On April 30, Tianshan Stock released the first quarterly report of 2024. During the reporting period, the company realized operating income of 16.351 billion yuan, down 26.94% year-on-year; the net profit loss attributable to shareholders of listed companies was 1.923 billion yuan, down 56.21% year-on-year. On the same day, the Company disclosed the Announcement on the Impairment Test and Compensation Scheme for the Company's Major Asset Restructuring. CNBM will compensate the Company by way of equity and cash payment in accordance with the provisions of the Impairment Compensation Agreement and the Performance Commitment Compensation Agreement, with a total amount of 21.791 billion yuan.
It is understood that in 2023, China's real estate industry continued to adjust in depth, dragging down the demand for cement. In the first quarter of 2024, the industry entered the traditional off-season, and the overall profit level entered the cyclical bottom. In this context, the strong strength of a few high-quality enterprises represented by Tianshan Stock Company in cost control, market expansion and financial management makes the market share still gather in such enterprises when the collective performance of the industry stalls, which is also the key force to determine whether the enterprises can successfully resist industry risks and move forward steadily in the market competition.
Data show that in 2023, the company promoted a series of optimization and upgrading, cost reduction and consolidation, business integration and other work landing, and achieved remarkable results in cost control, in which the comprehensive cost of cement (excluding the impact of coal price) decreased by about 50.24 yuan/ton year on year; The cash flow of operating activities remained stable, and the pressure of "two funds" dropped by about 6.4 billion yuan, and the overall cost reduction effect was obvious. The overall cost reduction far exceeds the industry level, which not only reflects the company's strong strength in technological transformation and internal potential tapping, but also consolidates the company's comprehensive advantages and favorable position in the market competition. The company's business moat and financial safety margin are as solid as ever, and the robustness of the financial structure is still being strengthened.
In addition, the Company actively seeks new business growth points, promotes the "cement plus" business and the development of special cement, actively and steadily lays out the development of international business, expands the market increment space, and is expected to gradually realize the results under the industry cycle game.
Looking back to 2021, the controlling shareholder, China Building Materials, injected its main cement assets into Tianshan Stock, and the two sides signed the Agreement on Compensation for Impairment and the Agreement on Compensation for Performance Commitment, which stipulated that the cumulative net profit of the restructured assets would be 35.518 billion yuan in the three fiscal years from 2021 to 2023, and that if the restructured assets were impaired, the total net profit of the restructured assets would be 35.518 billion yuan. CNBM will compensate Tianshan for the corresponding amount of impairment with the Compensation Shares (the shares it acquired in the Reorganisation).
According to the previous annual report from 2021 to 2023, the actual cumulative net profit of Tianshan's performance commitment assets is only 13.727 billion yuan, and the unrealized net profit is 21.791 billion yuan. China Building Materials will use this as the total compensation to compensate the company with equity and cash.
Firstly, Tianshan shares will repurchase about 1.553 billion shares of China Building Materials that should be compensated to the company at a total price of 1 yuan, and cancel the corresponding compensated shares in accordance with the law after the approval of the shareholders'meeting of the company; At the same time, CNBM shall return to Tianshan Shares the corresponding cash dividend of 1.109 billion yuan during the period of impairment compensation, that is, from 2021 to 2023.
Secondly, the unrealized net profit of performance commitment assets is 21.791 billion yuan. According to the Performance Commitment Compensation Agreement, the amount of cash compensation that China Building Materials should pay to Tianshan Stock Company is 1.758 billion yuan. The capital reduction compensation and performance compensation scheme still need to be submitted to the shareholders'meeting of the company for consideration and approval. It is expected that Tianshan shares will receive cash compensation of about 1.758 billion yuan in this year.
Analysts said that, on the one hand, with the gradual landing of the compensation scheme, the company can replenish operating cash, and its share repurchase and cancellation will directly increase earnings per share, benefit the majority of small and medium shareholders, stabilize and enhance investor confidence. On the other hand, the fulfillment of performance commitments is not only the responsibility of controlling shareholders to enable the steady development of their assets, but also reflects the great importance China Building Materials attaches to the long-term development of the company. Through overall coordination, it is expected that in the future, with its strong project experience and resource advantages, it will cooperate with the company in production, brand, channel and operation. Inject energy into the company's long-term development.
In fact, as the largest cement giant in China with complete industrial chain and national layout, the future development of Tianshan shares is also highly expected by the market. After the seasonal factors are gradually cleared, the company's cost reduction and cost control effect will be further transformed into profit momentum, combined with the performance commitment compensation landing, the company may usher in market value revaluation. With the acceleration of the company's internal optimization of quality and efficiency and the transformation of digital intelligence, the release of profit expectations driven by overseas layout and aggregate business, the growth space of Tianshan shares is worth looking forward to by the market.
