Comprehensive evalsuation: In 2022, Conch Cement achieved a total operating revenue of 132.022 billion yuan, a year-on-year decrease of 21.4%. The net profit attributable to shareholders of the listed company was 15.661 billion yuan, a year-on-year decrease of 52.92%. In 2022, due to the contraction of demand in the national cement industry, the sales volume of the company's main product cement clinker decreased, and the selling price decreased simultaneously. At the same time, the further increase in coal prices led to an increase in production costs, resulting in a decrease in the company's revenue and profits, with profits halving, a decrease exceeding that of 2015.
Figures 1 and 2: The profit of Conch Cement decreased by more than half in 2022
Data source: cement Big data（ https://data.ccement.com/ ）
Shrinking demand combined with rising costs, resulting in a significant decrease in major business indicators
In the first quarter of 2022, the industry was in the off-season, and the company's revenue decreased. In the second quarter, the epidemic was severe, and the cement industry was not prosperous during the peak season, with demand rapidly shrinking. The company's revenue decreased significantly by 33.05% year-on-year. After entering the third quarter, the off-season became even weaker, and the already weak market further weakened, making it difficult for the company to survive alone. The resurgence of the epidemic in the fourth quarter still resulted in weak demand. However, the company benefited from increased sales and slightly positive operating income. However, weak demand, coupled with low cement prices, led to high costs throughout the year. The company's profit decline continued to expand, with a year-on-year decrease of 70.2% in the fourth quarter. In 2022, the company achieved a revenue of 132.022 billion yuan, a year-on-year decrease of 21.4%. The net profit attributable to the shareholders of the listed company was 15.661 billion yuan, a year-on-year decrease of 52.92%, and the profit was halved.
Other operating indicators of the company also showed a significant decrease. In 2022, the company's earnings per share were 2.96 yuan, a decrease of 52.87% compared to the same period, and the return on equity was 12.23%, a significant decrease of 10.73 percentage points compared to 2021. The three fee rate in 2022 was 5.48%, an increase of 1.21 percentage points compared to 2021. The increase in the three fee rate was mainly due to an increase in management expenses. In 2022, the company's management expenses were 5.561 billion yuan, an increase of 9.5% compared to the same period last year.
Table 1: Main Business Data of Conch Cement in 2022
Data source: cement Big data（ https://data.ccement.com/ ）
In 2022, the overall demand of the cement industry will shrink, and the sales of self operated and traded cement clinker by the company will be greatly affected. In 2022, the company's total sales of cement clinker reached 310 million tons, a year-on-year decrease of 24.2%. Among them, the sales of self operated cement clinker reached 283 million tons, a year-on-year decrease of 6.94%. The sales of cement clinker trade business reached 27 million tons, a year-on-year decrease of 74.2%. The significant decline in trade volume caused the proportion of trade sales in the total sales of cement clinker to plummet to 8.7%.
Due to the significant decline in demand, the cement price in 2022 will start low and move lower, and the overall price center will shift downwards. In 2022, the average selling price of the company's self-produced cement clinker was 321 yuan/ton, a year-on-year decrease of 11%.
Figure 3 and 4: Change in sales volume and average sales price of conch clinker from 2017 to 2022
Data source: cement Big data（ https://data.ccement.com/ ）
From the ton data, the cost of self operated cement clinker by Conch in 2022 was 230.4 yuan, an increase of 27 yuan or 13.3% compared to 2021, mainly affected by the rise in coal prices. In terms of gross profit per ton, the gross profit per ton of cement clinker decreased significantly due to the decrease in the price of cement clinker. In 2022, the gross profit per ton of self operated cement clinker of the company was 90.6 yuan, down 66.6 yuan from 2021. The gross profit per ton of Gross margin decreased from 43.6% in 2021 to 28.2%.
Figure 5: Significant decrease in gross profit per ton of self operated cement clinker by Conch Cement in 2022
Data source: cement Big data（ https://data.ccement.com/ ）
According to the cost per ton information of major listed companies that have published annual reports at present, the production cost per ton of conch cement in 2022 will be 230.4 yuan, up 13.3% year on year. Although the unit production cost is still lower than that of Tianshan Shares and Tapai Group, the cost increase is relatively large, mainly due to the rise in coal prices, which leads to the rise in fuel and power costs. In the Unit cost of 2022, the cost of fuel and power will be 144.5 yuan, up 28.2% year on year, a relatively high increase.
Table 2: Unit production cost of cement clinker for some major listed companies in 2022 (yuan/ton)
Data source: cement Big data（ https://data.ccement.com/ ）
Future outlook: To expand and strengthen the main business, accelerate transformation and upgrading
The company is actively expanding and strengthening its main business in the cement industry chain, while also increasing its efforts to enter the new energy and new track, creating new industrial growth levels, and cultivating new profit growth points. In 2022, the company added 3.85 million tons of cement production capacity, 44.8 million tons of aggregate production capacity, and 10.8 million cubic meters of commercial concrete production capacity, further strengthening the cement industry chain; Zongyang all vanadium Flow battery energy storage project and Xuancheng photovoltaic BIPV Phase I project were successfully put into operation, with the installed capacity of photovoltaic power generation of 275MW, up 37.5% year on year. In 2023, the company plans to sell 307 million tons of cement clinker (excluding trade), a year-on-year increase of 8.5%. In addition, the company has arranged a capital expenditure of 19.318 billion yuan, mainly with its own funds, mainly used for project construction, energy-saving and environmental protection technology renovation, mergers and acquisitions project expenses. It is expected that the company's market share will further increase, and its leading position will continue to consolidate. It is optimistic about the long-term performance of Conch Cement. (This article does not constitute investment advice)
(Editor in charge: Anonymous)
Article source: China Cement Network
