2022, Western Construction [002302] achieved an operating income of 24.856 billion yuan, a year-on-year decrease of 7.69%, and a net profit attributable to listed companies of 551 million yuan, a year-on-year decrease of 34. The annual revenue decline is lower than overall level of the industry. However, due to the shortage of downstream funds, the loss of credit impairment has increased significantly, and the profit decline is relatively large. In 2023, the construction of the western region will further strengthen the layout of production capacity in major strategic regions of the country, improve and strengthen the industrial chain business of aggregates and admixtures, and enhance the competitiveness of enterprises in the market. It is expected that the annual revenue and profit will rebound.
Figures 1 and 2: In 2022, the revenue and net profit attributable to parent company of Western Construction declined year-on-year (unit: 100 million yuan,%)
Data source: cement big data (https://data.ccement.com/)
The number of mixed contracts still increased.
In 2022, a total of 56.0193 million cubic meters of commercial concrete were sold in western construction, a decrease of 8.24% compared with the same period last year, and the growth rate was 26% lower than that in 2021. In 2022, the contracted volume of concrete supply projects in western construction was 12780. There are 239 major projects with contract volume of more than 100,000 square meters, totaling 3,790.
Although the annual sales volume of western construction has declined, the contract volume still maintains a growth trend. At the same time, from the structural point of view, the proportion of contracted projects in key cities such as Beishengguang and its surrounding areas has increased significantly, which has played a strong supporting role in the growth of the scale of subsequent mixed business.
Figure 3: Contract volume and sales volume of commercial concrete in western construction from 2018 to 2022 (unit: ten thousand square meters,%)
Data source: cement big data (https://data.ccement. The total revenue of Hubei, Xinjiang, Hunan and Yunnan markets declined by more than 2.6 billion yuan, accounting for 54% of the total revenue reduction, which is the main area causing the annual revenue decline. The main reason for the decline in revenue is the overall shrinkage of market demand, rather than construction and operation strategy of the western region. Therefore, the market share of western construction in traditional dominant markets such as Sichuan, Hubei, Hunan, Shaanxi and Xinjiang still maintains a leading position, and the business income contributed by these regions still accounts for nearly 50% of the total revenue of western construction.
At the same time, the number of production plants and stations in the major strategic areas of the country and other key development areas of the company has exceeded 100. The Beijing region has formed a layout of six factories around the city, the Shanghai region has achieved capacity coverage of five new towns, the Guangdong region has broken through the two blind spots of Foshan and Zhuhai, and the revenue scale of Beijing-Tianjin-Hebei, Jiangsu-Zhejiang-Shanghai and Guangdong markets has increased significantly compared with 2021. Among them, the increment of revenue in Beijing market is close to 1.2 billion yuan, with a year-on-year increase of 2792%, and the ranking of revenue has jumped to the sixth place; followed by the Jiangsu market, with an increment of revenue of more than 500 million yuan, with a year-on-year increase of 31%, which has become the fourth largest business market in the western construction; Finally, there are markets such as Shanghai, Hebei, Guangdong, Zhejiang and Chongqing. The increment of revenue is between 0.2 and 4.
Figure 4: Changes in revenue of western construction by region in 2022 (Unit: 10,000 yuan)
Data source: Cement Big Data (https://data.ccement. In this context, the competition in the concrete industry has intensified significantly. Prices declined more than raw materials, industry profits generally narrowed, and loss-making enterprises accounted for more than 20%. Due to the wide distribution of business in
Western Construction, it is difficult to stand alone in the process of market downturn, and the annual profit has also declined significantly. However, through deepening strategic cooperation with leading cement enterprises, the cost of raw materials has been reasonably controlled, and the overall enterprise can still maintain profitability.
Table 1: Main Operating Data of Western Construction in 2020-2022 (Unit: 100 million yuan,%)
Data source: Cement Big Data (https://data.ccement. Therefore, the lease liabilities of Western Construction grew rapidly. The unrecognized financing costs in the lease business amortized under the financial expenses also increased significantly, and the overall rate of the three fees showed an upward trend.
In addition, the downstream real estate industry in 2022 generally has capital problems, frequent defaults, difficulties in repayment of some projects, and the credit risk faced by concrete enterprises is generally rising. Affected by this, the credit impairment loss of Western Construction for the whole year was more than 140 million yuan, an increase of 44% over the same period last year.
Overall, profit contraction is a universal trend in the concrete industry. In addition, Western Construction chose to expand in major strategic areas, resulting in an increase in various expenses, resulting in a relatively obvious withdrawal of corporate profits.
In 2022, the liquidity of downstream real estate enterprises was relatively tight, the repayment cycle was generally extended, and the scale of accounts receivable in the ready-mixed concrete industry exceeded trillion yuan. The proportion of accounts receivable and bills in the revenue of
Western Construction increased by 18.44 percentage points to 86.64%, and the turnover days of accounts receivable and bills further increased to 288.94 days, an increase of 39. The cash flow ratio from operating activities and the cash ratio decreased by 0.83 and 8 respectively compared with the same period last year.
Overall, the liquidity pressure of western construction increased in 2022, and all debt repayment indicators were lower than same period in 2021. At the same time, the construction of the western region is in a period of expansion in many important markets, and the demand for funds is relatively large. Therefore, the financing demand for western construction has increased during the year, and the proportion of short-term and long-term loans to total assets has increased by 2.30% and 1.30% respectively. The proportion of total assets increased by 1.49 percentage points to 3.
Table 2: Operation of some financial indicators of Western Construction in 2020-2022 (Unit: day,%)
Data source: Cement Big Data (https://data.ccement., however, With a relatively large amount of existing contracted business and the continuous infrastructure project support provided by the parent company, China State Construction, Western Construction will further strengthen its business layout in major strategic development areas such as Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, Chengdu-Chongqing Twin Cities and the Yangtze River Economic Belt, and the scale of its commercial-hybrid business is expected to show an expansion trend. At present, the western construction has a production capacity of 107.49 million cubic meters of ready-mixed concrete, and there are seven ready-mixed concrete projects under construction, which will increase production capacity by 5.6 million cubic meters after putting into operation. Therefore, in 2023, the production and sales volume and operating income of the commercial mixed business in the western construction will probably rebound.
In addition, Western Construction will continue to promote the acquisition and development of sand and gravel mining rights, promote the operation of sand and gravel aggregate business, and complete the company's industrial chain. At the same time, by deepening the strategic cooperation with the head cement enterprises, it is expected to further achieve cost reduction and efficiency enhancement, and the profit margin of commercial mixing business in western construction will be improved.
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