WANG & LEE GROUP, INC. Announces 2023 Unaudited Interim Financial Results
- None.
- Cost of revenues increased by 35.6%
- Gross profit decreased to $0.25 million
- General and administrative expenses rose by 204.8%
- Net loss for the six months ended June 30, 2023 was $1.62 million
Insights
The financial results presented by WANG & LEE GROUP, Inc. indicate a revenue increase of 15.2% for the six months ended June 30, 2023, compared to the same period in 2022. This growth is a positive indicator of the company's sales performance, particularly in the construction sector where project-based revenue can be highly variable. However, this top-line growth is overshadowed by a disproportionate increase in general and administrative expenses, which surged by 204.8%. Such a significant rise in overhead costs, primarily due to increased listing fees and salaries, suggests potential inefficiencies or strategic investments in the company's operations.
Moreover, the cost of revenues outpaced the revenue growth, rising by 35.6%, which resulted in a decrease in gross profit. This erosion of margins could be indicative of cost pressures in the market, such as rising material costs or wage inflation. The financial leverage of the company also appears to be increasing, as evidenced by a 76.5% hike in finance costs, which could raise concerns about the sustainability of its debt levels in the long run.
Overall, the net loss widening to $1.62 million from $0.24 million year-over-year is a critical concern for stakeholders. It reflects the challenges the company faces in managing its expenses and profitability amidst its revenue growth. This performance may affect investor confidence and could have implications for the company's stock price and future access to capital.
From a market perspective, the interim financial results of WANG & LEE GROUP, Inc. provide insights into the competitive landscape of the construction industry in Hong Kong. The reported increase in sales for low voltage electrical systems and the introduction of revenue from mechanical ventilation and air-conditioning systems (MVAC) suggest a diversification in the company's product offerings. However, a notable decrease in revenue from water supply and sewage disposal system installations could reflect a shift in market demand or competitive displacement.
The construction industry is often seen as a bellwether for economic activity and the revenue growth reported by WANG & LEE GROUP, Inc. may indicate underlying economic expansion or increased construction activity within the region. Nevertheless, the company's ability to translate revenue growth into net profitability is hindered by rising costs, which may be symptomatic of broader industry trends such as increased competition for skilled labor or heightened regulatory costs.
Investors and industry stakeholders may view the results as a signal to scrutinize the company's cost control measures and strategic focus. The report could also prompt a reevaluation of market expectations for the sector, especially if similar trends are observed across other companies in the industry.
An economist would examine WANG & LEE GROUP, Inc.'s financial results within the broader context of economic conditions affecting the construction industry. The reported revenue increase suggests that the company is experiencing growth, potentially in line with or outpacing GDP growth in their operational regions. However, the substantial rise in general and administrative expenses could reflect macroeconomic pressures such as inflation, which affects listing fees, salaries and other operational costs.
The expanded net loss highlights the importance of cost management during periods of economic uncertainty. A company's inability to maintain cost discipline can lead to an erosion of profitability, even when revenues are growing. This situation could force the company to make strategic adjustments, such as restructuring operations or seeking cost efficiencies, to remain competitive.
Furthermore, the increase in finance costs suggests that the company may be more exposed to interest rate fluctuations, which have been a focal point for many economies grappling with inflationary pressures. The financial health of WANG & LEE GROUP, Inc., as reflected by these results, could therefore serve as a microcosm for the challenges faced by businesses in a potentially inflationary environment with rising borrowing costs.
HONG KONG, China, Dec. 29, 2023 (GLOBE NEWSWIRE) -- WANG & LEE GROUP, Inc. (Nasdaq: WLGS) (“WLGS” or the “Company”), is a British Virgin Islands holding company with operations conducted by its subsidiaries in Hong Kong. The group is a construction prime and subcontractor engaging in the installation of Electrical & Mechanical Systems (“E&M”), which include low voltage (220v/phase 1 or 380v/phase 3) electrical systems, mechanical ventilation and air-conditioning (“MVAC”) systems, fire service systems, water supply and sewage disposal system installation and fitting out for the public and private sectors. The group’s vision is to operate as a conglomerate to build synergy within its own sustainable ecosystem thereby creating value to its shareholders, today announced its unaudited operating results for the six months ended June 30, 2023.
2023 Interim Results Overview
Revenue
Our sales were
Below is the summary presenting the Company’s revenues disaggregated by products and services and timing of revenue recognition:
| For the six months ended June 30, | ||||||||
| Revenue by recognition over time | 2023 | 2022 | ||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenue by recognition over time | $ | 1,437 | $ | 1,250 | ||||
| $ | 1,437 | $ | 1,250 | |||||
| For the six months ended June 30, | ||||||||
| Revenue by major product line | 2023 | 2022 | ||||||
| (Unaudited) | (Unaudited) | |||||||
| Low voltage electrical system | $ | 707 | $ | 818 | ||||
| MVAC systems | 328 | - | ||||||
| Out-fitting | 381 | 279 | ||||||
| Water supply and sewage disposal system installation | 14 | 95 | ||||||
| Fire safety system | 7 | 58 | ||||||
| $ | 1,437 | $ | 1,250 | |||||
Cost of revenues
For the six months ended June 30, 2023, cost of revenues increased by
Gross profit
Our gross profit was
General and administrative expenses
General and administrative expenses amounted to approximately
General and administrative expenses include rental expenses, staff salary and benefits, legal and professional fees, office expenses, travel expenses, entertainment, depreciation and listing fee.
Finance cost
Finance cost amounted to
Other Income
Other income amounted to
Net loss
As a result of the various factors described above, net loss for the six months ended June 30, 2023 was
About WANG & LEE GROUP, Inc.
WANG & LEE GROUP, Inc. is a British Virgin Islands holding company with operations conducted by its subsidiaries in Hong Kong. The group is a construction prime and subcontractor engaging in the installation of Electrical & Mechanical Systems, which include low voltage (220v/phase 1 or 380v/phase 3) electrical systems, mechanical ventilation and air-conditioning systems, fire service systems, water supply and sewage disposal system installation and fitting out for the public and private sectors. The group’s vision is to operate as a conglomerate to build synergy within its own sustainable ecosystem thereby creating value to its shareholders, today announced its unaudited operating results for the six months ended June 30, 2023. For more information about WLGS, please visit our investor relations website: https://www.wangnleegroup.com/
Safe Harbor and Informational Statement
This announcement contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including, without limitation, those with respect to the objectives, plans and strategies of the Company set forth herein and those preceded by or that include the words “believe,” “expect,” “anticipate,” “future,” “will,” “intend,” “plan,” “estimate” or similar expressions, are “forward-looking statements”. Forward-looking statements in this release include, without limitation, the effectiveness of the Company’s multiple-brand, multiple channel strategy and the transitioning of its product development and sales focus and to a “light-asset” model. Although the Company’s management believes that such forward-looking statements are reasonable, it cannot guarantee that such expectations are, or will be, correct. These forward-looking statements involve a number of risks and uncertainties, which could cause the Company’s future results to differ materially from those anticipated. These forward-looking statements can change as a result of many possible events or factors not all of which are known to the Company, which may include, without limitation, our ability to have effective internal control over financial reporting; our success in designing and distributing products under brands licensed from others; management of sales trend and client mix; possibility of securing loans and other financing without efficient fixed assets as collaterals; changes in government policy in China; China’s overall economic conditions and local market economic conditions; our ability to expand through strategic acquisitions and establishment of new locations; compliance with government regulations; legislation or regulatory environments; geopolitical events, and other events and/or risks outlined in WLGS ‘s filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F and other filings. All information provided in this press release and in the attachments is as of the date of the issuance, and WLGS does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
For media queries, please contact:
The Company:
Email: mgt@wangnlee.com.hk
For investor and media inquiries, please contact:
Wealth Financial Services LLC
Connie Kang, Partner
Email: ckang@wealthfsllc.com
Tel: +86 1381 185 7742 (CN)
WANG & LEE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2023, AND DECEMBER 31, 2022
(In thousands of U.S. dollars except share and per share data)
| As of | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 7,416 | $ | 610 | ||||
| Accounts receivables, net | 307 | 1,068 | ||||||
| Contract Assets, net | 1,370 | 1,037 | ||||||
| Retention receivables – current, net | 39 | 2 | ||||||
| Other receivables | 84 | - | ||||||
| Other receivables – related parties | 1 | 1 | ||||||
| Advance and prepayments | 127 | 160 | ||||||
| Total current assets | 9,344 | 2,878 | ||||||
| Retention receivables – non-current, net | 183 | 220 | ||||||
| Plant and equipment, net | 73 | 2 | ||||||
| Total assets | $ | 9,600 | $ | 3,100 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Short-term bank loans | $ | 579 | $ | 455 | ||||
| Account payables | 599 | 937 | ||||||
| Other payables | 75 | 48 | ||||||
| Contract liabilities | 866 | 867 | ||||||
| Other payables – related parties | 2,180 | 1,853 | ||||||
| Total current liabilities | 4,299 | 4,160 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Bank loans, non-current | 642 | 653 | ||||||
| Total liabilities | 4,941 | 4,813 | ||||||
| COMMITMENTS AND CONTINGENCIES | - | - | ||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Ordinary share, no par value; 15,096,331 and 12,000,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022 respectively | 8,000,002 | 2 | ||||||
| Additional paid-in-capital | 503 | 503 | ||||||
| Accumulated deficit | (3,846 | ) | (2,221 | ) | ||||
| Accumulated other comprehensive income | 2 | 5 | ||||||
| Total shareholders’ equity (deficit) | 4,659 | (1,713 | ) | |||||
| Total liabilities and shareholders’ equity | $ | 9,600 | $ | 3,100 | ||||
WANG & LEE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(In thousands of U.S. dollars except share and per share data)
| 2023 | 2022 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Contract revenues | $ | 1,437 | $ | 1,250 | ||||
| Contract costs | 1,184 | 872 | ||||||
| Gross profit | 253 | 378 | ||||||
| Selling expenses | - | - | ||||||
| General and administrative expenses | (1,894 | ) | (620 | ) | ||||
| Total operating expenses | (1,894 | ) | (620 | ) | ||||
| Operating loss | (1,641 | ) | (242 | ) | ||||
| Other income (expenses) | ||||||||
| Other income | 42 | 14 | ||||||
| Interest expense | (25 | ) | (14 | ) | ||||
| Total other income | 17 | - | ||||||
| Loss before taxes | (1,624 | ) | (242 | ) | ||||
| Provision for income taxes | - | - | ||||||
| NET LOSS | $ | (1,624 | ) | $ | (242 | ) | ||
| Other comprehensive (loss) income | ||||||||
| Foreign currency translation adjustment | (3 | ) | 4 | |||||
| Total comprehensive loss | $ | (1,627 | ) | $ | (238 | ) | ||
| Loss per share – Basic and diluted | $ | (0.11 | ) | $ | (0.02 | ) | ||
| Basic and diluted weighted average shares outstanding | 15,096,331 | 12,000,000 | ||||||
FAQ
What are WANG & LEE GROUP, Inc.'s (WLGS) unaudited operating results for the six months ended June 30, 2023?
How did the cost of revenues change for WANG & LEE GROUP, Inc. (WLGS) in the six months ended June 30, 2023?
What were the general and administrative expenses for WANG & LEE GROUP, Inc. (WLGS) in the six months ended June 30, 2023?
What was the net loss for WANG & LEE GROUP, Inc. (WLGS) in the six months ended June 30, 2023?
