Comprehensive review: In 2023, the operating income of Shanshui Cement was 18.116 billion yuan, a year-on-year decrease of 15.69%, and the net profit attributable to shareholders of listed companies was -884 million yuan, a year-on-year decrease of 217.02%. In 2023, the competition in the cement industry intensified, the company's main business showed a state of rising volume and falling price, the operating income continued a negative growth trend, coupled with a more obvious decline in gross interest rate, the net profit attributable to the parent company showed a loss.
Figures 1 and 2: Revenue and net profit attributable to parent company of Shanshui Cement in 2023 (Unit: 100 million yuan,%)
Data source: Cement Big Data (https://data.ccement.com/)
Annual sales growth. In
2023, the sales volume of cement and clinker of Shanshui Group was 52.612 million tons and 10.338 million tons respectively, with a year-on-year increase of 10.6% and 35.4% respectively. From the perspective of geographical distribution, the total sales volume of cement in Shandong was 28.637 million tons, with a year-on-year increase of 2.4%, and the proportion decreased by 5.3 percentage points to 58% compared with 2022. The sales volume of cement in Northeast, Shanxi and Xinjiang markets was 15.895 million tons, 6.877 million tons and 1.203 million tons respectively, with a year-on-year growth rate of more than 20%. Overall, in 2023, the sales volume of Shanshui Cement in its main market accounted for about 13.1%, and its market share increased by about 2.0 percentage points compared with 2022.
Due to the general shrinkage of demand in the northern market where Shanshui Cement is located, the market competition has intensified significantly, and the prices of cement and clinker have continued to decline. In this context, although Shanshui Cement can achieve sales growth by relying on its brand and scale advantages, the average selling price of cement and clinker inevitably falls with the market. In 2023, the average cement sales price of Shanshui Group was about 270.1 yuan/ton, down 25.1% year on year, and the average clinker sales price was about 216.5 yuan/ton, down 29.3% year on year.
Figures 3 and 4: Sales volume and selling price of cement and clinker of Shanshui Group in 2023 (Unit: 10,000 tons, RMB,%)
Data source: Cement big data (https://data.ccement.com/)
The cost decrease is relatively small. In
2023, the domestic coal price fell from a high level, coupled with the increase of fuel substitution rate of Shanshui Cement, the cost of clinker coal dropped to 112.9 yuan/ton, a year-on-year decrease of 25.3%. Therefore, in the case of sales growth, the cost of sales of Shanshui Cement still decreased by 7.88% year on year. However, as the decrease in sales prices of cement and clinker was much greater than the decrease in production costs, the consolidated gross profit margin of Shanshui Cement for the whole year further declined to 18.1%, a decrease of 7.5 percentage points compared with 2022. In addition, the short-term borrowing of Shanshui Cement increased in 2023, and the proportion of financial expenses to revenue increased. Under the influence of the above factors, the net profit of Shanshui Cement dropped to-884 million yuan, down 217.02% year on year.
Table 1: Main Operating Data
of Shanshui Cement in 2023 Source: Cement Big Data (https://data.ccement.com/)
Market Outlook: The contradiction between supply and demand in the market is prominent. In
2024, the northern region where Shanshui Cement is located is still facing downward pressure on demand, especially the task of debt conversion in some regions, which affects the construction of infrastructure projects, and the contradiction between supply and demand in the market is expected to remain prominent. Affected by this, it is difficult for the cement industry to push up the price, and it is expected that the price of cement and clinker will remain low during the year. At present, the cement and material business of Shanshui Group still accounts for more than 90%, and the relatively single business structure will bring greater operating pressure to the company, and it is expected that it will be more difficult to achieve profitability in the short term. (This article does not constitute investment advice)
