The cement industry will still face many challenges, such as downward market demand, high cost, energy consumption control and so on.
Recently, Anhui Conch Cement Company Limited(600585) , Guangdong Tapai Group Co.Ltd(002233) , Tangshan Jidong Cement Co.Ltd(000401) , Xinjiang Tianshan Cement Co.Ltd(000877) and other listed companies in the cement industry disclosed their annual reports for 2021. From the disclosed performance, the revenue and profits of many companies have declined to varying degrees, and they all pointed out that the rise of coal and electricity costs has an important impact on the decline of enterprise performance.
Last year, China’s cement demand generally showed the characteristics of “weak demand, high before and low after”. According to the data of the Ministry of industry and information technology, China’s cement output was 2.36 billion tons in 2021, a year-on-year decrease of 1.2%. However, affected by factors such as dual control of energy consumption, shutdown and power rationing, the cement price fluctuated “first restrained and then increased” in 2021, and the cement price in most parts of the country reached an all-time high.
He Kai, a cement industry observer, told the 21st Century Business Herald that although the price of cement rose, the rise in production costs offset the profits brought by the rise in cement prices. According to the data, the operating revenue of the cement industry in 2021 was 1075.4 billion yuan, a year-on-year increase of 7.3%, but the total profit was 169.4 billion yuan, a year-on-year decrease of 10.0%.
This year, the cement industry will still face many challenges, such as downward market demand, high cost, energy consumption control and so on. Many companies said in their annual reports that they would actively extend the industrial chain related to their main business and create new economic growth points.
“cement Mao” revenue and net profit decreased
Last year, under the influence of production restrictions, rising raw material costs and other factors, the price of cement soared seasonally, but the price of thermal coal also rose sharply, offsetting some profits of cement enterprises. It is generally estimated in the industry that for every 100 yuan / ton rise in coal price, the cost of cement will increase by 10-15 yuan / ton.
The decrease of price increase and volume, the rise of coal price and the decline of other business income led to the double decline of Anhui Conch Cement Company Limited(600585) revenue and net profit Anhui Conch Cement Company Limited(600585) published annual report shows that the operating revenue in 2021 was 167953 billion yuan, a year-on-year decrease of 4.73%; The net profit attributable to shareholders of listed companies was 33.267 billion yuan, a year-on-year decrease of 5.38%; The basic earnings per share is 6.28 yuan.
The cement industry is generally “strong in the South and weak in the north”, with high concentration in each region. For a single enterprise, logistics and transportation, cost control, mining resources and regional pattern are important competitive advantages Anhui Conch Cement Company Limited(600585) production capacity is mainly concentrated in East China. Due to the wide distribution of production capacity, it is also greatly affected by production restriction Tianfeng Securities Co.Ltd(601162) pointed out in the research report that Huaxin Cement Co.Ltd(600801) , Anhui Conch Cement Company Limited(600585) production was greatly reduced due to production restriction, and Guangdong Tapai Group Co.Ltd(002233) , Gansu Shangfeng Cement Co.Ltd(000672) had little impact.
Anhui Conch Cement Company Limited(600585) said that affected by the sharp rise in raw coal prices, the company’s comprehensive cost of cement clinker increased by 17.78% year-on-year. Meanwhile, the total net sales volume of cement and clinker was 409 million tons, a year-on-year decrease of 9.76%.
Among them, the sales volume of products in the eastern, central and southern regions decreased slightly, benefiting from the substantial increase of sales price, and the sales amount increased by 5.60%, 6.23% and 5.42% respectively year-on-year; Affected by the rise in product costs caused by the rise in raw coal prices, the gross profit margin decreased by 3.16 percentage points, 3.11 percentage points and 2.35 percentage points respectively year-on-year. In the western region, due to insufficient market demand, the sales amount decreased by 0.32% year-on-year and the gross profit margin decreased by 4.37 percentage points year-on-year.
The 21st Century Business Herald reporter found that, in fact, the performance growth of Anhui Conch Cement Company Limited(600585) has shown a continuous downward trend since 2019. In 2018, the year-on-year growth rate of Anhui Conch Cement Company Limited(600585) operating revenue reached 70.5%, 22.3% in 2019 and 12.23% in 2020. From 2018 to 2020, the net profit attributable to shareholders of the parent company increased by 88.05%, 12.67% and 4.58% respectively. The growth rate of net profit attributable to the parent company reported in 2021 changed from positive to negative.
Not only Anhui Conch Cement Company Limited(600585) , many cement enterprises have poor performance Gansu Qilianshan Cement Group Co.Ltd(600720) and Anhui Conch Cement Company Limited(600585) have seen a double drop in revenue and net profit. In 2021, the operating revenue was about 7.673 billion yuan, a year-on-year decrease of 1.78%; The net profit attributable to shareholders of listed companies was about 948 million yuan, a year-on-year decrease of 34.07% Xinjiang Tianshan Cement Co.Ltd(000877) revenue continued to grow, but net profit declined.
seeking a new growth pole
After coming out of the trough in 2015, the cement industry has ushered in a high outlook for six years. He Kai said that considering the total revenue volume of the company, Anhui Conch Cement Company Limited(600585) ‘s main business remained stable and still had a cost advantage.
Dongxing Securities Corporation Limited(601198) research report shows that in 2021, the cost of Anhui Conch Cement Company Limited(600585) ton increased more under the circumstances of rising coal price and falling sales volume, reaching 203.44 yuan, an increase of 3.72 yuan year-on-year, but it still remained at the lowest level among Xinjiang Tianshan Cement Co.Ltd(000877) , Tangshan Jidong Cement Co.Ltd(000401) , Guangdong Tapai Group Co.Ltd(002233) , Gansu Qilianshan Cement Group Co.Ltd(600720) and other cement listed companies.
“From the perspective of the whole industry, the industry is still resilient.” He Kai believes that with the year-on-year weakening of the impact of coal prices, the demand gradually recovers, and the industry performance may improve, while a number of cement enterprises are also extending the industrial chain and creating a new growth pole.
Recently, Xinjiang Tianshan Cement Co.Ltd(000877) said that aggregate is the extension of the company’s cement industry, the need to strengthen the industrial chain and a new business growth point. At present, the aggregate industry has entered the stage of transformation and upgrading and industrialized large-scale production, and environmentally friendly and green mines will become the mainstream.
Not only is Xinjiang Tianshan Cement Co.Ltd(000877) in the aggregate overweight layout, but it can also be seen from the annual report that by the end of 2021, the operating revenue of Tangshan Jidong Cement Co.Ltd(000401) aggregate was 979 million yuan, accounting for 2.69% of the operating revenue, and the gross profit margin of aggregate products was 45.06% Gansu Qilianshan Cement Group Co.Ltd(600720) cement aggregate business income was 48 million yuan, an increase of 59.25% over the previous year; In 2021, the sales revenue of Anhui Conch Cement Company Limited(600585) aggregate reached 1.82 billion yuan, a year-on-year increase of 77.5%, and the gross profit margin reached 65.7%. Tianfeng Securities Co.Ltd(601162) said that the aggregate business remained at a high level, and the aggregate business is expected to continue to grow rapidly in the future.
Zheng Jianhui, chief analyst of cement big data Research Institute of China cement network, believes that the profit margin improvement of the cement industry in the “14th five year plan” has entered a bottleneck period, and the performance growth driven by supply side reform and price rise may come to an end. The aggregate industry has become the key direction of expansion of cement enterprises. It is expected that the aggregate production capacity of cement enterprises in the “14th five year plan” will exceed 1 billion tons.
In addition, under the background of “double energy”, many enterprises are also exploring the development of cement. On March 28, Tangshan Jidong Cement Co.Ltd(000401) answered investors’ questions and said that the company was actively exploring the field of new energy, had relevant plans and was promoting the preliminary work.
Anhui Conch Cement Company Limited(600585) announced a new energy business investment plan on March 9, which plans to spend 5 billion yuan to develop photovoltaic power stations and energy storage projects Anhui Conch Cement Company Limited(600585) said that while focusing on the development of the main cement industry, the company gives full play to its capital and location advantages to develop new energy business, which is conducive to building a new industrial growth pole and promoting the diversified development of the company’s industry.
Tianfeng Securities Co.Ltd(601162) believes that Anhui Conch Cement Company Limited(600585) will continue to increase capital expenditure in 2022 and vigorously promote the development of new energy industry while accelerating the extension of upstream and downstream industrial chain. The installed capacity of photovoltaic power generation of the company will reach 200MW in 2021 and 1GW in 2022, creating a new industrial growth pole.
