“Carbon reduction” opportunities and Broad Homes’ growth potential
Broad Homes (Ticker: 2163.HK) is the first company in the prefabricated construction industry to IPO on the HKEX. The Company has accumulated more than 20 years of technological and industrial capabilities. The industry believes that Broad Homes will help lead the construction industry towards resource integration and more environmental-friendly developments.
Opportunities under carbon reduction
This year, “carbon peak, carbon neutral” was formally written into the government work report, the “14th Five-Year Plan” included policies to accelerate the promotion of green and low-carbon development. Since the construction industry is a key contributor of carbon emissions, companies related to green buildings will usher in new development potential.
In fact, green building development is already on the rise. In June 2021, 15 departments including the Ministry of Housing and Urban-Rural Development issued the “Opinions on Strengthening Green and Low-Carbon Construction in County Towns” document, clarifying that the county will vigorously develop green buildings and building energy conservation, including the promotion and application of green building materials, the development of new construction methods such as prefabricated steel structures, and the full implementation green construction, etc.
Prefabricated buildings are highly energy-efficient and can reduce carbon emissions by more than 40% throughout its life cycle, according to CITIC Securities. From 2016 to 2020, the CAGR of newly started prefabricated buildings nationwide reached 53%, and the proportion of newly started prefabricated buildings reached 20.5% in 2020.
Broad Homes’ path to carbon reduction
Facing positive market prospects, Broad Homes’ strategy to grasp development opportunities is industrialized construction.
Tang Fen, Board Director and President of Broad Homes, commented: “Industrialized construction is the most effective technological path for the construction industry to achieve the dual-carbon goal.” Broad Homes will continue to invest in technology and product R&D to consistently enhance product characteristics. “Simply put, construction industrialization is like building a house like a car. This methodology is currently in its early stages of development in China”, Tang Fen added.
Compared with traditional engineering construction models, prefabricated buildings have the following two advantages: 1) prefabricated construction can effectively shorten the construction period and improve construction efficiency. During the early stage of construction, prefabricated buildings go through stages of detailed and standardized design, shortening the construction period by more than 1/3 compared to buildings built using traditional construction methods. 2) Prefabricated construction helps to achieve energy saving, environmental protection and low carbon emissions throughout the entire construction cycle, Ping An Securities’ research report indicated.
As the industry leader for prefabricated construction, Broad Homes has greater development advantages. Firstly, Broad Homes is the first company in the industry to fully adopt the full-process digital information system. Secondly, Broad Homes is also the first company to obtain exclusive intellectual properties for the entire industry technology chain.
At present, Broad Homes has 8 generations of product systems, a leading national information system, an accumulation of experience in building 200 million square meters of construction projects, and a strategic factory layout in China. As of June 2021, Broad Homes has 15 wholly owned PC factories and 60 joint PC factories that are currently under operations.
Future growth is empowered by digitalization
When industrialized construction reaches productization, it is necessary to gradually move away from passively meeting customer needs to actively meeting them. Broad Homes believes digitalization should be adopted to improve efficiency and push for product innovation.
Tang Fen commented: “How to return building construction to the essence of the product itself relies on realizing the values of industrialization and digitalization.” Broad Homes began to actively engage in digitalization capabilities in 2014. Currently, the Company’s operation is entirely driven by the data system. The front-end production and operation are driven by demand, and the influence of human factors in the entire production and operation process is reduced by 95%.
In March 2021, Broad Homes officially released the BOX Modul product. Since the trial production in July this year, a total of more than 100 million new orders have been contracted in three months, showing positive demand from the market. It is reported that the BOX Modul is built ready-to-live with a wide range of application scenarios including cultural tourism, homestays, public service spaces, etc. This product allows the realization of more innovative models of living and usage of land.
Take employee apartment as an example, in 2021, Broad Homes upgraded the settlement solution for employees. The multi-story employee apartment can be delivered in just 50 days, and high-rise employee apartment can be delivered in 150 days, which meets the differentiated market demand for rental housing in different cities.
Regarding the successful innovation of products, Hu Shengli, the Co-President of Broad Homes and CEO of Broad Box Technology Co., Ltd., commented: “The Company’s independently developed whole-process digitalized information system, PC-CPS, integrates all parts of the industrial chain including design, manufacturing, and construction and at the same time offering flexible manufacturing. This system has set a good foundation to produce BOX-Modul products.”
He also commented: “Through transformation and upgrades, the PC-CPS system can be implemented into BOX-Modul products. We hope in a year of continuous efforts, we can realize digitalization through the BOX-Modul’s CPS system and with feedback from the client end, we hope to further enhance and upgrade our product.”
In his view, in the near future, BOX-Modul products can be upgraded and iterated from hardware to software just like the iPhone. Digital technology provides this possibility for the BOX-Modul.
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