Comprehensive review: In 2023, Tianrui Cement realized an operating income of 7.889 billion yuan, a year-on-year decrease of 28.64%; the net profit attributable to shareholders of the listed company was -634 million yuan, a year-on-year decrease of 241.27%. In 2023, the market demand of Tianrui Cement's main business areas was low, the volume and price of cement clinker fell, and the company's revenue and gross profit margin declined. In addition, due to the substantial increase in trade and other receivables, the company has expanded its financing scale, and the proportion of financial costs has increased significantly, which is an important reason for the loss of net profit attributable to the parent company.
Figures 1 and 2: Revenue and net profit attributable to parent company of Tianrui Cement in 2023 (Unit: 100 million yuan,%)
Data source: Cement Big Data (https://data.ccement.com/)
The volume and price of the main business fell. In
2023, the market demand of Henan and Liaoning, where Tianrui Cement is located, was still relatively low, and the overall competition intensity of the industry increased significantly. In this context, the market share of Tianrui Cement in the main sales areas increased slightly by 0.12 percentage points to 9.47%, but the price decline also became the main reason for the annual revenue and gross interest rate decline. Among them, the main product cement sales totaled 25.2 million tons, a year-on-year decrease of 9.0%, the average price dropped to 242 yuan/ton, a year-on-year decline of 21.8%. Meanwhile, the export volume of clinker dropped to 1.3 million tons, a year-on-year decline of more than 50%, and the average selling price was about 230 yuan/ton, a year-on-year decline of 27.0%. Affected by this, the revenue of cement and clinker business of Tianrui Cement dropped to 6.386 billion yuan, down 32.09% year on year.
At the same time, with the gradual release of production capacity of the production line put into operation last year, the sales volume of Tianrui cement aggregate rose to 43.6 million tons in 2023, an increase of 4.1% over the same period last year. However, the sales price of aggregates also declined during the year, with the revenue of aggregates business falling to 1.503 billion yuan, a year-on-year decline of 9.08%, accounting for about 19.05% of the total revenue, an increase of 4.10 percentage points compared with 2022.
In the context of the sustained decline in the level of industry prosperity, the volume and price of Tianrui Cement's main business fell, dragging down the annual revenue decline. In addition, although the sales volume of aggregate business has increased, it has failed to achieve revenue growth due to price factors. In 2023, Tianrui Cement achieved a total operating income of 7.889 billion yuan, down 28.64% from the same period last year.
Figures 3 and 4: Sales volume and selling price of cement and clinker of Tianrui Cement in 2023 (Unit: 10,000 tons, RMB,%)
Data source: Cement big data (https://data.ccement.com/)
Sales gross profit continued to shrink. Financial costs increased
significantly. In 2023, the price of raw materials and fuels in the cement industry showed a downward trend. Tianrui Cement reduced production costs through centralized mining and other means, but due to the decline in cement and clinker prices, the gross profit margin of enterprise sales did not rise but fell. In 2023, the cost per ton of cement and clinker produced by Tianrui Cement is about 205.2 yuan/ton, with a year-on-year decrease of about 17.4%. Among them, the unit cost of raw materials, coal and electricity is 52.0 yuan, 86.4 yuan and 26.0 yuan respectively, which is 17.6 yuan, 23.9 yuan and 3.6 yuan lower than that in 2022. However, as the unit selling price of cement and clinker decreased by 22.1%, the actual gross profit per ton decreased to 35.8 yuan/ton, representing a year-on-year decrease of 41.2%.
In the case of a significant decline in the gross profit of the main business units, the comprehensive gross profit rate of Tianrui cement business dropped to 20.7% in 2023, down 3.8 percentage points from 2022.
Table 1: Comprehensive selling price, cost and gross profit
per ton of cement and clinker of Tianrui Cement in 2023 Source: Cement Big Data (https://data.ccement.com/)
Meanwhile, affected by sales and procurement strategies, In 2023, the scale of trade and other receivables of Tianrui Cement rose sharply to 19.606 billion yuan, an increase of 112.18% over the same period last year. Due to the large amount of capital occupied, the company's short-term and long-term borrowing scale reached 11.969 billion yuan and 4.623 billion yuan, an increase of 93.68% and 230.95% respectively. Affected by this, the financial cost in 2023 increased by 11.5% to 1.152 billion yuan compared with 2022, accounting for 14.60% of business income, an increase of 5.25 percentage points over the same period last year.
Overall, the main reasons for the loss of Tianrui Cement are the decline in revenue scale, the decline in gross interest rate and the substantial increase in expenses during the period. In 2023, the net profit of Tianrui Cement dropped to-634 million yuan, a decrease of 215.62% compared with the same period last year, the first loss since its listing.
Table 2: Main Operating Data
of Tianrui Cement in 2023 Source: Cement Big Data (https://data.ccement.com/)
Market Outlook: The downward trend of demand is hard to change. The operation of the Company continued to be under pressure
. In 2024, the infrastructure sector was affected by the government debt factor, and the landing of new projects was relatively slow. In addition, the real estate market was still low, and the domestic demand for cement continued to shrink. Henan, Liaoning and other provinces, where Tianrui Cement's main markets are located, are expected to maintain a relatively high degree of competition, the cost of maintaining market share remains high, and the profit margin of cement business is likely to further weaken. Generally speaking, due to the relatively single business structure, Tianrui Cement will still face greater operating pressure this year. (This article does not constitute investment advice)
