Recently, Anhui Conch Group Co., Ltd. signed a strategic cooperation agreement with Longji Green Energy. One is the "cement Mao" which ranks first in the national cement sales volume, the veteran in the traditional industry, and the other is the "photovoltaic Mao" which ranks first in the component production capacity, the bright moon of the emerging industry. When the two meet, there is not only the "injury" of sympathy, but also the impetus of the times. This paper compares the business development of Conch Cement and Longji Green Energy for the reference of the industry. Change of
market value: The market value of Longji Green Energy is still higher than that of Conch Cement
. On August 4, 2020, Conch Cement recorded the highest market value of 322.024 billion yuan. One year later, on November 1, Longji Green Energy also recorded the highest market value of 542.378 billion yuan. As of December 6 this year, they had fallen 66% and 70% respectively from the highest market value, to 109.4 billion yuan and 159.9 billion yuan. When the dragon head meets, I don't know if there is a feeling of the same injury. However, Longji Green Energy has expressed confidence that it can show better resilience in the current industrial cycle, while Conch Cement has implemented share repurchase based on confidence in the company's future development prospects and recognition of the company's stock value. Comparing the trend of market value changes, we can find that Conch Cement has basically been declining all the way since its high level, while Longji Green Energy has continued to decline rapidly since June last year, and the rate of decline is faster. At present, the market value of Longji Green Energy is still higher than that of Conch Cement, and the market-to-net ratio of Longji Green Energy is 3.46 times that of Conch Cement.
Figure 1: Changes in
the total market value of Conch Cement and Longji Green Energy Source: Digital New Energy DataBM. Com
Revenue and profit comparison: Longji Green Energy's profit has exceeded that of Conch Cement
For a long time, the net profit and revenue scale of Conch Cement have been higher than that of Longji Green Energy. In 2015, the net profit of Conch Cement was 14 times that of Longji Green Energy, while in 2022, the net profit of the two was almost the same. In the first three quarters of this year, the net profit of Longji Green Energy reached 11.7 billion yuan, while that of Conch Cement was only 8.7 billion yuan. The net profit of Longji Green Energy has officially exceeded that of Conch Cement. In terms of income, Longji Green Energy was 94.1 billion yuan and Conch Cement was 99 billion yuan in the first three quarters, and the gap between them is also narrowing. Over the past years, the overall scale of Longji Green Energy has been greatly improved, while the income of Conch Cement has been declining for two consecutive years, which inevitably leads to the suspicion of "not thinking of making progress".
Figure 2: Changes in net profit of Conch Cement and Longji Green Energy (RMB100 million)
Source: Digital New Energy DataBM. Com
Figure 3: Changes in revenue of Conch Cement and Longji Green Energy (RMB100 million)
Source: Digital New Energy DataBM
In addition to domestic business, both of them have overseas business layout. Conch Cement is mainly engaged in overseas direct investment, supplemented by import and export trade, while Longji Green Energy is just the opposite, mainly engaged in product export, supplemented by overseas investment. In 2022, Conch Cement's overseas self-product sales revenue is 3.967 billion yuan, accounting for 3% of the company's total revenue; Longji Green Energy's overseas revenue is 47.932 billion yuan, accounting for 37% of the company's total revenue. At present, Longji Green Energy is gradually strengthening overseas investment and building factories, successively laying out Vietnam and Malaysia, and jointly building factories with Invenergy in the United States. Comparison of
profitability: The profitability of Conch Cement products is significantly higher than that of Longji Green
Energy. The main business of Conch Cement is the production and sales of cement, commercial clinker, aggregate and concrete, while the main business of Longji Green Energy is silicon wafers and components. From the structural point of view, the main business of Conch Cement is more concentrated in cement, with cement and clinker sales accounting for 88%, while Longji Green Energy, in addition to solar modules and batteries, also accounts for 30% of the revenue of silicon wafers and silicon rods.
Figure 4: Conch Cement Revenue Structure Chart 5: Longji Green Energy Revenue Structure
Data Source: Digital New Energy DataBM.com
In 2022, the gross profit margin of Conch Cement's main business was 26.29%. The gross profit margin of Longji Green Energy's main business is only 15.38%. From the perspective of gross profit margin of products, the profitability of Conch Cement products is significantly higher than that of Longji Green Energy. We believe that there are two main reasons:
First, due to the strong cost advantage of Conch Cement, the raw material limestone required for Conch Cement production is mainly supplied by itself, while the fuel procurement has the advantage of Changxie Coal. Longji Green Energy is restricted by the upstream polysilicon industry, and the rising price of silicon materials will greatly increase the production cost of Longji Green Energy and weaken its bargaining power downstream.
Second, the industry threshold of cement is higher than that of photovoltaic modules. Even though the current loss rate of cement industry is approaching 50%, the overall gross profit rate of the industry is still about 12%, which is slightly lower than gross profit rate of Longji Green Energy. From the comparison of personnel structure, it can be found that conch cement production technicians are significantly higher than Longji Green Energy. It is worth noting that the proportion of administrative staff of Longji Green Energy is twice that of Conch Cement, and the proportion of sales staff is less than half that of Conch Cement. Perhaps it is necessary for Longji Green Energy to reduce its overstaffed administrative team. In
2023, both the price of photovoltaic modules and the price of cement declined, with the same overcapacity behind it, but the difference is the change of future demand. The production capacity of Conch Cement has basically stopped growing, and the annual increment is very limited. It will use a lot of funds for internal upgrading and transformation rather than scale expansion. Longji Green Energy continues to substantially increase its investment in batteries and modules, and believes that the growth space of the photovoltaic industry in the medium and long term is large enough.
Two powers join hands with Conch or more than application & nbsp;
In 2022, the installed photovoltaic energy storage capacity of Conch Cement reached 475 MW, generating 272 million kilowatt-hours of electricity annually, focusing on power generation and photovoltaic applications. Longji Green Energy Module shipments reached 46.74 GW, accounting for 16% of the national output, focusing on the creation of module products. Conch Cement's construction of distributed photovoltaic is not only an important part of carbon reduction in the cement industry, but also a key layout for the company to build Conch New Energy as the company's growth pole. At the signing ceremony of strategic cooperation between Conch Group and Longji Green Energy, Longji Green Energy said that it would empower Conch Cement in an all-round way, carry out industrial support, and deepen cooperation in technological innovation related to photovoltaic industry . In addition to the photovoltaic field, the two sides may also have in-depth cooperation in power plant projects and hydrogen energy application projects. However, the application of conch in the photovoltaic field may not be limited, and it may continue to extend upstream in the future. According to public data, Conch Cement Fengyang Conch Photovoltaic Technology Co., Ltd. intends to invest 4.4 billion yuan in the layout of photovoltaic modules and photovoltaic glass, coupled with the current heavy money, the future or substantially into the upstream photovoltaic industry.
浙公网安备33010802003254号