Revenue increased slightly year over year, and performance continued to be under pressure. In 2023, the company achieved revenue of 141.0 billion yuan, +6.8% year on year, net profit of 10.43 billion yuan, 33.4% year on year, net profit without return to mother of 9.97 billion yuan, EPS was 1.97 yuan/share, and plans to pay 10 to 9.6 yuan (tax included); of these, Q4 achieved revenue of 42.0 billion yuan in a single quarter, -10.2% year on year, net profit of 1.76 billion yuan, net profit attributable to mother of 1.76 billion yuan, 40.6% year on year due to insufficient market demand. Competition in the industry intensified, and the downward impact on cement prices continued to put pressure on performance.
Sales bucked the trend and increased slightly, and businesses such as aggregates contributed steadily to the increase. In 2023, the company's net sales volume of cement clinker was 293 million tons, of which sales volume was 285 million tons, +0.72%, higher than the national cement production growth rate of -0.7%. The share bucked the trend. We estimated that cement clinker's revenue per ton revenue/ton cost/ton gross profit from product tonne was 273.5/205.0/6 yuan/ton, respectively, 47.5/-25.4/-22.1 yuan/ton. The decline in cement prices continued to drag down profits; the aggregate business and commercial concrete business achieved revenue of 38.6/ 2.25 billion yuan, +73.3%/+24.7% YoY, gross margin was 48.3%/11%, respectively, -12.0pp/-3.6pp. The extension of the industrial chain progressed steadily.
By region, due to the year-on-year decline in prices, domestic revenue declined to varying degrees, but with the continuous improvement of the overseas sales market network, overseas project companies achieved revenue of 4.67 billion yuan, +17.8% year over year, sales volume +14.9% year over year, gross profit margin of 30.1%, and +3.3pp year over year.
Declining prices are suppressing profits, cash flow is still plentiful, and dividend rates remain high. The comprehensive gross profit margin for 2023 was 16.6%, 4.7pp year on year, of which Q4 was 12.4% in the single quarter, -1.46pp year on year, -3.76pp, and the period cost ratio was 6.96%, which was basically the same year on year. Among them, Q4 single quarter was 5.92%, -0.75pp year on year, and -2.06pp month-on-month, mainly due to the decline in management expense ratios. Net cash flow from operating activities was 20.01 billion yuan in 2023, +108.4% year over year, mainly due to a decline in accounts receivable, accounts receivable, inventory, and advance payments compared to the beginning of the year; monetary capital and transactional financial assets totaled 70.57 billion yuan at the end of the year, +2.8% over the same period last year, and cash on hand was still abundant. The company's capital expenditure in 2023 was 19.51 billion yuan, a year-on-year capital expenditure of 4.4 billion yuan, showing an overall trend of convergence. At the same time, the proposed cash dividend in 2023 was 50.7 yuan, combined with a repurchase of 340 million yuan, with a dividend rate of 51.82%, continuing to maintain a high level.
Risk warning: Demand recovery falls short of expectations; supply increases exceed expectations; cost increases exceed expectations.
Investment advice: Shares bucked the trend and consolidated, with a high margin of safety at the bottom to maintain a “buy” rating.
As a high-quality leader in the industry, the company's share has bucked the trend and consolidated against the backdrop of economic pressure, and its competitive advantage is obvious. Currently, it has sufficient cash on hand, the dividend rate remains at a high level, the valuation is also low, and it still has a high margin of safety. Considering that overall demand is still sluggish, the 24-25 profit forecast was lowered. EPS for 24-26 is expected to be 1.74/1.85/2.04 yuan/share, corresponding PE is 12.8/12.0/10.9x. Considering that cement's profit is expected to bottom out and the company's position in the industry is stable, the “buy” rating will be maintained.