Comprehensive review: In the first half of 2023, Shangfeng Cement achieved an operating income of 3.209 billion yuan, a year-on-year decrease of 9.49%, a net profit attributable to the parent company of 531 million yuan, a year-on-year decrease of 24.89%, and a gross profit rate of 29.79%, a decrease of 8 percentage points over the same period last year. The company's sales of cement clinker increased, but the prices of cement, clinker and sand aggregates declined significantly, coupled with the increase in overall operating costs, resulting in a reduction in profits in the first half of the year.
Figures 1 and 2: Decline
in operating revenue and net profit attributable to parent company of Shangfeng Cement in 2023 H1 Data source: Cement big data (https://data.ccement.com/)
The selling price declined significantly. In the first quarter of
2023, the company realized operating income of 1.309 billion yuan, down 6.77% from the same period last year. After the second quarter, the decline was further expanded, and the final revenue in the first half of the year reached 3.209 billion yuan, down 9.49% from the same period last year. Due to the decline in the price of the company's products and the sharp increase in operating costs, the profit in the first half of the year declined, the net profit returned to the mother decreased by 24.89% to 531 million yuan, and the gross interest rate decreased by 8 percentage points.
Table 1: Main operating data
of Shangfeng Cement in the first half of 2023 Source: Cement Big Data (https://data.ccement.com/)
In the first half of 2023, the total sales volume of cement and clinker was 9.97 million tons. The sales volume of sand and gravel aggregates was 6.53 million tons, representing a year-on-year decrease of 16.69%. The average selling price of cement clinker was RMB279.29/ton, representing a year-on-year decrease of 19.55%. Although the sales volume of Shangfeng Cement increased synchronously with the regional market, the average unit selling price of cement products decreased by 19.51% year-on-year, the average unit selling price of clinker also decreased by 18.82% year-on-year, and the average selling price of aggregate decreased by 31.31% year-on-year, which affected the profitability of Shangfeng Cement to a certain extent.
Figures 3 and 4: Sales volume of cement and clinker and average selling price
of cement in H1 of 2023 Source: Cement Big Data (https://data.ccement.com/)
The Company's business layout is distributed in East China, Northwest China, Southwest China, of which East China is the main business region, has a contribution rate of 72.64%. The market share of Shangfeng Cement in the Yangtze River region and the northwest region is stable, while the newly put into operation subsidiary in the southwest region has increased some production, which promotes the company's sales of cement and clinker. In addition, aggregate sales decreased due to the decline in demand in some areas.
Figure 5: Operating area
of Shangfeng Cement in the first half of 2023 Data source: Cement Big Data (https://data.ccement.com/)
From the company's cement sales ton data, In the first half of the year, the selling price of cement clinker per ton was RMB279.29 per ton, representing a year-on-year decrease of 19.55%, and the cost of cement clinker per ton was RMB206.30 per ton, representing a year-on-year decrease of 12.92%, which was mainly caused by the decrease in coal price. The scale of the company's cement building materials business increased steadily, but the price reduction affected the profitability. In the first half of the year, the gross profit of the company's cement clinker was 72.98 yuan/ton, down 33.80% from the same period in 2022.
Table 2: Peak cement clinker tons
in the first half of 2023 Data source: Cement Big Data (https://data.ccement.com/)
Profit outlook for
the second half of the year The property market is at the bottom of the adjustment stage. However, relevant policies such as urban village reconstruction and "emergency dual-use" public infrastructure construction will drive the increase of cement demand. In addition, the company has strong strength. It has more than 50 subsidiaries in 9 provinces such as Zhejiang and Anhui and in Kyrgyzstan and other countries abroad. It has an annual cement clinker production capacity of about 17.74 million tons and an annual cement production capacity of about 21.7 million tons. It has 13 new dry process cement clinker production lines and two cement clinker production lines under construction. At the same time, the construction of new projects is progressing in an orderly manner, and the company also has rich technical experience and regional advantages. It is expected that these will bring considerable profits to the company in the future and promote the rapid development of the company. (This article does not constitute investment advice)
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