In the first quarter of 2024, the company achieved operating income of 21.328 billion yuan, a year-on-year decrease of 32.08%; realized net profit of 1,502 billion yuan, a year-on-year decrease of 41.14%; net profit after deduction of 1,368 billion yuan, a year-on-year decrease of 36.56%; basic EPS was 0.28 yuan/share, a year-on-year decrease of 40.91%; and a weighted average ROE of 0.81%, a year-on-year decrease of 0.57pct.
In 24Q1, the volume and price of the main cement business both fell, and the performance was under pressure in the short term. In 24Q1, the company achieved operating income of 21.328 billion yuan, a year-on-year decrease of 32.08%, and realized net profit of 1,502 billion yuan, a year-on-year decrease of 41.14%. Net profit after deducting non-return to mother was 1,368 billion yuan, a year-on-year decrease of 36.56%. The year-on-year decline in the company's revenue and profit was mainly due to the year-on-year decline in sales volume and price of cement business products. According to data from the National Bureau of Statistics, the country's cement production in 24Q1 was 337 million tons, a year-on-year decrease of 11.8%. According to data from the Digital Cement Network, the average price of cement across the country fell 4.43% year on year in 24Q1.
Gross margin increased, and net profit margin declined due to period expenses. In 24Q1, the company achieved a gross sales margin of 17.75%, a year-on-year increase of 1.21pct; achieved a net sales margin of 6.98%, a year-on-year decrease of 1.53 pcts. On the cost side, the company's cost rate during the period was 9.36%, an increase of 2.22pct over the previous year. The financial expense ratio was -1.19%, down 0.29pct; the management expense ratio was 6.31%, up 1.61 pct; the sales expense ratio was 3.37%, up 0.87pct; and the R&D expense ratio was 0.87%, up 0.03pct year on year.
The net cash flow from 24Q1's operating activities was 160 million yuan, a sharp decrease of 94.87% compared with 3.108 billion yuan in the same period last year, mainly due to the year-on-year decline in operating income and profit. At the end of the first quarter, the company's monetary capital was 66.337 billion yuan, an increase of 10.41% over the previous year.
Project construction and mergers and acquisitions are active, and the layout of the new energy sector is remarkable. 1) Main cement business: Guizhou Shuicheng Conch Low Carbon Reduction Project, Guangdong Fresh Cement Phase II Project, Uzbekistan's Tashkent Conch Project were successfully completed and put into operation, and the construction of cement clinker production line projects of Cambodia's Phnom Penh Conch and Uzbekistan Shangfeng Friendship Company progressed in an orderly manner. 2) New energy: Actively promote the construction of photovoltaic and wind power generation projects, particularly the construction of BIPV photovoltaic building materials projects in Xuancheng City, Anhui Province. 3) Production capacity and capital expenditure: The planned capital expenditure for 2024 is $15.2 billion. The company expects to increase clinker production capacity of 3.9 million tons, cement production capacity of 8.4 million tons, aggregate production capacity of 25.5 million tons, and commercial concrete production capacity of 7.2 million cubic meters throughout the year.
The cement industry's profits have bottomed out, and the supply and demand pattern needs to be improved. At the industry level, the volume and price of the cement industry fell sharply in the first quarter; affected by real estate, the cement industry's supply-demand conflict was prominent, cement prices bottomed out, while coal and other costs were high, putting pressure on corporate profits. Currently, real estate support policies continue to be optimized, and infrastructure investment remains resilient, which is expected to support cement demand; the cement industry will soon be included in the carbon trading market, and the supply side is expected to clear up at an accelerated pace. At the company level, Conch will continue to promote mergers and acquisitions of market projects; promote the expansion of the aggregate industry and production capacity; promote the layout of commercial mixed industries; promote the integrated collaborative development of multi-energy and source network load storage such as scenic water storage, further improve the cement market and production capacity layout, and promote the quality and efficiency of the digital industry. We maintain our previous profit forecast. We expect the company's 2024-2025 EPS to be 1.77 yuan and 1.87 yuan respectively, and the corresponding PE will be 13.1x and 12.4x respectively, maintaining a “highly recommended” investment rating.
Risk warning: Real estate and infrastructure investment has declined sharply, raw material and fuel costs have risen sharply, industry competition has intensified, and the commissioning of new construction projects falls short of expectations