2023, affected by the macroeconomic downturn and insufficient market demand, the cement industry continued its downturn since 2022. In the first half of the year, the national cement output was 953 million tons, down 2.4% from the same period last year, and the output hit a new low since 2012. In terms of benefits, due to the deep decline in cement prices and the decline in demand, the benefits of the industry shrank sharply, with a total profit of 16.47 billion yuan in 2023, down 59.8% from the same period last year.
At present, there are 22 cement listed companies in Hong Kong and Shanghai and Shenzhen, including 7 in Hong Kong and 15 in Shanghai and Shenzhen. In the first half of
2023, the overall performance of 22 listed companies was not good, and most of the profits declined, among which the profit decline was larger.
Conch Cement, Huaxin Cement , Tapai Group, Western Cement, Ningxia Building Materials and Qingsong Jianhua achieved positive growth in business income, among which Ningxia Building Materials revenue increased by more than 20% year-on-year, showing a bright performance; The revenue of Conch Cement increased by 16.28% year on year, with excellent results; the revenue of Huaxin Cement and Tapai Group increased by about 10%, while the revenue of Western Cement and Qingsong Jianhua was relatively stable, with an increase of less than 6%. The operating income of the remaining
16 companies declined by more than 30%, including Yatai Group and Dongwu Cement, Huarun Cement, Tianrui Cement and Evergreen Cement. China Building Materials, Shanshui Cement and Shangfeng Cement have a relatively small decline in revenue, all around 10%.
In terms of net return to the mother, only two of the profitable companies, Tapai Group and Qingsong Jianhua, have achieved profit growth, while 19 companies have experienced profit decline or loss, including Yatai Group, Jidong Cement, Shanshui Cement, Xizang Tianlu, Fujian Cement and Dongwu Cement.
From the perspective of enterprises with increased net profit, the profit growth rate of Tapai Group is as high as 178%, mainly benefiting from the recovery growth of regional demand, the stable operation of Qingsong Jianhua and a small increase in profits. Among the enterprises with declining
profits, most of them have a larger decline, although the net profit of leading conch cement is 6.468 billion yuan, which is still the most profitable cement company, but the profit is 34.3% lower than same period last year. China Building Materials, Tianshan Cement , China Resources Cement and Tianrui Cement and other leading companies all had a net profit decline of more than 60%, while Huaxin Cement, Shangfeng Cement and Western Cement performed relatively well, with a profit decline of less than 25%.
Table 1: Profitability
of 22 Listed Cement Companies in the First Half of 2023 Data Source: Cement Big Data (https://data.ccement.com/)
Cement Clinker Sales:
The rise and fall of the sales volume were mixed and the prices all fell
. According to the data of 13 major listed companies that announced the sales volume of cement clinker, the rise and fall of the sales volume of cement clinker were mixed. Sales
of Shangfeng Cement, Jidong Cement, Shanshui Cement and Tapai Group all increased by more than 10%, among which Shangfeng Cement benefited from the release of new production capacity, and sales of cement clinker increased by 18.7%. Sales of leading companies such as
China Resources Cement, Huaxin Cement and Conch Cement increased steadily, ranging from 2% to 7%, while sales of Asian cement were stable, basically the same as last year. Among the
four enterprises with declining sales volume, the sales volume of Tianrui Cement decreased by 14.2% due to the poor market demand in Henan; since the beginning of this year, the real estate performance in Fujian has been sluggish, the demand for cement has declined significantly, and the sales volume of Fujian cement has decreased by 7% year-on-year; Tianshan Cement and China Building Materials have slightly decreased by less than 5%. At
the price level, since this year, the overall market demand has been weak, the competition has been extremely fierce, and the price of cement has been falling. Cement clinker sales prices of
listed companies fell across the board. The enterprises with a decline of more than 20% are Jidong Cement and Tianrui Cement, whose main business areas are located in Hebei and Henan, where the overall demand is weak, the market competition pressure is high, and the cement price has fallen deeply.
Conch Cement, China Building Materials, China Resources Cement and other leading enterprises fell between 10% and 20%, and the decline was in the middle level. There are four enterprises with a
decline of less than 10%, namely, Western Cement, Tapai Group, Huaxin Cement and Fujian Cement, among which Western Cement benefits from the development of African business and the price is much higher than that in China, and the price of cement clinker is almost the same as last year; Benefiting from the moderate recovery of regional demand, the price of cement clinker of Tapai Group decreased slightly by 2.5%, while that of Huaxin Cement and Fujian Cement decreased by about 7%.
Table 2: Sales and Average Price of
Cement Clinker of Major Listed Cement Companies in the First Half of 2023 Data Source: Cement Big Data (https://data.ccement.com/)
Summary Outlook:
Revised in the Second Half of the Year In the first half of
2023, due to the overall weakness of downstream demand, the fierce market competition and the large decline in cement prices, companies with cement business as their main business are facing enormous challenges. Despite the decline in coal prices and the reduction in cost pressures, the decline in cement prices has been deeply dragged down, and the profits of most enterprises have declined. Industry profits hit a seven-year low in the first half of the year.
Looking forward to the second half of the year, although demand is expected to improve, the improvement of demand is relatively limited under the background that real estate has not yet stabilized and infrastructure growth has slowed down. In terms of
industrial added value, from January to August, the industrial added value of non-metallic mineral products industry decreased by 0.3% compared with the same period last year, which has not yet turned positive. The current market demand is still weak, the fineness is poor in the peak season, and the resistance to price rise is greater. It is expected that the profit of cement enterprises in the second half of the year will have little room to repair compared with the first half of the year, and there will still be greater downward pressure compared with the same period last year.
Figure 1: Added Value of Building Materials Industry Turns Negative
Data Source: Cement Big Data (https://data.ccement.com/)
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