Comprehensive review: In 2022, Huaxin Cement will achieve a total operating income of RMB 30.47 billion, a year-on-year decrease of 6.14%; the net profit attributable to shareholders of the listed company will be RMB 2.699 billion, a year-on-year decrease of 49.68%. Basic earnings per share was RMB1.3, representing a year-on-year decrease of 49.61%. The weighted average return on equity was 10.03%, representing a year-on-year decrease of 11.27 percentage points. Overall, in 2022, the demand for cement was weak, and the company's cement clinker sales declined significantly. Thanks to the expansion of non-cement business, the company's revenue declined slightly, but the price of raw materials was high throughout the year, and the company's profits declined sharply.
Figures 1 and 2: Operating revenue and net profit
attributable to parent company of Huaxin Cement from 2014 to 2022 Data source: Cement big data (https://data.ccement.com/)
Revenue decreased slightly. Significant pressure on
profits in 2022, the company's operating income totaled 30.47 billion yuan, down 6.14% from the same period last year, of which revenue in East China and overseas markets grew against the market. Overall, in 2022, the cement market showed a decline, and the cement peak season did not perform well. After the second quarter, the company's revenue began to show negative growth, with a year-on-year decline of 13.49% in the fourth quarter. In addition, affected by the high price of raw materials and fuels, the company's operating costs increased by 5.09% year-on-year in 2022, and the company's profitability was constrained. The gross profit margin of cement business decreased by nearly 10 percentage points compared with 2021, and the net profit attributable to the parent company decreased by 49.68% year-on-year to 2.699 billion yuan.
Table 1: Main operating data
of Huaxin Cement in 2022 Source: Cement Big Data (https://data.ccement.com/)
Profitability of cement business declined. In
2022, due to the bottoming of the real estate market and other factors, the national cement demand contracted rapidly, and the company's cement and clinker revenue fell by 19.81% to 20.588 billion yuan. In 2022, the company sold 54.69 million tons of cement, a decrease of 22.03% over the same period last year, 5.71 million tons of clinker, an increase of 11.52% over the same period last year, and the proportion of cement clinker revenue dropped sharply to 67.57%.
Figure 3 and 4: Average sales price and sales volume change
of Huaxin Cement from 2016 to 2022 According to the data per ton, the average price per ton of cement and clinker is 340.86 yuan/ton, which is basically flat compared with the same period last year; In terms of cost per ton, due to the high prices of raw materials, the comprehensive sales cost of cement and clinker increased by 12.19% to RMB256.98 per ton; due to the significant increase in production costs, the profitability of the cement and clinker business decreased significantly, and the comprehensive gross profit margin decreased by 25.17% to RMB83.87 per ton.
Table 2: Data
of main tons of Huaxin Cement from 2020 to 2022 Source: Cement Big Data (https://data.ccement.com/)
During the reporting period, the Company 20 Aggregate production lines have been put into operation successively, and the aggregate production capacity has reached 210 million tons per year. In addition, the company has completed the leasing, construction and acquisition of more than 30 sites in the concrete business, and its own concrete production capacity has reached 68.75 million square meters. Thanks to the vigorous promotion of integrated development, the company's aggregate and commercial mixed products sales increased significantly, with revenue growth of 49.25% and 61.64% respectively, effectively hedging the impact of the decline in cement business revenue.
Market outlook: The contribution of non-cement business increased, and the overseas market provided the growth point
of performance. In 2022, the contribution of non-cement business of the Company increased significantly, the operation of overseas factories was stable, and the operating performance was steadily improved. At the beginning of the year, the 3000t/d cement clinker dry process production line of Nepal Narayani Co., Ltd. was put into operation, and the annual operating income of overseas factories was 4.19 billion yuan, an increase of 62.3% over the previous year, which built a new profit pillar for the company. In
2023, the company plans to spend about 11 billion yuan on capital expenditure, focusing on the construction of aggregate and concrete production capacity, the expansion of environmental protection and new materials business, and the layout of overseas cement business. In 2023, the cement industry is expected to see a periodic rebound, and the Company plans to sell about 57 million tons of cement and clinker in 2023; the centralized release of aggregate and concrete production capacity in 2022 will significantly enhance the competitiveness of the Company, and the Company plans to sell about 130 million tons of aggregate and 25 million cubic meters of concrete in 2023, and the contribution of non-cement business will be further enhanced; In terms of overseas business, during the reporting period, Tanzania Marvini Phase II 4000 tons/day cement clinker production line project was started, and the preparation work of Malawi clinker line project has been started. In addition, according to the company's announcement in March 2023, Huaxin (Hong Kong) International Holdings Limited, a wholly-owned subsidiary of the company, intends to acquire 59.58% of Oman Cement Company for US $193 million, with a clinker production capacity of 2.61 million tons per year and a cement production capacity of 3.6 million tons per year. (This article does not constitute investment advice)
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