the outbreak. On the other hand, the Group kept a tight grip on its business objectives, adjusted business strategies in a timely manner, enhanced capital management and improved cash flow position through strict control over costs and expenses, and achieved some effect. In 2020, the Group recorded revenue of approximately US$65.1 million, and a net profit of approximately US$10.8 million. The Group was making profit for the second consecutive year, which was not easy to maintain amidst the sluggish market conditions.

In 2020, the Company’s historical debt issues were satisfactorily resolved. In the first half of the year, the Company had reached settlement with CSSC Huangpu Wenchong Shipbuilding Company Limited (“Huangpu Shipbuilding”), which completely resolved the debt relationship between the Company and Huangpu Shipbuilding, improved the Company’s asset and liability structure and resulted in an one-off adjustment of approximately US$26.3 million. In the second half of the year, substantial progress had been made in the land revitalization project of the Qingdao offshore engineering base and the transaction is in progress. The effective resolution of historical debt issues will help the Company to “lighten up” and better realise its goals of strategic transformation and development.

The Company’s offshore drilling service project for PEMEX, the national oil company of Mexico, which was secured last year, is marking good progress. Two units of JU2000 jack-up rigs for PEMEX, arrived at the operating site at the end of 2019 for drilling in April and May 2020, respectively. Two units of CJ46 rigs owned by the joint venture, Wealthy Marvel Enterprises Limited (“WME”) have been operating smoothly for Abu Dhabi National Oil Company for 22 months. The four units of rigs are currently operating in good condition and have been well received by our customers. Despite certain delay in rentals for rigs due to low oil prices and COVID-19, the Company has been able to receive the rentals largely as scheduled with the concerted efforts of the team. This has provided a solid foundation for the team to continue on strengthening the Mexican market and to expand the scale of asset management in future.

In the first half of the year, the Company has won orders for two sets of lifting systems for offshore wind power installation vessels, with a total contract value of approximately RMB74.6 million. The Company has accumulated orders for four sets of similar products, signifying that its core product lifting systems have been recognized by the offshore wind power installation market and will bring new growth points for the Company’s business. The supply of core equipment for offshore wind power installation vessels is also a new initiative and direction for the Company to apply its years of experience in traditional offshore manufacturing, services and management to the green and clean energy sector in line with the trend of offshore wind power development.

The world experienced a huge challenge in 2020. The outbreak of COVID-19 pandemic and the ensuing economic crisis has caused unprecedented disruption to the global energy landscape, and the global economic recovery is predicted to remain uncertain in 2021. As the global energy system is undergoing rapid transformation due to developments in energy technology, regulations, consumer preferences and investor sentiment, the traditional, large oil companies are quietly reshaping their business landscape and shifting their focus to clean energy. According to McKinsey analysis, renewable energy will become cheaper than existing fossil energy sources for power generation over the next decade, leading to a dramatic increase in solar photovoltaic and onshore and offshore wind power installed capacity. The new installed capacity of solar and wind power is expected to increase by 5TW by 2035, equivalent to a further five-fold increase from the current level. This shows that the trend to actively seek transformation of energy structures. There is a huge demand in the clean energy market dominated by LNG, hydrogen energy, photovoltaic and wind power. The development potential and investment direction of such clean energy will remain the focus of our future business transformation.

Despite the steady recovery in oil prices, the volatility of COVID-19 pandemic continues to pose a challenge to the recovery of the global economy. In the context with both challenges and opportunities, in 2021, the Group must still firmly adhere to the balanced development concept of “quality first, efficiency in higher priority, moderate scale”, increase attention on and investment in the clean energy market dominated by offshore wind power, continue to improve the equity structure, and increase attempts for potential cooperation opportunities with strategic partners including exchange of shares with assets and equity, and proactively introduce strategic investment partners suitable for the Company’s medium and long-term development, to create good value returns for investors, strengthen our business transformation and integration, appropriately expand the scale of asset management, put more efforts towards intelligent manufacturing, green energy and technological innovation, so as to further discover risk-manageable and sustainable business models and the matching point of industry synergies.

Looking back at 2020, notwithstanding that we were able to repay our historical debts, secure new equipment orders, maintain stable rig operations and ensure steady rental income, allowing the Group to be slightly profitable as a whole, the extremely adverse market conditions such as COVID-19 coupled with low oil prices, the Group’s previous backlog of accounts receivable, tight cash flows and low profit margins for certain products are still issues that should not be overlooked. Those are the direction and target of our efforts in 2021. In the future, the Company will continue to focus on high-end equipment manufacturing for marine engineering, offshore asset management as well as oil and gas operation and maintenance and supply services, and concentrate on new business opportunities such as offshore wind power installation and operation and maintenance to enhance the Company’s core competitiveness and achieve performance growth. Lastly, I would like to express my sincere gratitude to our shareholders and friends from all walks of life for your unremitting and long-standing support, as well as to our directors, management team and staff for your dedication, trust and commitment on us, and you are assured to witness our robust growth and development.