Description of the event

The company disclosed its semi-annual report: 2024H1's revenue was 39.699 billion yuan, a year-on-year decrease of 25.7%; realized net profit of 3.414 billion yuan, a year-on-year decrease of 2508%; and basic earnings per share -0.394 yuan.

Incident comments

Industry-level demand and profits continue to be under pressure. According to digital cement network data, in the first half of 2024, the cement industry showed the operating characteristics of “continuous decline in demand, low price fluctuations, and continuous industry losses”. According to statistics from the National Bureau of Statistics, in the first half of 2024, the country's cement production was 0.85 billion tons, a year-on-year decrease of 10%. Price competition in mainstream consumer markets such as the Yangtze River Delta and Pearl River Delta remained intense during most of the first half of the year, causing cement prices to run at a bottom. In January-May, the large-scale cement industry lost about 3.4 billion yuan, and the company lost more than 55%; according to Digital Cement Network, the cement industry lost about 1 billion yuan in the first half of the year. In addition, from January to June 2024, the cumulative production of commercial concrete fell 10.8% year on year. The main business revenue of the large-scale concrete and cement products industry decreased by 16.5% compared to the same period of the previous year, and total profit decreased by 43.67% compared to the same period of the previous year.

At the company level, the business situation matches the development of the industry. From January to June 2024, the company sold 94.44 million tons of cement, down 11.68% year on year; sold 11.59 million tons of clinker, down 21.30% year on year; sellers mixed 34.26 million square meters, up 1.51% year on year; sold 59.38 million tons of aggregate, down 6.38% year on year. From January to June 2024, the company achieved operating income of 39.7 billion yuan, down 25.72% from the same period last year; net profit attributable to shareholders of listed companies - 3.4 billion yuan. According to the tonnage index, the tonnage revenue of 2024H1 was 238 yuan/ton, down 62 yuan/ton; the tonnage cost was 217 yuan/ton, down 40 yuan/ton; the gross profit per ton was 21 yuan/ton, down 22 yuan/ton year-on-year.

By the end of the reporting period, the company had a clinker production capacity of 0.32 billion tons, commercial mixed production capacity of 0.38 billion square meters, and an aggregate production capacity of 0.23 billion tons.

Currently, the cement business has basically bottomed out, and it is expected that the company will achieve higher growth flexibility overseas and in the aggregate business.

Mergers and acquisitions have been launched in the African market, and we are looking forward to more overseas market layouts. In July 2024, the company announced that Sinoma Cement, its holding subsidiary, plans to acquire 100% of the shares of CJO in Tunisia and its GJO company. This acquisition is the company's first project to be implemented in Africa in recent years based on Sinoma Cement. It will follow up or rely on the company's technical reform service capabilities to further reduce costs and increase efficiency.

The African market is booming. As a state-owned enterprise, the company has strong resources to endorse both downstream channel customers (close cooperation with construction central enterprises) and its own equipment EPC construction (Sinoma International), and is optimistic about the company's future layout in the African market.

The 2024-2025 performance is expected to be 0.3, 1 billion, and the corresponding PE is 97 or 30 times higher.

Risk warning

1. Demand recovery falls short of expectations; 2. Aggregates, etc. are progressing slowly.