Tapai Group: There is still room for cement cost reduction in the future

2024-03-26 09:26:35

The company continues to streamline the organization and optimize personnel, establish and improve the flexible salary system, and constantly reduce costs.

Recently, Tapai Group issued a record of investor relations activities, introduced the basic situation of the group's annual report in 2023, and answered investors'questions about profit distribution and future development.

In 2023, the Company achieved a cement sales volume of 17.6316 million tons, representing a decrease of 3.46% as compared with the same period of last year, a clinker sales volume of 888,000 tons, basically the same as the same period of last year, and a total cement and clinker sales volume of 18.5196 million tons, representing a decrease of 3.3% as compared with the same period of last year; The operating income was 5.535 billion yuan, down 8.29% from the same period last year; the net profit attributable to shareholders of listed companies was 742 million yuan, up 178 from the same period last year.

From the single quarter data of Q4 in 2023, the sales volume of Q4 cement was 5.16 million tons, an increase of about 900,000 tons on a month-on-month basis; The price of cement per ton is 254 yuan/ton (excluding tax), which is 4 yuan/ton lower than the previous month. The month-on-month decline in the price of Q4 tons of cement was mainly due to the abundant rainfall in Q4 Guangxi, the high water level of the Xijiang River and the high navigation capacity. Guangxi transported more cement to the Pearl River Delta through the Xijiang River waterway, which had a great impact on the price of cement in the Pearl River Delta.

From the data point of view, the company's operation in 2023 is better than that of the industry. First, the decline in cement production and sales is less than the average level of the national cement industry and the same industry in Guangdong Province, mainly because the company has taken a series of measures to actively respond to the impact of the rapid decline in market demand and intensified competition, further consolidating the market share; Second, the net profit has achieved a substantial increase against the market, which is better than the 50% year-on-year decline in the total profit of the national cement industry. In addition to the low year-on-year base caused by the decline of the company's net profit in 2022, which is greater than the decline of the industry's profit, and the implementation of precise and effective marketing policies during the reporting period, it is mainly due to the company's initiative to adapt to market changes. We continued to make solid progress in cost reduction and efficiency enhancement and achieved the expected results, and superimposed the impact of the significant year-on-year increase in non-recurring gains and losses during the reporting period.

1、 from the company just disclosed the 2023 profit distribution plan, the company's dividend ratio is close to 80%, a record high, what is the main reason, whether the future is sustainable? To sum up, in order to further enhance investors'sense of acquisition and enhance investors' confidence in the company, the company increased the dividend ratio in 2023, hoping to enhance investors' returns by increasing the dividend ratio. In fact, the company has always attached great importance to the return of investors, in the past few years, the company's annual cash dividend has maintained a high proportion, basically around 60%.

In the future, the company will continue to consider comprehensively, continue to implement a sustainable, stable and predictable cash dividend policy, further enhance the return of investors, let investors share the company's operating results, and continuously improve the company's investment value.

2、 from the annual report of 2023, the income and cost of environmental protection disposal business have increased greatly. Can you introduce the situation of the company's environmental protection disposal business? In 2023, the contribution of environmental protection business to the net profit of the Company increased year by year. The Company mainly operated the sludge disposal project of Huita Environmental Protection and the aluminum ash disposal project of Jiaoling Branch, and the disposal volume increased steadily. The project of co-processing solid waste in

cement kilns has the advantages of less investment in facilities, lower disposal costs and more thorough disposal, which is more competitive and still has great potential. In the next step, the company will further accelerate the construction of solid waste projects, expand the scale of disposal, increase the category of disposal, continuously expand the revenue and profit scale of the environmental protection industry, and form a certain volume and sustainable performance growth point. The

company's environmental protection planning mainly includes: promoting the construction of the 300,000-ton/year general solid waste resources comprehensive utilization project of Jiaoling Branch, which has been approved by the eighth meeting of the fifth board of directors. To promote the construction of Fujian

3、 from the annual report of 2023, we have observed that the significant decline in the purchase price of coal has had an important impact on the performance. How much impact does this have on the cost of cement? In addition, are there any more effective cost reduction measures in other aspects? Is there room for future cost reduction?

In the future, there is still room for the reduction of cement cost. We will continue to do a good job in production organization, implement the economic operation mode of cement kilns, strengthen the collocation of production materials, ensure the optimal production cost, strengthen the procurement of materials, especially coal, and strengthen the price research and the scientific determination of order timing and order quantity; We will strengthen the implementation of energy-saving and consumption-reducing technological transformation projects and the application of new technologies to improve the level of intelligence. For example, we will accelerate the implementation progress of distributed photovoltaic power generation projects on the roof of raw material storage sheds in cement production enterprises, further expand the installed capacity of photovoltaic power generation, accelerate the construction of user-side energy storage power stations in cement enterprises, and continuously reduce the cost of electricity consumption in enterprises; Speed up the use of alternative fuels, gradually increase the proportion of substitution, further reduce the cost of coal consumption, and so on; strengthen the internal fine management, and reduce all costs that can be reduced.

In a word, we will strengthen internal management and cost control in an all-round way, continue to explore more ways to reduce costs and increase efficiency, improve overall operational efficiency and economic benefits, and create greater value for investors.

4、, what is the company's future capital expenditure plan? In the future, the capital expenditure of the company will mainly include technological transformation projects such as ultra-low emission, co-disposal of solid waste in cement kilns, construction of intelligent factories, green mines and first-class safety standard enterprises, aiming at promoting the company's technological progress, environmental protection upgrading and safety production.

5、, what is the scale of the company's photovoltaic power generation and what is the proportion of the company's annual electricity consumption? What is the future plan?

Next, the company will speed up the implementation progress of distributed photovoltaic power generation projects on the roof of raw material stacks in cement production enterprises, further expand the installed capacity of photovoltaic power generation, and the scale is expected to increase by one; As at the end of the reporting period, the Company seized the opportunity of the rapid decline in the price of energy storage power station equipment, accelerated the construction of user-side energy storage power stations in cement enterprises, continuously increased the proportion of clean energy use, and continuously reduced the cost of electricity consumption of enterprises.

6、, what is the energy consumption level of the company's cement clinker production line in the industry? Over the years, the company has always attached great importance to the energy consumption management of cement clinker production lines. Two 10,000-ton production lines of the company have reached the energy efficiency benchmark level, and five 5,000-ton production lines have reached the energy efficiency benchmark level. The company plans to make the energy efficiency of 5000 t/d clinker production line reach the benchmark level as soon as possible through technical transformation and the use of alternative fuels. Will

7、 companies develop concrete industry in the future?

At present, the company has 12 wholly-owned, holding and shareholding concrete enterprises, and the company will strive to operate the existing mixing stations well, and actively respond to the decline in concrete demand and the increasing difficulty of loan recovery caused by the deep adjustment of real estate.

For the concrete industry, the company will continue to pay attention to the development trend, changes and opportunities of concrete in the future because of the low entry threshold, small investment amount, more accounts receivable and poor profitability of concrete mixing stations.

8、 we have observed that the annual report disclosed that the company added two new companies, Tapai Biology and Tapai New Energy, in 2023. Please introduce the situation of these two companies? What is the impact on the company? As a kind of microorganism beneficial to human body, functional probiotics have attracted wide attention in the health industry in recent years. The company is optimistic about the market prospects in this field and plans to provide consumers with high-quality functional probiotics products through cooperation with competitive research institutes in the industry. At present, we are building a team to do a good job of trial sales before the product goes on the market. If the project meets the requirements of the letter, the company will fulfill the obligation of information disclosure in a timely manner. The

establishment of Guangdong Tapai New Energy Development Co., Ltd. is mainly to explore the investment and operation of new energy storage power stations. At the end of 2023, the price of energy storage power station equipment dropped rapidly, which made the economy of investing in energy storage power stations on the user side and grid side continuously improved, and the demand was relatively stable. The company intends to explore the development of new energy storage power station business. If the project meets the requirements of the letter, the company will fulfill the obligation of information disclosure in a timely manner.

At present, the two newly established companies are actively promoting the preliminary work, and there is no substantial and breakthrough progress. It is expected that it will take a long time to form a certain volume of business income contribution and profit.

9、, we have noticed that the gross profit rate of the company increased in 2023. In addition to the decrease in cement cost, the decrease in cement price is relatively small, which is less than the statistics of the association. What is the reason?

10、 Q4 is usually the company's cement sales season, but from the company's announcement data to analyze, the company's Q4 cement prices have declined compared with Q3, what is the reason? What is the current shipment volume and price of the

11、 company, and how does the company judge the demand of the cement market in 2024?

We expect cement demand to continue to decline in 2024, continuing the trend of the previous two years. The downstream of cement is mainly divided into three parts: infrastructure, real estate and new rural construction. We expect that the demand for infrastructure and rural market will remain stable. The key is whether the growth rate of real estate investment can stabilize and rebound, thus supporting the demand for cement. In recent years, the relevant ministries and local governments have issued a series of policies to optimize the regulation and control of real estate, such as the liberalization of the purchase restriction policy in Shenzhen and Guangzhou, the reduction of LPR interest rate, the "white list" system of real estate projects under the coordination mechanism of urban real estate financing, etc., in a multi-pronged manner, covering the financing of real estate enterprises, real estate sales, etc. The positive effects have initially appeared, and the volume of real estate transactions in some cities has also increased, which is expected to further stabilize the real estate market.Meanwhile, in 2024, the main expected targets for the economic and social development of Guangdong Province are to increase the GDP by more than 5% and the investment in fixed assets by 4%. In January 2024, the Guangdong Development and Reform Commission announced that 1,508 key projects will be arranged in Guangdong Province in 2024, with an annual planned investment of 1 trillion yuan.

The company will continue to pay close attention to the dynamic changes and development trends of the market, strengthen market research and analysis, rationally adjust production and sales strategies, and strive to create better business performance on the basis of consolidating market share.

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Adani is also a big man in the Indian cement industry and is the second largest cement producer in India. He entered the industry in 2022 with the acquisition of Holcim's cement business in India, which acquired about 70 million tons of cement per year for $10.5 billion. Adani plans to expand its annual cement production capacity to 140 million tons by 2028. Adani has previously invested $1.6 billion to acquire Sanchi Cement and Penna Cement, and is expected to acquire an additional 21 million tons of production capacity.