Comprehensive review: In the first half of 2023, China Resources Cement achieved an operating income of HK $12.173 billion, a year-on-year decrease of 24.5%, a net profit attributable to the parent company of HK $621 million, a year-on-year decrease of 65.6%, and a gross profit margin of 15.63%, a decrease of 4.86 percentage points over the same period last year. In the first half of the year, cement prices in various regions of the company declined significantly, coupled with the overall decline in cement sales, resulting in a reduction in profits in the first half of the year. (The currency units in this article are all Hong Kong dollars)
Figure 1. In the first half of 2023, the operating income and net profit attributable to the parent company of China Resources Cement decreased
significantly. Data source: Cement Big Data (https://data.ccement.com/)
I. The sales price of cement decreased, and the profit shrank
significantly. The company realized operating income of HK $5.294 billion, down 24.12% from the same period last year. After the second quarter, the decline further expanded, and the final revenue in the first half of the year reached HK $12.173 billion, down 24.47% from the same period last year. Due to the decrease of cement sales volume and price, the decrease of revenue exceeded the decrease of cost, which led to the decrease of profit in the first half of the year. The net profit attributable to the parent company decreased by 65.6% to HK $621 million, and the gross profit margin decreased by 4.86 percentage points.
Table 1: Main operating data
of China Resources Cement in the first half of 2023 Source: Cement Big Data (https://data.ccement.com/)
In the first half of 2023, China Resources Cement sold 28.521 million tons of cement. The average selling price was HK $357.1/ton, representing a year-on-year decrease of 12.09%. In addition, in the first half of the year, the external sales volume of concrete was 3.803 million square meters, down 29.46% year-on-year, and the average sales price dropped 17.21% year-on-year to HK $440.5 per square meter. In the first half of the year, cement and concrete, which accounted for a large proportion of the company's revenue, experienced a decline in price and volume. Due to the large decline in sales volume, the company's revenue in the first half of the year was not good. In addition, the company's clinker volume and price dropped, and its external sales dropped by 21.35%.
Figures 3 and 4: Sales volume and average price
of China Resources Cement in the first half of 2023 Source: Cement Big Data (https://data.ccement.com/)
In the first half of 2023, Cement sales areas include Guangdong, Guangxi, Fujian, Hainan, Yunnan, Guizhou, Shanxi and Hunan. In addition to Yunnan, Guizhou and Hunan, cement sales in the other five regions have declined to varying degrees. Shanxi has the largest decline in cement sales, down 16.99%. At the same time, cement sales in Guangdong and Guangxi are still the highest, accounting for about 70% of the total sales. In addition, the average price of cement in the eight major sales areas of cement all declined, with Shanxi's average sales price falling the most, by 27.69%.
Figure 5: Cement Sales Proportion of
China Resources in Eight Provinces in the First Half of 2023 Source: Cement Big Data (https://data.ccement.com/)
From the company's cement sales ton data, In the first half of the year, the price of cement per ton was HK $357.1 per ton, down 12.09% from the same period last year. The average purchase price of coal of the Company in the first half of the year was HK $1,152/ton, representing a decrease of 1.2% as compared with the purchase price of HK $1,166/ton in the same period of last year. The decrease in coal price and the improvement in unit coal consumption resulted in a decrease in the average coal cost per ton of clinker, but it could not offset the impact of the decrease in cement sales volume and price. Down 33.26% from the same period in 2022.
Table 2: Data
of main tons of China Resources Cement in the first half of 2023 Source: Cement Big Data (https://data.ccement.com/)
II. The long-term aggregate production capacity exceeded 146 million tons
. In the first half of 2023, CR Cement rapidly developed the aggregate business, actively acquired high-quality aggregate mine resources, and accelerated the construction and production of aggregate projects. During the reporting period, China Resources Group mainly won the mining rights of Longmashan Limestone Mine in Litang Town, Binyang County, Nanning City, Guangxi and Maoping Limestone Mine in Dongshi Town, Pingyuan County, Meizhou City, Guangdong Province, which are expected to be completed and put into operation by the end of 2023 and by the end of 2024 respectively. The aggregate concrete project of China Resources Group in Xixiu District, Anshun City, Guizhou Province has been completed and put into operation. As of the end of June 2023, the annual aggregate production capacity (including trial production) owned by China Resources Group through its subsidiaries is about 83.4 million tons, which is expected to reach 146.4 million tons in the future.
Profit outlook for
the second half of the year At present, the investment in real estate development and the area of new construction of real estate have decreased year on year, and the real estate industry continues to be depressed, resulting in a decline in demand for cement. However, the infrastructure projects involving China Resources Cement are in full swing, which strongly supports the demand for cement. It is expected that the future infrastructure projects will continue to promote the demand for cement. At the same time, CR Cement will compete for two new mining rights, accelerate the production of aggregate projects, strengthen research and development and innovation, actively carry out digital transformation, seize new business development opportunities, and give full play to the advantages of integration and coordination of cement, aggregate and concrete, which will help the company reduce costs, improve production capacity and increase operating profits. (This article does not constitute investment advice)
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