Recently, a number of cement companies issued performance forecasts for 2023.
China Resources Building Material Technology announced that the profit attributable to owners of the Company for the year ending 31 December 2023 is expected to decrease by approximately 58% to 67% as compared with the year ending 31 December 2022. In 2022, the profit attributable to the owners of China Resources Building Materials Technology Company was about HK $1.936 billion.
Asia Cement (China) announced that it expects the group's unaudited profit attributable to equity holders to decrease by approximately 75% in 2023 as compared to the same period in 2022. In 2022, Asia Cement (China) achieved an operating income of 9.614 billion yuan and a net profit of 420 million yuan attributable to the parent company.
Tianshan shares announced that the net profit attributable to shareholders of listed companies in 2023 is expected to be 1.6 billion yuan to 2.08 billion yuan, down 64.78% to 54.21% from the same period last year, with a profit of 4.542 billion yuan.
China Shanshui Cement Group issued a profit warning. The announcement shows that the Group expects that the net loss attributable to the equity holders of the Company will not be less than approximately RMB850 million for the year ending 31 December 2023 . For the year ending 31 December 2022, net profit attributable to equity holders of the Company amounted to approximately RMB748.7 million
. Tapai Group issued a performance forecast. It is estimated that the net profit attributable to shareholders of listed companies in 2023 will be 666 million yuan to 799 million yuan, an increase of 150% to 200% over the same period last year.
It can be seen that, except for Tapai Group, the profits of other enterprises have been "cut in half" or even lost.
Regarding the reasons for the performance changes, Tapai Group said that thanks to the fact that the average sales cost of cement decreased more than the average sales price of cement during the reporting period, the comprehensive gross profit rate increased by about 9 percentage points year on year, and the profitability of the main cement industry improved significantly year on year;
At the same time, during the reporting period, the company's non-recurring gains and losses are expected to be about 110 million yuan, while in 2022, the non-recurring gains and losses are greatly affected by the floating losses of securities investment, which is-0.53 billion yuan. It is expected to increase by 163 million yuan over the same period last year. Since
this year, the demand for cement has declined significantly, the contradiction between supply and demand has become increasingly prominent, the "price war" of cement has broken out everywhere, and the profits of the industry have declined sharply. With the decline of cement demand and the arrival of the peak of production capacity, a cyclical industry shuffle is inevitable. Under such circumstances, cement enterprises should enhance their competitiveness in time and enhance their ability to survive.
Looking at the industry situation, how should cement enterprises deal with the current situation? In addition to consolidating and strengthening the main business, opening up new tracks has become the same choice for many cement enterprises.
Cross-border photovoltaic refers to the direct layout of photovoltaic industry in the future
and its development into a major industry, and the application of photovoltaic technology to the cement industry to achieve carbon reduction are the two mainstream practices of cement enterprises at present. The Red Lion is typical of the first approach. In March
2023, Red Lion Holding Group received formal approval from the State Administration of Market Supervision and Administration, agreeing to acquire the controlling rights of Asia Silicon Industry (Qinghai) Co., Ltd. After the completion of the transaction, Red Lion Group holds more than 68% of the total equity of Asia Silicon Industry and becomes the controlling shareholder of Asia Silicon Industry.
With the implementation of the national "double carbon" strategy, new energy has entered a period of rapid development. Hongshi Group has determined its future development strategy: based on the main cement industry, enter the polysilicon industry, strengthen and refine the main cement industry, accelerate the layout of the polysilicon industry to form a scale, create the "second growth curve", and build a "cement + polysilicon" dual main industry pattern.
The application of new energy technologies such as photovoltaic and energy storage in cement production is favored by most cement enterprises. The layout of photovoltaic power plants is an important development direction for cement enterprises to reduce carbon emissions, and Conch has taken the lead in this regard.
According to China Cement Network Cement Big Data Research Institute, from the installed capacity of photovoltaic power plants, the total installed capacity of the cement industry is about 1GW, accounting for about 0.2% of the country's total, and the overall scale is relatively low. As of June 2023, the installed capacity of photovoltaic power generation of Conch Cement has reached 513 MW, which is far ahead in the cement industry. On May 23,
2023, Yang Jun, chairman of Conch Group, demanded that "new energy companies should grasp the period of industrial transformation and accelerate the pace of development" when investigating Conch New Energy. On December 1, Conch Group signed a strategic cooperation agreement with Longji Green Energy to carry out in-depth cooperation in photovoltaic business, power plant projects, hydrogen energy applications and other fields.
Extending the industrial chain to build a "moat"
is not a new thing for cement enterprises to extend the industrial chain and create a new industrial growth pole by expanding the upstream and downstream businesses such as aggregates and concrete, but it is a "magic trick" for "everlasting prosperity".
With a complete integrated layout of the cement industry chain, it can effectively resist market risks and improve the competitiveness and profitability of enterprises; the layout of aggregate and concrete business can play a strong supporting role when the cement price falls. It can be said that the steady improvement of aggregate and concrete business has built a "moat" for the development of enterprises. In the first half of
2023, the aggregate and concrete sales of Huaxin Cement increased by 103.30% and 82.31% respectively. Affected by this, the company's non-cement business has steadily improved, achieving revenue of 5.836 billion yuan, an increase of 49.19% over the previous year, accounting for about 37% of the company's total revenue, accounting for 56% of the net profit attributable to the parent company, which has become an important contribution to the company's profits and played an important supporting role in its performance.
Coincidentally, in the first half of 2023, Tianshan shares sold 63.42 million tons of aggregates, an increase of 25.53% over the previous year, and the gross profit rate of aggregates reached 37.15%. Tianshan has 320 million tons of clinker production capacity, 390 million cubic meters of commercial mixing capacity and 230 million tons of aggregate production capacity. Tianshan shares said that it would actively develop the "cement plus" business, continuously optimize the layout of commercial mixing business, rapidly develop aggregate business and increase resource reserves.
