Conch Cement (600585) 2018 Annual Report Comment: Clearly Expected Development Path to Fully Benefit from Real Estate Scale


Conch Cement (600585) 2018 Annual Report Comment: Clearly Expected Development Path to Fully Benefit from Real Estate Scale

Event: The company released its 2018 financial report.

The company achieved total operating income of 1284 in 2018.

30,000 yuan, an increase of 70 over the same period last year.

50%; net profit attributable to shareholders of listed companies was 298.

140,000 yuan, an increase of 88 over the same period last year.


The initial gain is 5.

63 yuan, an annual increase of 88.


Both volume and price rose, and operating income grew rapidly.

The company achieved total operating income of 1284 in 2018.

30,000 yuan, an increase of 70 over the same period last year.


Among them, the operating revenues of Q1-Q4 companies in 2018 were 18.8 billion, 27 billion, 32 billion and 50.6 billion respectively; an increase of 37.

59%, 47.

66%, 76.

77%, 100.

26%, single quarter revenue growth steadily increased.

In 2018, the company’s total net sales of cement and clinker were 3.

6.8 billion tons, rated 2 in 2017.

9.5 billion tons increase in 24 years.


In 2018, the national cement price hit a record high.

As a leader in the industry, the company has obvious pricing power advantages and its product prices have risen sharply.

In 2018, the company’s self-produced and sold cement clinker average price was 327.

98 yuan / ton, rated 247 in 2017.

The price of 09 yuan / ton rose by about 81 yuan / ton.

In addition, the Group has created trading platforms in various regional markets to achieve zero sales of cement clinker trading business.

7 billion tons, a 12-fold increase in ten years; trading business income was 252.

100,000 yuan, an increase of 17 times in ten years.

Company 42.

Grade 5 cement (sales of its own products) accounted for 51% of the main business revenue.

19%, 32.

The proportion of 5R cement (self-product sales) accounts for 19% of the main revenue.

76%, trading business accounted for 19% of main income.

63%, clinker accounted for 5 of the main revenue.

16%, aggregate and stone, commercial concrete and other businesses together accounted for 4% of main revenue.

twenty four%. The central and eastern regions contributed most of the company’s revenue, accounting for 51% of the total revenue.

29% and 34.

62% in the west and south respectively contributed 22 of the revenue.

30% and 12.


Among them, the growth rate of operating income in the eastern region accelerated to 43.

27%, central, southern, and western operating income exceeded the growth rate by twice or about 35%.

Affected by the periodical tightness of clinker resources in the domestic market, export sales continued to decline33.

53%, with sales 天津夜网 falling by 23 each year.


However, through the successive completion and commissioning of overseas projects and the improvement of the sales network, the sales of overseas project companies increased by 57.

66%, the sales amount increases by 66 every year.


The gross profit margin and period expense ratio increased and decreased, which doubled the profit level.

In 2018, the company realized a net profit attributable to shareholders of listed companies of 298.

14 ppm, an increase of 88 in ten years.

05% growth reached a record high.

Among them, the net profit attributable to shareholders of listed companies for Q1-Q4 in 2018 were 47.

7.8 billion, 81.

6.4 billion, 77.

7.4 billion and 90.

9.8 billion, the previous growth rate was 121.

90%, 78.

90%, 151.

43%, 50.

48%, of which, the net profit attributable to shareholders of listed companies in the fourth quarter accelerated, mainly due to the base conversion in the fourth quarter of 2017.

The company’s gross profit margin in 2018 was 36.

74%, an increase of 1 per year.

65 units.

Approximately the increase in net profit and the increase in gross profit margin were mainly due to the proportion of the company’s trading business in operating income.

63%, while its gross margin level is only 0.


The gross profit margin of the company’s self-product sales business was 47 in 2018.

29%, an increase of 14 a year.

51 averages to enhance competitiveness.

The company’s comprehensive unit cost of cement clinker increased by 15 in 2018.

25 yuan / ton to 173.

14 yuan / ton.

The unit cost of raw materials was 27 in 2017.

22 yuan / ton rose to 36.52 yuan / ton, the proportion of cost increased by 3.

85%; labor unit cost from 20 in 2017.

51 yuan / ton rose to 25.

58 yuan / ton, the cost proportion increased by 1.


The fuel and power and depreciation cost cost control is relatively high, which is not much different from the 2017 estimate.

The gross profit per ton of the company’s cement clinker in 2018 increased by 67 compared to 2017.

81 yuan to 155.

08 yuan / ton, gross margin level from 35.

32% rose to 47.

29%, resulting in a substantial increase in the company’s net profit.

In terms of period expenses, the company’s sales expense ratio, management expense ratio and financial expense ratio increased in 2018.

The company’s sales expense ratio decreased by 1 in 2018.

84%, the management expense ratio decreased by 1.

61%, the financial expense ratio fell to 0.

67%, the R & D expense ratio is consistent with 2017, which is 0 of the company’s main business income.


R & D costs increase by 67 per year.

43%, mainly due to the increase in research and development expenses for new products such as intelligent factory construction and refractory materials of the company’s subsidiaries.

The company’s ROE reached 29 in 2018.

51%, an increase of 10 a year.

41 units.

Abundant cash flow and sound financial structure.

The company’s net cash flow from operating activities in 2018 reached 360.

5.9 billion, an increase of 107 in ten years.

68%; At the end of 2018, the company held a total of 376 monetary funds.

19 billion, a 51% increase over the same period in 2017.


The company’s asset-liability ratio is completely 22.

15%, about 24 at the end of 2017.

71% dropped by 2.


Sufficient cash is conducive to the further development of the scale of the enterprise and achieve continuous growth in performance.

Production capacity has been steadily increased, and new space has been opened up for mergers and acquisitions and overseas expansion.

In 2018, the company continued to promote domestic project construction and mergers and acquisitions. Four cement mills were successively completed and put into operation, and five aggregate projects were completed and put into operation.

Acquired Guangying Cement to increase 270 tons of clinker capacity, 400 tons of cement capacity and 130 tons of aggregate capacity.

At the same time, the company actively promoted the construction of overseas projects. Cambodia, Indonesia 2 clinker production lines and 40,000 conch conch, Uzbekistan Kalshi conch and other projects entered the preliminary work.

By the end of 2018, the company’s clinker production capacity2.

52 billion tons, an increase of 0 in 2017.

0.6 billion tons, an annual increase of 2.44%; cement production capacity 3.

5.3 billion tons, an increase of 0 in 2017.

1.8 billion tons; an increase of 5 in ten years.

37%; aggregate capacity of 3870 additives, equivalent to an increase of 980 tons in 2017, an increase of 33 per year.

91%; the capacity of commercial concrete has remained unchanged at 600,000 cubic meters.

Utilizing the cash and policy advantages of mergers The company has a clear development path through mergers and acquisitions and overseas expansion.

Profit forecast and investment grade: In 2019, the scale of the real estate market exceeded expectations, and the real estate industry entered the construction and safety stage, releasing cement demand.

We expect the company’s EPS to be 6 from 2019 to 2021.

25 yuan, 6.

82 yuan and 7.

08 yuan, corresponding to 7, 6 and 6 times the dynamic PE. Considering that the company as a leader in the industry has fully benefited from the elasticity of demand beyond the expected release, meanwhile, mergers and acquisitions and overseas development paths are clear, we maintain the company’s “strongly recommended” investment rating.

Risk warning: The continuous demand for real estate cement and overseas expansion are less than expected.