Western Construction has concrete production lines in 26 provincial administrative regions in China and overseas markets such as Malaysia, Indonesia and Cambodia. Before 2020, the revenue of the western construction concrete business mainly came from the markets of Sichuan, Hubei, Hunan, Xinjiang and Shaanxi, and the total sales of the above five provinces accounted for more than 50% for a long time. During the "14th Five-Year Plan" period, in order to adapt to the changes in the market environment, the construction of the western region has intensified the development and layout of major national strategic regions such as Beijing-Tianjin-Hebei, Yangtze River Delta and Guangdong-Hong Kong-Macao Greater Bay Area. The number of commercial mixed sites in the new market has been increasing, and the proportion of sales revenue has continued to increase.
According to the announcement of listed companies, the total capacity of concrete mixing stations under the Western Construction reached 85.79 million square meters in 2023. Among them, the mixed production capacity of traditional markets such as Hubei, Hunan, Sichuan, Xinjiang and Shaanxi totaled 13.01 million square meters, accounting for about 40%. Meanwhile, in the Yangtze River Delta region (Jiangsu, Zhejiang, Shanghai and Anhui), the total commercial mixed production capacity of the western construction is 17.05 million m3, accounting for about 15% of the total production capacity; in the Beijing-Tianjin-Hebei region, the commercial mixed production capacity reaches 7.39 million m3, accounting for nearly 9%; in the Guangdong-Hong Kong-Macao Greater Bay Area (Guangdong), the commercial mixed production capacity is 4.04 million m3, accounting for about 5% of the total production capacity.
From the perspective of regional distribution, the capacity scale of the western construction in the traditional dominant market still exceeds that of other regions, but after several years of development, the total capacity scale of the newly developed regions has gradually approached the traditional market.
Figure 1: Regional Distribution of Concrete Production Capacity in Western China in 2023 (%)
Data Source: Cement Big Data (https://data.ccement.com/)
From the perspective of capacity changes, In 2023, the commercial mixed production capacity of western construction decreased by 21.7 million square meters compared with the same period last year, a decrease of about 20%. Among them, Hubei, Xinjiang and Hunan have the most obvious situation of reducing production, reducing production capacity by 2.87 million square meters, 2.54 million square meters and 2.05 million square meters respectively. Considering the capacity adjustment in Sichuan and Shaanxi, the traditional dominant market has reduced production capacity by 10.37 million square meters, accounting for about 48% of the total capacity reduction; Some mixing stations in the Beijing-Tianjin-Hebei region withdrew from production, resulting in a year-on-year decrease of 1.68 million cubic meters in production capacity; the commercial mixing stations in the Guangdong-Hong Kong-Macao Greater Bay Area (Guangdong) were slightly adjusted, resulting in a slight year-on-year decrease of 180,000 cubic meters in production capacity. In addition, the Yangtze River Delta region (Jiangsu, Zhejiang, Shanghai and Anhui) continued to intensify its development efforts, and the commercial mixed production capacity increased by 1.01 million square meters year on year, becoming the only region to achieve capacity growth in the western construction in 2023.
Figure 2: Year-on-year increase and decrease of concrete production capacity of western construction provinces and cities in 2023 (10,000 cubic meters)
Data source: cement big data (https://data.ccement.com/)
Hunan, Jiangxi and other places are inefficient.
By comparing the sales revenue corresponding to the unit capacity of different provinces, we find that there are great differences in the output efficiency of regional markets, which is the direct reason for promoting the optimization and adjustment of the layout of production capacity in the western construction.
Figure 3: Output efficiency and changes of traditional and newly developed markets in western construction (yuan/square meter)
Data source: cement big data (https://data.ccement.com/)
In terms of output efficiency, Sichuan-Chongqing and Shaanxi markets continue to occupy the first echelon, and the sales revenue corresponding to the single production capacity reaches about 400-500 yuan, which is significantly higher than that of other regions, which means that the production capacity layout of the western construction in the above-mentioned regions is more reasonable and the production operation is efficient.
Secondly, in the Guangdong-Hong Kong-Macao Greater Bay Area (Guangdong), when the adjustment of production capacity is not obvious, the sales revenue corresponding to the single production capacity of the western construction increased to 312 yuan, a substantial increase of 82 yuan over the same period of last year, which shows that the orders of the western construction in the above-mentioned areas increased rapidly in 2023, and the market development space is broad. The Beijing-Tianjin-Hebei region
and the Yangtze River Delta region (Jiangsu, Zhejiang, Shanghai and Anhui) are in the third echelon, and the sales revenue corresponding to the single production capacity is roughly between 200 and 300 yuan. In 2023, the Beijing-Tianjin-Hebei region increased its unit output by about 77 yuan by reducing inefficient production capacity. At the same time, as the Yangtze River Delta region (Jiangsu, Zhejiang, Shanghai and Anhui) is still in the stage of capacity expansion, the overall unit output declined by about 34 yuan. In terms of specific provinces, the Shanghai market has performed better, and concrete production capacity and output efficiency have increased simultaneously.
Finally, although the sales revenue contributed by regional markets such as Hunan, Hubei and Xinjiang to the construction of the western region is still relatively high, the sales revenue corresponding to the single production capacity is only about 170-220 yuan. In addition, from the perspective of changes, although the western construction has implemented large-scale capacity reduction actions in the above-mentioned regions, the overall output efficiency has not been significantly improved, indicating that the inefficient capacity in Hunan, Hubei and Xinjiang is still on the high side, and there is room for further optimization and adjustment.
Generally speaking, the output efficiency differentiation of the traditional dominant markets in the western construction is obvious, and the regions such as Sichuan, Chongqing and Shaanxi perform better, which belong to the mature markets that need to focus on deep cultivation and maintenance, while the regions such as Hubei, Hunan and Xinjiang have more room to improve efficiency, and the capacity and layout of mixing stations may continue to be optimized and adjusted. In terms of newly developed markets, the overall output efficiency is in the upper middle level, and with the gradual release of new production capacity, the unit output is still increasing.
Together with Conch Cement , Dawan District and Yangtze River Delta have more production capacity
to be put into operation. Under the background of slowing down the growth of urbanization in China and shrinking demand for housing construction, the western construction is expected to continue to optimize and adjust production capacity and market layout. In the traditional dominant regions, it is mainly to stabilize the market position and improve the efficiency of unit output. New production capacity and market expansion are mainly concentrated in major strategic development areas such as the Guangdong-Hong Kong-Macao Greater Bay Area and the Yangtze River Delta. Taking the strategic cooperation between Western Construction and Conch Cement as an example, it is planned to build 11 new concrete mixing stations in Guangdong in the next three years, with an additional capacity of 17.6 million square meters, and 19 mixing stations in four provinces and cities, including Jiangsu, Zhejiang, Shanghai and Anhui, with an additional capacity of 21 million square meters.
Figure 4: Concrete production capacity release plan for western construction in the next three years (Wanfang)
Data source: Cement Big Data (https://data.ccement.com/)
If the above production capacity is released as scheduled, Without a significant decline in output efficiency, the Yangtze River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area will replace the traditional dominant regions such as Sichuan, Hubei and Hunan, and become the main source of concrete sales revenue in the western construction.
