Cement industry mergers and acquisitions cases one after another, the head of the enterprise moves frequently. On the evening of January 14, Jidong Cement disclosed that its subsidiary planned to acquire the equity of Hengwei Cement and its affiliated enterprises for 428 million yuan; BBMG also disclosed that its holding subsidiary planned to acquire 90% equity of Hongpeng Commercial Concrete for 34.1784 million yuan. Just a month ago, Jidong Cement announced that it planned to acquire three cement/commercial mixing companies for more than 700 million yuan; Huaxin Cement disclosed in December last year that it planned to spend about 838 million dollars to acquire cement assets in Nigeria and 186.6 million dollars to acquire four aggregate factories in Brazil.
Reporters found that the related operations of the aforementioned cement enterprises mostly focus on the extension of the industrial chain, and want to acquire the aggregate and commercial mixing enterprises in the key strategic layout area/target market of the target company, so as to broaden the "moat" and further strengthen and optimize the main cement industry. At the same time, the relevant actions will significantly accelerate the integration of regional production capacity, enhance regional concentration, and lay a good foundation for enterprises to improve market voice and increase profits.
"In 2025, the cement industry is expected to enter a new cycle of mergers and acquisitions." Li Kunming, a cement analyst at China Cement Network and Cement Big Data Research Institute, said in an interview with reporters that multiple factors, such as the development environment of the industry, the support of national policies, the willingness of leading enterprises to merge and acquire, and the exit voice of small and medium-sized enterprises, have provided strong support for related mergers and acquisitions. Why Are Mergers and Acquisitions in Cement Industry Speeding up by
Increasing the Main Industry to "Increase Efficiency"
? In Li Kunming's view, there are three main reasons: first, the valuation of cement assets is relatively cheap, and the time for mergers and acquisitions is relatively mature; second, it is the active choice of enterprises to promote the implementation of the strategy, improve the strategic layout, and strengthen the main cement industry; third, it is the inherent requirement of strengthening industry self-discipline and purifying the industry environment.
It is reported that in recent years, due to the slowdown of infrastructure investment and other factors, the overall demand for cement is weak, and most cement enterprises are facing profit pressure. In this context, aggregate, commercial mix and other assets play an increasingly important role in supporting the performance of cement enterprises. As far as the underlying assets are concerned, besides cement production capacity, high-quality clinker, aggregate and commercial mixing capacity have also become the focus of mergers and acquisitions of cement enterprises.
Take the recent high-frequency mergers and acquisitions of Jidong Cement as an example. The announcement shows that the assets to be acquired by Jidong Cement include: 100% equity of Hengwei Cement, valued at 309 million yuan; 70% equity of Hongguang Mining and 100% equity of Benxi Yongxing, valued at 59.6906 million yuan and 59.7277 million yuan respectively.
Among them, Hengwei Cement has a 4000t/d cement clinker production line, supporting 9MW waste heat power generation system and 2.2 million tons of cement grinding per year, with 65.2342 million tons of limestone reserves. Hongguang Mining's mines have an annual design production capacity of 2.6 million tons, a reserve of 53.211 million tons, a recoverable reserve of 47.061 million tons, and a 2.6 million tons/year aggregate line.
Therefore, it is not difficult to see that the target of Jidong Cement's merger and acquisition around the cement industry chain is mainly clinker, aggregate and other assets. As far as the financial report is concerned, these assets can be regarded as synergistic assets for Jidong Cement, whose performance is under pressure. In the first half of 2024, Jidong Cement achieved a revenue of 11.220 billion yuan, down 22.55% year-on-year, of which aggregate products achieved a revenue of 729 million yuan, an increase of 23.68% year-on-year.
Looking at Huaxin Cement, the company disclosed in December 2024 that it planned to invest 186.6 million US dollars to acquire four aggregate factories in Brazil. These four factories are located in the metropolitan area of the core economic region of Sao Paulo, Brazil, with superior geographical location and abundant resource reserves, with a total capacity of 8.8 million tons per year. Financial data show that in the first half of 2024, Huaxin Cement achieved revenue of 16.237 billion yuan, an increase of 2.56% over the same period last year. Among them, aggregate sales of 71 million 526 thousand and 100 tons, an increase of 41.60% over the same period. In the view of
industry insiders, the merger and acquisition of leading enterprises is expected to greatly enhance the industry concentration in some regions. From the perspective
of Jidong Cement, as the largest cement manufacturer in the north, the main market of Jidong Cement covers 13 provinces such as Beijing-Tianjin-Hebei and the three northeastern provinces, with a market share of more than 50% in the north of China, especially in the Beijing-Tianjin-Hebei region, and the market competitive advantage is obvious. Hengwei Cement, Hongguang Mining and Benxi Yongxing, which the company intends to acquire, are located in Liaoning Province, and the market share of the three enterprises is about 50%.
"From the perspective of the cement market structure in Liaoning Province, the industry concentration is low and there are no leading enterprises." Jidong Cement announced that from a historical point of view, this market structure is prone to have a negative impact on the industry order. Through integration, the company can improve its voice in the regional cement market, cultivate regional leading enterprises, better play the leading role of large enterprises, and help stabilize and further restore the regional market order.
Looking at the Shuangyashan Cement to be acquired, it is located in the eastern part of Heilongjiang Province, and the sales market is mainly in Longdong area. Jidong Cement said that Shuangyashan Cement will form a market synergy with Heilongjiang Jidong Company, which belongs to the company and covers the relevant areas, to enhance the company's voice in the Heilongjiang market.
"Jidong Cement's acquisition of Shuangyashan Cement and Hengwei Cement is carried out in the region, and after completion, it is connected with existing enterprises, which reduces the intensity of regional competition, improves the control of the terminal market, and is expected to expand the profit contribution area." Li Kunming said.
At present, the voice of enterprises with poor efficiency and low competitiveness in the cement industry to withdraw from the market is increasing day by day. "In 2025, the cement industry is expected to enter a new cycle of mergers and acquisitions." Li Kunming suggested that the relevant industry departments should seize the window period of debt conversion and introduce supporting policies as soon as possible to accelerate the merger and reorganization of the cement industry.
In his view, China's cement demand has entered a downward channel, and the future market competition will enter the stock era. In this context, according to their own strategic planning, leading enterprises choose high-quality assets to promote mergers and acquisitions, which will be an important measure to strengthen the main cement industry and increase the profit base.
Li Kunming also said that enterprises need to focus on three factors when conducting mergers and acquisitions: first, take a broad view of the main business areas and carefully develop peripheral markets; second, focus on the main business, moderately extend the industrial chain, and avoid a long battle line; Thirdly, we should train capital market talents, familiarize themselves with relevant economic and financial laws and regulations, and improve the success rate of mergers and acquisitions.
