Real estate is having a hard time, and the family of Li Liufa, the former richest man in Henan who made his fortune in the cement industry, is also facing a capital attack.
On April 9, China Tianrui Cement (01252. HK) experienced a cliff-like flash crash, with its share price plunging 99% in less than 15 minutes near the close, reaching a minimum of HK $0.035 per share and a final closing price of HK $0.048 per share. It fell 99.04% from the previous day's closing price of HK $5 per share, hitting a record low. In one day, the market value of HK $14.55 billion went up in smoke. On the evening of April
9, Li Jiangming, executive director, joint company secretary and authorized representative of China Tianrui Cement, responded to Jiggai Finance and Economics that the company was operating normally and that today's sharp fall might be due to the passive liquidation of some minority shareholders.
In fact, the turnover of China Tianrui Cement today is 281 million shares, but the turnover is only 24.38 million, which in Li Jiangming's view, liquidity is not high. As for the maintenance of stock prices and other issues that shareholders are most concerned about, Li Jiangming said that the company is currently meeting to actively discuss countermeasures. Asked
by reporters whether the black swan could copy the bottom in the face of a sudden slump, Li Jiangming responded with a smile: "You can understand that.". The stock of Henan's richest man
plummeted before the market value of the
01、 collapsed. For the major shareholders, it is undoubtedly a knife in the flesh and a sword in the head. On December 8,
2023, China Tianrui Cement announced that its controlling shareholder had completed the reorganization of the enterprise, and that Yukuo Limited (hereinafter referred to as "Yukuo") held 69.58% of the issued share capital of China Tianrui Cement, while Li Liufa and Li Feng's husband and wife controlled 100% of Yukuo through Tianrui Group and other enterprises. According to
public information, China Tianrui Cement is mainly engaged in the manufacture and sale of cement, limestone aggregate and clinker. It was established in February 2011 and successfully landed in Hong Kong in December 2011. Its parent company Tianrui Group Co., Ltd. (Hereinafter referred to as Tianrui Group) was founded in 1982. According to its official website, it has developed into a joint-stock enterprise group with tourism, cement, foundry and Internet logistics as its main body, ranking 356 among the top 500 enterprises in China, 195 among the top 500 manufacturing enterprises in China, and 16 among the top 50 cement enterprises in the world. According to the list of China's top 500 private enterprises released by
the All-China Federation of Industry and Commerce in 2023, Tianrui Group ranked 181st with a business income of 60.1 billion yuan.
Interestingly, Li Liufa, the actual controller of Tianrui Cement in China, was born in 1957 in Pingdingshan, Henan Province, and is a super-rich man in Henan Province. According to the newly released Hurun Global Rich List 2024, Li Liufa and Li Fengxuan ranked 900th on the list with a net worth of $4 billion. In addition, Li Liufa was the richest man in Henan Province in the "New Fortune 500 Rich List" selected by New Fortune magazine twice in 2011 and 2012. In October
2022, Li Liufa officially joined China Tianrui Cement for one year. Li Xuanyu, the eldest son of the then deputy general manager, pushed him to the front desk at the age of 35 and became the chairman and executive director of China Tianrui Cement.
But today's fall, the former richest man in Henan Li Liufa family ushered in the darkest moment, the stock market value of Tianrui Cement in China plummeted by 90%, and the net worth shrank by 10 billion, which can be said to be a great loss of vitality.
It is worth mentioning that as early as January 18 this year, China Tianrui Cement announced that its controlling shareholder, Yu Kuo, had just released a pledge of 160 million shares and pledged 97 million shares of China Tianrui Cement as a guarantee, thus obtaining a loan financing of 166.5 million RMB. The pledged equity accounted for 3.3% of the issued share capital.
Based on the closing price of HK $5.24 per share on January 18, the market value of the pledge was 508 million at that time. Now the stock price has fallen sharply, the stock price has already fallen below the pledge liquidation line, and the major shareholders may have to take money to cover their positions or add margin. At the same time, the whole market value of Tianrui Cement in China is even lower than the financing three months ago, which is embarrassing.
Meanwhile, the latest financial report of China Tianrui Cement shows that its loans due within one year are 11.969 billion yuan, an increase of 95% compared with 6.15 billion yuan in the same period last year; the loans due after one year are 4.623 billion yuan, an increase of 2.3 times compared with the same period last year. Its net borrowing ratio in 2023 was approximately 79.3%, up 54.4 percentage points from approximately 24.9% in 2022. The pressure of debt repayment is not small. The
02、 has delivered the worst performance in history, and the cement industry is under the pressure
of dark clouds. On the other hand, the basic cement market faced by the Li family is also in trouble.
On April 2, China Tianrui Cement produced its worst performance report ever. According to the 2023 annual report, the total revenue of China Tianrui Cement is 7.889 billion, down 28.64% year-on-year; the net profit attributable to parent company is -634 million, down 241.27% year-on-year, which is also the first loss since its establishment. Its net profit in the previous three years, namely 2020, 2021 and 2022, was 1.861 billion, 1.201 billion and 449 million respectively. From the trend point of view, earnings are shrinking. In
2023, the gross profit margin of China Tianrui Cement further decreased from about 24.5% in 2022 to about 20.7%. According to its financial report, the decline in gross profit margin was mainly due to the fact that the decline in cement prices in 2023 was greater than the decline in the cost of cement per ton.
In terms of main business, in 2023, the revenue contribution of China Tianrui Cement from cement, aggregate and clinker was 77.2%, 19% and 3.8%, respectively.
In terms of the specific performance of the cement business, which accounted for the majority, its sales volume was about 25.2 million tons last year, down 9% year-on-year, while the average price was about 241.5 yuan/ton, down 21.8% year-on-year, showing a situation of double decline in volume and price.
In addition, the sales volume of limestone aggregate last year was approximately 43.6 million tonnes, representing an increase of approximately 1.7 million tonnes or 4.1% from approximately 41.9 million tonnes in the same period of 2022. However, the average price per tonne of limestone aggregate was approximately RMB34.5, representing a year-on-year decrease of 12.6%.
Data show that in 2023, the average transaction price of the national cement market fell by 15% year on year, mainly due to the continued downturn in market demand, high inventory, high sales pressure of enterprises, and the adjustment of cement prices at the bottom. It is estimated that the profit of the cement industry in 2023 will be about 32 billion yuan, down about 50% from the same period last year.
China Tianrui Cement pointed out in its financial report that in 2023, due to the downturn of downstream real estate, intensified market competition, high cost of upstream raw materials and fuels and other factors, some regions suffered from disorderly competition and regional losses, so the cement business was under serious pressure. However, fixed asset investment, infrastructure investment, transportation investment and other fields still maintained a certain growth throughout the year, which is also an important factor to support the demand of cement industry in the future.
At the same time, in view of the work target of 2024, China Tianrui Cement also pointed out that the cement business should not only emphasize the development and maintenance of the high-grade cement market with key engineering customers as the main part, but also continue to increase the market share of low-grade civil cement; With respect to seeking new profit growth points, the Company will continue to extend the industrial chain, expand new energy businesses such as wind power, solar power and energy storage, and promote alternative fuel projects. In addition, the Company will continue to promote "smart" and "green" development, and build and upgrade smart mines and smart factories as well as green mines and green factories.
