Net profit fell 75.6% year on year! Evergreen 2022 Annual Report Released

On April 15, Jiangxi Wannianqing Cement Co., Ltd. disclosed its annual report for 2022. During the reporting period, the Company produced 21,247,800 tons of cement, representing a year-on-year decrease of 13.93%; sold 21,176,600 tons of cement, representing a year-on-year decrease of 13.60%; and sold 3,567,300 tons of clinker, representing a year-on-year increase of 12.30%. In 2022,

the Company achieved a total operating income of RMB11.282 billion, representing a year-on-year decrease of 20.6%; a net profit attributable to parent company of RMB388 million, representing a year-on-year decrease of 75.6%; and a basic earnings per share of RMB0.49.

On a quarterly basis, the company made profits of 209 million yuan, 283 million yuan and 75 million yuan respectively in the first three quarters of 2022, but lost 179 million yuan in the fourth quarter, dragging down its annual performance.

The announcement shows that the company's production and operation performance is mainly driven by the price of raw materials needed for production and manufacturing, national macroeconomic policies, peak staggering production, fixed investment in business coverage areas and other factors, with obvious cyclical, seasonal and regional characteristics.

From the perspective of raw materials required for production and manufacturing, most of the limestone used by the Company during the reporting period was mined from the Company's own mines, and the mining cost was relatively low, which had little impact on the operating results. Evergreen said that coal and electricity costs account for more than 60% of cement production costs, which is an important factor affecting the profitability of cement enterprises, among which coal accounts for a larger proportion of manufacturing costs. During the reporting period, a series of factors, such as the high coal price, the floating electricity price opened by the state, and the high energy consumption enterprises not subject to the 20% floating limit, pushed up the company's cement manufacturing costs.

From the perspective of demand, the continuous decline in real estate investment "drags down" the demand for cement. As one of the "troikas" driving the demand for cement, the sluggish real estate market has seriously affected the demand for cement in Jiangxi. According to the statistics of Jiangxi Provincial Bureau of Statistics, the investment in real estate development in Jiangxi Province decreased by 12.6% year on year in 2022.

As the second "troika" driving cement demand, some municipal projects, provincial and municipal key construction projects and private investment projects are affected by funds, or suspended or delayed, and the start-up rate and completion rate are obviously not high, which affects the overall demand for cement products.

Rural construction, as the third of the "troika" to stimulate cement demand, the suspension of rural market investment also affects the demand for cement in Jiangxi Province. In recent years, governments at all levels in Jiangxi Province have vigorously promoted rural construction and implemented the "183 + 5" construction task. By 2022, Jiangxi has built 6000 new rural construction villages and 200000 rural toilet improvement tasks. With the basic completion of the first step of rural construction, the demand for cement in the rural market of Jiangxi has also declined significantly in 2022. Weak

demand drags down volume and price, and rising costs erode profit margins.

In 2022, the overall cement market was weak, and the construction of infrastructure and real estate construction fell short of expectations, resulting in a significant decline in downstream demand, accompanied by intensified competition in the short term, showing a downward trend in volume and price. At the same time, coal and other fuel power prices remain high, seriously eroding the profit margins of the cement industry. Under the pressure of falling cement sales volume and price and rising cost, the company's operating profit, total profit and net profit attributable to shareholders of listed companies decreased significantly year on year during the reporting period.