© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Subject to regulation, we have to broadcast to comply with the relevant regulations. Please ask your salesperson for details. [Foreign Language]
[Foreign Language] So thank you for joining today's call. This is Jack Shang from Citi Research. Perhaps we're very glad to have James Zhang with us, Board Secretary of BBMG, and the management team here to share with us some updates of the company post results. I'll hand over to James first. [Foreign Language]
[Foreign Language]
Okay. Okay. Anna?
Hi. This is Anna from Citi. Okay. So we, today, we are glad to have this opportunity to communicate with investors. And I am Mr. Zhang Jianfeng, the Board Secretary of the group. Also today, we have the management from cement segment and property segment, including the sales manager, Mr. Hou from Jidong and also Ms. Hu Juan from the financial department. We also have CFO Mr. Xu from the property segment. Also, we have other management from the group to join today's results presentation.
[Foreign Language]
[Foreign Language]
Okay. Below is the financial results during the first quarter. BBMG Group achieved operating revenue of RMB 23.1 billion, with a year-on-year growth of 0.6%. The gross margin of cement business was 14%, up by 0.27 percentage points year-on-year. The net profit attributable to equity holders was RMB 276 million, representing an increase of 25% year-on-year. The asset liability ratio was 65%, 1.5 percentage points lower than that at the end of last year. Earnings per share was RMB 0.026, up by 25% year-on-year.
[Foreign Language]
The contribution of main business income of each business segment below. Cement segment accounts for about 25%. Property development sector accounted for about 41%. New building materials accounted for about 32%. Investment property sector accounted for about 4%.
[Foreign Language]
The profit of cement segment recorded a net loss of RMB 450 million, while the real estate sector recorded a net profit of RMB 620 million. New building materials segment was RMB 21 million. Investment property segment, RMB 118 million.
[Foreign Language]
During the first quarter of 2022, the cement business achieved operating revenue of RMB 4.3 billion, representing a year-on-year decrease of 1.5%. The gross margin was 20.2%, down by 3 percentage points year-on-year. The sales volume of cement and clinker was 11.53 million tonnes, down by 23% year-on-year. The average selling price of cement and clinker was RMB 373 per tonne, increased by RMB 82 per tonne year-on-year. The gross profit per tonne was RMB 75, increased by RMB 8 per tonne year-on-year. The net profit per tonne recorded a net loss of RMB 16.6 per tonne compared with a net loss of RMB 2.2 per tonne in the same period during last year.
[Foreign Language]
The concrete business revenue reached RMB 582 million, down by 36% year-on-year. The gross margin was 2% compared with 9.7% last year. Concrete sales volume was 1.23 million cubic meters, down by 35% year-on-year. The selling price was RMB 406 per square meter, down by RMB 4.4 per square meter year-on-year. The single quarter gross profit was a net loss of RMB 8.2 per cubic meter compared with RMB 39.7 per square meter in the same period. The net profit per square foot was a loss of RMB 101.6 per square meter compared with the loss of RMB 35.8 per square meter for the same period last year.
[Foreign Language]
The operating revenue of environmental protection business was RMB 230 million, down by 22% year-on-year. The gross margin was 25.8%, down by 12.5 percentage points. The amount of waste collected was about 420,000 tonnes, up by 48.7% year-on-year. The disposal volume was about 330,000 tonnes, up by 24.7% year-on-year.
[Foreign Language]
The aggregate business achieved operating income of RMB 185 million, almost flat year-on-year. Gross margin was 46.4%, down by 0.84 percentage points year-on-year. The sales volume of aggregates was 4.53 million tonnes, down by 8% year-on-year. The price was RMB 41 per tonne, increased by RMB 1 per tonne year-on-year. The gross profit per tonne is RMB 19, basically the same as last year.
[Foreign Language]
During the first quarter, the property development business achieved RMB 9.21 billion of booked revenue representing an increase of 20% year-on-year. The booked GFA was 397,000 square meters, up by 33% year-on-year. The booked gross margin was 15.89%, up by 4.1 percentage points year-on-year. The presale contract amount was RMB 1.81 billion, down by 84% year-on-year. The presale area was 95,300 square meters, reduced by 78% year-on-year. By the end of this report, the company's real estate sector land bank area recorded 6.8723 million square meters.
[Foreign Language]
For the new materials segment, the operating revenue recorded RMB 7.352 billion, down by 5.6% year-on-year. The average gross margin was 4.5%, up by 0.8% year-on-year.
[Foreign Language]
For the investment property segment, the business income recorded RMB 928 million, decreased by 20.3% year-on-year. The gross margin was 43.4%, 16.9 percentage points lower than last year.
[Foreign Language]
By end of the first quarter, the total area of investment properties held by BBMG Group is 2.219 million square meters with a comprehensive average rental rate of 81%, which excludes construction in progress and decoration and renovation projects. The total area of high-end investment properties held in the core area of Beijing totaled 1.282 million square meters, with a comprehensive average rental rate of 78%.
[Foreign Language] So we're now open for a Q&A session. [Foreign Language] So I'll translate for myself. There are 3 questions. First one is guidance of the cement volume and the cement pricing strategy in the rest of the year. And second is the property segment guidance. And third one is investment property segment. We noticed that the first quarter revenue and margins were both down and what's the reasoning, what's behind that? And is that a sustainable impact? And what are the driving factors behind this?
[Foreign Language]
So okay. I am Mr. Hou from Jidong Cement. So in the long term, we have confidence on the segment of cement business because there are promotional policies on pushing up the infrastructure construction investment. Also, the fiscal policy are also very attractive. On the second point, the industry ecology was very good. The discipline, industry discipline is well maintained. So the supply side, we have confidence as well. The third point, the demand during the first quarter was suppressed. But we believe the demand will rebound in the following quarters. So our sales target of full year remains unchanged at 90 million tonnes, and we expect the ASP will rise stably.
[Foreign Language]
Okay. For the property development segment, the decrease in revenue and net profit during the first quarter had several reasons. Firstly, there is no new projects during the first quarter. And secondly, the revenue was impacted by the lockdown impact after March. Also, the property industry was dealing with rescheduling period. So our judgment for this year, the contract areas and contract revenue will remain flattish with 2019. The first quarter of 2021 is a peak point in the last year. In the midterm, in the mid and long term, we have confidence for the top key markets to return to a virtuous cycle. The policies are loosening and more and more policies are promoted by the government and they are lending gradually. And we also see the transaction volume of property in Beijing is increasing. So we believe the impact by the pandemic will decrease gradually and the momentum will get back to normal. However, there will be some difference on the time and the regions. So, so far, our guidance, our full year guidance remain unchanged.
[Foreign Language]
Okay. For the property investment segment, we are impacted by the pandemic so the impact on our rental business and our vacation business is influential. Also, the Winter Olympic price, we charged very low price during the Winter Olympic period. Also, our interest income decreased because we repaid the debt. Our debt ratio decreased year-on-year sequentially significantly.
[Operator Instructions] [Foreign Language]
[Foreign Language] The last question is on coal cost trend.
[Foreign Language]
So the salable coal in the market is comparatively smaller than same period in last year, also impacted by the pandemic. The transportation was impacted. So therefore, the price improved significantly. And the price recorded RMB 1,100 per tonne, up by 60% year-on-year. And we have several measures on this. Firstly, we would strive to increase our long-term contracts to above 30%. Also, we will optimize our purchase channels to cooperate with large coal companies. And we are also making efforts on the environmental protection and also technology innovation to reduce the consumption.
[Foreign Language]
Okay. So the unit cost of cement and clinker during the first quarter increased by RMB 70 as amount that the coal cost increased by RMB 40 per tonne.
[Foreign Language]
[Foreign Language]
Okay. So another increase of RMB 30 per tonne, among this, the raw material procurement price increased year-on-year. Also, the production volume during the first quarter was lower year-on-year. So the fixed cost per tonne was up by RMB 10. Also, the industrial electricity price increased and this impacts by RMB 4 per tonne. The electricity price increased by RMB 0.08 per kilowatt.
[Operator Instructions]
[Foreign Language] My follow-up question is regarding BBMG's plan for land acquisition potentially when demand, when property demand improves and also the project launches in light of the improving demand.
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
So once the top key demand picks up, we will hold the window period to sell our projects. And we are also prudent on land acquisition. The guidance of land acquisition this year is around RMB 18 billion to RMB 20 billion. We will acquire more if the payment collection is better. For the last year, we spent RMB 16 billion to RMB 17 billion on the land acquisition.
[Operator Instructions]
[Foreign Language]
So the first question is regarding our guidance on mergers and acquisition on the cement business.
Hold on. [Foreign Language]
[Foreign Language]
Okay. So we have completed the handover. And we also have targets on the 20 markets and east, northern China market. For the 20 markets, we have basically achieved our negotiation with the targets. The M&A opportunities will depend on the price and opportunities we encounter.
[Foreign Language]
[Foreign Language]
So we are looking for the acquisition opportunities proactively. In the long term, cement business, supply outpaces demand. Our sales volume target for this year of 90 million tonnes is down by 10% year-on-year. Also, the replacement cost per tonne varies in different regions. So it's hard to compute. But we will see its asset quality overall and give a pricing comprehensively, pricing on the targets.
[Foreign Language]
Okay. The question is about the minority share of profit. So could you give us the same parameter under the same standards so that we could evaluate the impact on our net profit?
[Foreign Language]
Okay. Our minority equity was mainly affected by cement and concrete business. Because the cement business is impacted by the lockdown and also the surges of coal prices, the net profit was down year-on-year. So it caused a loss of our minority equity.
[Operator Instructions]
[Foreign Language] I have 3 questions. The first is regarding cement business. And what's our daily sales volume and the inventory condition entering April? And is there any change on the sales volume in recent days considering the pandemic impact? And do we have additional plans on production suspension if the demand disruption continues? The second question is regarding expense control. And we have seen that our company achieved a very good expense control in the first quarter and especially for financial expenses. And my question is, what's the reason behind the decline in the financial expenses and what's our full year guidance on the financial expenses. The third question is regarding contract liability. And my question is that, how is that related to our revenue booking for the property business? And do we have an update on the booked revenue for property business for this year?
[Foreign Language]
The shipment was down year-on-year compared to last year in April. So we forecast the daily, the average daily shipment was around 350,000 tonnes in April. The clinker inventory was around 45%, while the cement inventory was around 50%. The inventory level varies depending on the lockdown impact in different cities. For example, the Xiong'an region was below 30% inventory. Nearly has no impact by the pandemic. So for the second quarter, we expect the demand to pick up broadly with the daily average shipment of above 400,000 tonnes per day. And also, there is around 10 days of peak production in May.
[Foreign Language]
So the inventory level during the first quarter was down by 30% year-on-year due to the lockdown control. Also, the environmental protection control was stricter this year.
[Foreign Language]
So the financing cost was down by 0.4 percentage points year-on-year. Our gearing debt also decreased by RMB 1.3 billion. Therefore, the financing expenses was down year-on-year. We expect the financing cost to slightly down year-on-year towards 2022.
[Foreign Language]
The property business was down by RMB 2 billion compared to the beginning of the year. This was due to the contracted amount was lower year-on-year. But we believe this will not impact the full year guidance of the booked revenue. Currently, we have RMB 9 billion booked and we have RMB 20 billion to book.
[Operator Instructions]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language] [Statements in English on this transcript were spoken by an interpreter present on the live call.]