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In the first half of 2024, the national cement industry maintained a sluggish operation, with market demand sliding beyond expectations, cement prices fluctuating at low levels, and the industry continuing to incur losses. On August 30, Jidong Cement (000401) released its semi-annual report for 2024. In the first half of this year, the company achieved a total revenue of 11.22 billion yuan, a year-on-year decrease of 22.55%, and a net loss attributable to the parent company of 806 million yuan. However, looking at the performance on a quarterly basis reveals a different picture for Jidong Cement in the first half of the year.

The company's net profits for the fourth quarter of 2023, the first quarter of 2024, and the second quarter of 2024 were -1.176 billion yuan, -1.099 billion yuan, and +293 million yuan, respectively. It is evident that the company made a significant turnaround in the second quarter, with a sequential increase of 126.62%, mainly due to the rise in cement prices and the creation of a low-cost core competitiveness.

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The industry also corroborates this point. In the first half of 2024, the cement industry exhibited the operational characteristics of "continuously declining demand, low-level price fluctuations, and ongoing industry losses." According to the National Bureau of Statistics, the national cement production in the first half of the year was 850 million tons, a decrease of 10% year-on-year. In the first quarter, the downstream cement market demand was weak, and prices continued the trend from the end of 2023, maintaining low-level fluctuations. In the second quarter, leading companies actively played a leading role, industry self-discipline promoted the recovery of the industry's ecosystem, and cement prices rebounded. By the end of June, the national cement price had exceeded the level of the same period last year. At the same time, the cement price situation in various regions across the country shifted in the first half of 2024, with the northern prices performing better than the southern ones, and the Northeast leading the North.

Information shows that the company is one of the 12 large cement enterprise groups supported by the national key support for cement structure adjustment and the largest cement producer in Northern China. As of the end of this report, the company's annual clinker production capacity is 110 million tons, cement production capacity is 178 million tons, aggregate production capacity is 76.6 million tons, and the hazardous and solid waste disposal capacity is 5.456 million tons/year. The main market covers more than 13 provinces (municipalities directly under the Central Government, autonomous regions) such as Beijing, Tianjin, Hebei, the three eastern provinces, Shaanxi, Shanxi, Inner Mongolia, Chongqing, Henan, and the northern part of South Africa. The company's market share in the northern region, especially in the Beijing-Tianjin-Hebei area, exceeds 50%, with a clear market competitive advantage, and its cement production capacity ranks third among domestic cement manufacturing enterprises.

Under the new era of Western Development Strategy, the company may benefit.

The Political Bureau of the CPC Central Committee recently held a meeting to review the "Several Policy Measures to Further Promote the Formation of a New Pattern of Western Development." Relevant experts said that the Western Development is a major strategic decision made by the Party Central Committee. The "Policy Measures" are more holistic and strategic, which will further promote the formation of a new pattern of Western Development, and the overall strength and sustainable development capacity of the Western region will continue to be enhanced. CITIC Securities said that under the new era of Western Development Strategy, the landing of infrastructure-related funds in the Western region has accelerated significantly, and infrastructure-related enterprises in the Western region may benefit.

Jidong Cement has been deeply involved in the main business of cement, deeply integrated into the coordinated development of Beijing-Tianjin-Hebei, the revitalization of the Northeast, and the Western Development and other national strategies. After more than 40 years of continuous and healthy development, it has formed a strong competitive advantage. The company's cement and sand and gravel enterprises are all close to the company's own limestone and aggregate mines. In the first half of this year, the company added 106 million tons of new mining resource reserves, and the rich mining resources have laid a solid foundation for the company's high-quality sustainable development.

In recent years, the company has actively laid out aggregate production lines and developed cement kiln co-processing. The company has built a circular economic park that includes upstream and downstream facilities such as cement clinker production lines, aggregates, co-processing, and resource comprehensive utilization in a cluster industry mode, forming a unique competitive advantage in terms of production scale, industrial regional layout, and vertical industrial chain layout.

Leading production technology in the industry and green low-carbon, digital intelligence first-mover advantage.

In recent years, the company has taken the new low-carbon clinker as the entry point, completed the industrial trial production of high-calcium belite clinker, and achieved stable large-scale production and engineering application. At the end of the second quarter, the company has 183 invention patents, 1,919 utility model patents, 5 design patents, and has won 75 scientific and technological awards above the provincial and ministerial level (including first-level associations). As the editor-in-chief unit, it has participated in the compilation of 5 national standards and 5 industry standards.The company adheres to the path of eco-priority and green low-carbon development, actively implements the "dual carbon" strategy, and actively carries out energy-saving and consumption-reducing transformations of clinker production lines. The comprehensive energy consumption of all products meets the national standard requirements, and the proportion of production lines at the benchmark level of energy efficiency reaches 65%. By the end of the second quarter, the company and its subsidiaries have been included in the national "green factory" list with a total of 35, 24 national green mines, and 23 provincial green mines. All of the company's production mines at a certain scale have reached the provincial and above green mine construction standards.

In addition, the company continues to strengthen the empowerment of digital transformation, enhance the integration of digital and industrial businesses, and accelerate the cultivation and development of new quality productive forces. Currently, the company has 3 national-level intelligent factories, 3 enterprises have passed the intelligent manufacturing maturity evaluation at level 3 and above, 8 enterprises have 11 scenarios selected as national excellent intelligent manufacturing scenarios, 2 enterprises have been included in the national 5G factory list, 12 enterprises have been rated as provincial and industry-level intelligent manufacturing demonstration enterprises, and the company has been included in the "Digital Pilot" enterprise list of the Ministry of Industry and Information Technology, passing the Data Management Capability Maturity (DCMM) level 3 and two integration AAA certification.

Actively layout overseas markets

In recent years, the pace of domestic cement enterprises "going global" has been accelerating, continuously increasing global investment layout. According to the statistics of the Cement Big Data Research Institute, in 2023, the overseas clinker production capacity of domestic cement enterprises expanded to 64.65 million tons, a year-on-year increase of 35%. Customs statistics show that in the first half of the year, domestic cement exports were 2.5233 million tons, a year-on-year increase of 67.49%, and clinker exports were 0.2426 million tons, a year-on-year increase of 248.02%. Cement enterprises "going overseas to seek gold" has become a new trend.

Jidong Cement is actively advancing in aspects such as expanding capacity, adjusting structure, strengthening guarantees, and supplementing chains to gather clusters. In the first half of this year, the company achieved a zero breakthrough in overseas layout by acquiring 100% equity of China-Africa Building Materials, and its subsidiary South Africa Mamba Company achieved a net profit of 255 million yuan from 2020 to 2023. According to the announcement issued by Jidong Cement, in order to compress the equity level and improve management efficiency, Jidong Cement plans to absorb and merge China-Africa Building Materials to undertake all the rights and obligations of China-Africa Building Materials, further increase investment in Africa and globally, and develop overseas business steadily.

Zheng Jianhui, the chief analyst of the Cement Big Data Research Institute, said that there is still room for growth in regions such as Africa and the Middle East in the future, and enterprises with strong strength should seize the opportunity to accelerate the pace of going overseas.