On January 31, Jidong Cement issued a performance forecast for 2023. The company expects a negative net profit of 1.4 billion yuan to 1.5 billion yuan attributable to shareholders of listed companies in 2023, which has become a rare loss year for the company in recent years. Company officials said that 2023 was a very difficult year for the whole industry and the company, but the worst may have passed. Soochow Securities also said in its annual strategy for 2024 that the cement industry is expected to usher in a double recovery of industry prosperity and valuation in 2024 after its prosperity will reach the bottom of history in 2023. In 2023, the
cement industry suffered from the "most difficult" year
in recent years. Influenced by the slowing growth of infrastructure investment and the slow repair of the real estate industry, the output of the cement industry has been declining for three consecutive years. According to the data of the National Bureau of Statistics, China's cement output in 2022 was 2.13 billion tons. The cement output in 2023 was 2.023 billion tons, representing a year-on-year decrease of 0.7%. While the demand is declining, the utilization rate of clinker production capacity in the cement industry is continuing to decline. According to the forecast of Soochow Securities, the utilization rate of clinker design capacity in China in 2023 is 66.7%, which is 11.5 PCT lower than the high point in 2020.
In the case of downward demand and intensified contradiction of excess capacity, the price of cement industry showed a downward trend at a low level in 2023. Among them, in September 2023, the cement price hit a new low since March 2017, and in November, the national average monthly cement price index was 110.92, down 27.91% from the same period last year. It is worth noting that according to the data of China Cement Network, the cement price index in North China fell by nearly 30% in November 2023, making it the largest decline in the six regions of the cement industry.
Under the influence of a series of factors, the Cement Association predicts that the total profit of the cement industry in 2023 will be the lowest since 2011.
For the cement industry in 2024, Dongwu Securities believes that from the demand side, in terms of infrastructure, fiscal policy will continue to work hard, the scope of special debt as capital will be expanded, and the broad financial support for the source of capital for infrastructure investment will be guaranteed; The list of the first batch of projects to issue 1 trillion special treasury bonds in 2023 was issued in December, and the physical workload is expected to be mainly formed in 2024. In terms of real estate, the continued relaxation of short-term real estate demand-side and supply-side policies is expected to promote a moderate recovery of the market in 2024. The transformation of villages in cities and the gradual promotion of affordable housing will become a powerful grasp to stimulate investment in real estate development. On
the supply side, in the traditional off-season of 2024, normal peak staggering production will be maintained or strengthened, which will effectively resolve the current high inventory pressure in the industry and lay a good foundation for the peak season in the first half of 2024. At the same time, after the sharp decline in industry efficiency, the willingness of enterprises to regulate supply to match demand and take the initiative to stabilize prices has increased significantly, and some regional market order has been rebalanced after the breakdown of competition and cooperation.
For 2023, Jidong Cement said in its New Year's message in 2024 that 2023 was a very difficult year in the company's development process and faced the most severe challenges since the reorganization seven years ago. In this year, the company has always strengthened its sound operation, expanded its external market, strengthened its internal management, and maintained abundant cash flow, excellent debt structure and high-quality customer groups. Although the
company suffered losses in the context of the sharp decline in the operating performance of the whole industry, the operating cash flow in the first three quarters was basically flat compared with the previous year, maintaining financial stability and ensuring the potential for development.
In addition, the Company actively promoted product innovation and service upgrading, and maintained stable market channels and high-quality customer groups despite the year-on-year decrease in national cement demand, with a steady increase in market share. In 2023, the sales volume of cement and clinker of Jidong Cement was approximately 93 million tons, representing a year-on-year increase of 7%, with a steady increase in market share.
When the cement industry as a whole is in difficulty, the company has intensified the expansion of mine resources, and the reserves of mine resources have been increasing. The extension of the industrial chain has been steadily promoted, the production capacity of upstream and downstream and supporting industries such as aggregates has not decreased, and the resilience of the industrial chain has been further enhanced. In 2023, the company added 691 million tons of mine resource reserves, 10 million tons of aggregate production capacity and 2.5 million cubic meters of commercial mixing capacity.
While focusing on the development of the main business, the company has made positive progress in new energy, public transit railway and network freight business. In terms of new energy, 12 photovoltaic power generation projects have been launched, of which 6 projects have been connected to the grid (with a total installed capacity of 15.37 MW). The "public transit railway" business accounts for the first place in the Beijing market, opening up the "public transit railway" business of commercial vehicles entering Beijing, and constantly improving the modern industrial chain system.
