The company achieved net profit of 2,762 billion yuan for the full year of '23, an increase of 2.34% year on year. The company released its annual report. It achieved annual revenue/net profit of 337.57/2,762 billion yuan, +10.79%/+2.34% year-on-year, and realized net profit deducted from non-current assets of 2,322 billion yuan, or -9.95% year-on-year. Non-recurring profit and loss were mainly due to non-current asset disposal gains and losses. Among them, Q4 achieved revenue/net profit to mother of 95.92/888 million yuan in a single quarter, +10.77%/+87.21% year-on-year, and net profit of 499 million yuan after deducting non-return to mother net profit of 499 million yuan, or +11.44% year-on-year.
Gross profit per ton of cement remained high. In 23 years, the company's cement and clinker business achieved revenue of 19.28 billion yuan, -6.4% year over year. Among them, cement clinker sales increased 2.48% year on year to 61.9 million tons. It is estimated that the average ton price/ton cost was 311.4/230.5 yuan, respectively. The estimated average ton price/ton cost was 311.4/230.5 yuan, respectively. Ultimately, gross profit per ton was 80.9 yuan, a year-on-year decrease of 3.0 yuan. In '23, the company's non-cement business revenue increased by 10.66 pct to 43%. Among them, aggregate/concrete business revenue was 53.6/7.65 billion yuan respectively, +75%/+49% year on year, and sales volume was 131.37 million tons/27.27 million square meters, respectively, +100%/+66% year on year.
The company's high-quality mechanical sand was officially put into operation in '23. The aggregate production capacity was +67 million tons and 277 million tons. A total of 23 new concrete sites were developed, and the commercial mixed production capacity was +53 million square meters year-on-year. The company's gross margin of cement and clinker/aggregate/concrete was 26.0%/45.9%/15.5% respectively, and the gross profit ratio of non-cement was 44.4%, +7.8pct compared to the previous year. The company plans to sell aggregate/concrete for 24 million tons/30.52 million square meters, +19%/+12% over the same period. The planned capital expenditure for 24 years is about 6.9 billion yuan, focusing on aggregate, concrete, overseas cement production capacity and alternative fuel construction. The non-cement sector has become the company's main profit growth point.
Gross margin increased in '23, and overseas business continued to grow
The company's overall gross profit margin in '23 was 26.71%, +0.49pct year on year. Among them, the overall gross profit margin in Q4 was 27.71%, and +4.59/-2.25pct yoy, respectively. The cost ratio for the 23-year period was 12.85%, +1.39pct. Among them, the sales/management/ R&D/finance expenses ratio was -0.002/+0.20/+0.64/+0.56pct, respectively, and the net profit ratio was 9.53% and -0.39pct year-on-year, respectively. The company continues to maintain a steady pace of overseas expansion. In 23, the company successfully completed the acquisition of 64.66% of the shares in the Omani cement company SAOG and 100% of the shares in Natal Portland Cement Company (Pty) Ltd., the company expanded its overseas business to the Middle East and Southern Africa. In addition, the second phase of the 4,500 tons/day cement clinker production line project of Tanzania was put into operation, adding a total annual production capacity of 8.54 million tons to 20.91 million tons, an increase of 69% over the previous year. Overseas revenue in '23 was 54.9 million tons. 100 million yuan, a year-on-year increase of 30%, accounting for +2.4 pct of total revenue reaching 16.3% year-on-year. We believe there is still plenty of room for overseas business growth in the future.
Non-cement and overseas business prospects are promising. Maintaining a “buy” rating for 23 years, the company has accumulated a cash dividend of 1.1 billion yuan, with a dividend rate of 40%, corresponding to the current dividend rate of 4.03%.
Against the backdrop of declining domestic demand for cement, the company's aggregate, concrete, and overseas business growth have all begun to materialize, and we continue to be optimistic about the company's medium- to long-term growth. Considering the pressure on demand in the cement industry, the company's net profit forecast for 24-25 was lowered to 32.3/3.65 billion yuan (previous value: 38.8/4.57 billion yuan), and the estimated net profit to mother in '26 reached 4.13 billion yuan. Referring to comparable companies, the company was given 11 times PE in 24 years, with a target price of 17.09 yuan to maintain a “buy” rating.
Risk warning: The company's sales fall short of expectations, cement demand falls short of expectations, peak season price increases fall short of expectations, coal costs rise, etc.