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Good morning, good afternoon and welcome to the conference call. Chairperson today is Mr. Jack Shang.
Jack, please begin your call, and I'll be standing by for the Q&A session. Thank you.
Thank you. Good morning and good afternoon. This is Jack Shang from Citi Research. Welcome to BBMG's 2018 3Q Results Conference Call. Joining us today is the management team from BBMG.
I'll hand over first to Mr. James Jiang, Director of Board of Directors' Office for an introduction of the management team and also a quick introduction of the 3Q results. [Foreign Language]
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[Foreign Language] Thank you for dialing in. So joining us today, we have Lawrence Lau, the Company Secretary; and also, Mr. [ Zheng Jin ], the Vice President of[ Jinyu ] and Jidong Cement, sales and marketing center; Mr. [ Xu Fong ], CFO of BBMG Property; Ms. [ Bai Ling ] from BBMG Finance department; and also Mr. [ Liu Zhang Sheng ], Senior IR Manager of the company.
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[Foreign Language] Next, I'll hand over to Mr. [ Liu Zhang Sheng ], who will share -- brief us on the 3Q results and the operational updates of the company.
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[Foreign Language] So for the 9 months '18, the revenue recorded for BBMG was RMB 56.06 billion, and this is up by 20.55% year-on-year. And the net income attributable to common shareholders for the first 9 months '18 was RMB 3.1 billion, and then up by 19% -- 19.2% year-on-year. And then our total assets as of end of the September '18 recorded to RMB 263.5 billion, and this was up by 13.5% against the beginning of the year. And then total liability versus total asset ratio recorded at is 69.98%, slightly flattish versus last year.
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So total revenue contributed by each segment for the first 9 months of '18 aggregated at RMB 55.3 billion. And then by segment revenue: our cement segment revenue recorded at RMB 27.3 billion, accounting for 49% of the total revenue; and then new building materials, our revenue recorded at RMB 14.6 billion, accounting for 26.5%; and then real estate developments segment, revenue recorded at RMB 12.9 billion, accounting for 23%; and plus property management segment, revenue for the first 9 months '18 got at RMB 2.7 billion, accounting for 4.8%. And then we've got the elimination amount each segment of RMB 2.2 billion, around negative 3.9% of the total revenue
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For the net income contributed from each segments: cement segment contributed net income of around RMB 2.55 billion; and then new building materials, RMB 8 million; property developments net income recorded at RMB 1.65 billion; and then property management has RMB 138 million during this 9 months '18.
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[Foreign Language] For the cement business segments, the 9 months '18 revenue recorded at RMB 27.3 billion, up by 15.3% year-on-year. And then the gross margin for the cement business segment was 31.5%, up by 5 percentage points year-on-year. And then specifically, for the cement itself, cement's gross profit was 36.4%. And then the comprehensive average selling price of cement and clinker recorded at RMB 208 per tonne, up by 18.9% year-on-year. And then the 9 months '18 aggregated selling volume of cement and clinker was 77.14 million tonnes, down by 2.5% year-on-year.
For the unit gross profit, unit gross profit for the 9 months of '18 was RMB 104 per tonne, up by 39% year-on-year. And the net profits for the cement and clinker was RMB 36.4 per tonne, up by 63.8%. And then if we come to the concrete, concrete sales volume for 9 months '18 recorded at 11.2 million cubic meter, down by 2.7% year-on-year. And then our net profit per cubic meter for the concrete during the first 9 months '18 was negative RMB 11 per cubic meter. This actually improved from the negative RMB 33 per cubic meter during the similar -- the same cost in 2017.
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[Foreign Language] So for the third quarter 2018, cement and clinker, overall sales volume recorded at 33.5 million tonnes. This is slightly down by 1.3% year-on-year. And average selling price for the third quarter of 2018 recorded at RMB 287 per tonne, up by 18.6% year-on-year. So as for the third quarter '17, the average selling price was at RMB 242 per tonne. And unit gross profit for the third quarter of '18 was RMB 103 per tonne, up by 39.2% from RMB 74 per tonne in the third quarter '17. And for the third quarter of '18, the gross margin of cement and clinker was 36%, up from the 29% in the third quarter of 2017. From the beginning of October until 28th of October, aggregated shipment volume of cement and clinker was 11.31 million ton and an average selling price already got RMB 291 per tonne.
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So for the property segment, actually, the third quarter 2018 booked revenue slightly dipped against the first half of 2018. So for the third quarter of '18, the booked revenue recorded at RMB 2.9 billion, up by 22%, and for the 9 months '18, booked area got 567,000 square meter, down by 2.4% year-on-year. And then the gross margin for the 9 months of '18 recorded -- realized at around 35%. And if we come to the pre-sale amounts, the 9 months pre-sale amounts aggregated about RMB 11.9 billion, down by 33% year-on-year. And then the new start area aggregated at 2.06 billion square meter, up by a significant hike of 170.3% year-on-year.
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And so for the 9 months '18, our newly acquired net reserve recorded at 1.3 billion square meter. And then the average floor price was RMB 8,336 per square meter. And then accumulated land acquisition cost was RMB 10.9 billion. Compared to the same period of last year, 9 months '17 acquired land reserve got 860,000 square meter, and then aggregated land acquisition cost was RMB 12 billion. And then -- but the average floor price was higher at RMB 13,900 per square meter. And as of... [Foreign Language]
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Okay, so for the rest of the 2 segments. New building materials revenue for the 9 months of '18 recorded at RMB 14.63 billion, up by 36% year-on-year. And then profit before tax was RMB 44 million, down by 39.5% year-on-year. And then if we go to the property or real estate management segment, revenue for 9 months of '18 was RMB 2.6 billion, up by 12%. And then the profit before tax was around RMB 323 million, down by 63% year-on-year.
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[Foreign Language] [Operator Instructions]
[Foreign Language] I have 3 questions. The first one is on the GP margin guidance and also revenue booked from the property segment, guidance for 4Q and for full year 2018. And also, and the second question is on the contract sales and for guidance for the full year and the 2019 color. The third question is on the investment property management segment. The question is why revenue is up 12%, but actually, pretax profit has really declined?
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Okay, so regarding the first question of the full year gross margin and book revenue guidance for the 2018. On this year, we currently still -- we estimate the booked revenue for the property segment will reach RMB 21.4 billion in 2018 full year. And then the gross margin for the full year would reach at 31%. And then for the second question, the pre-sale amounts, we are currently facing pressure of the overall property market. And then -- but we are striving to reach our annual targets of RMB 27 billion for the 2018 full year. And then we think that government intervention on the property market is really sort of stringent, and then some pre-sale permissions for the projects may have some uncertainties.
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Yes. For the property management segment, the revenue actually added by around RMB 300 million and mainly contributed from the increase of the rents and management fees. But for the costs, we think the lower profit was impacted by integration of Tianjin Building Materials, which was a loss-making right now. [Foreign Language]
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So the primary said reason of the lower profitability of property management segment is because the Tianjin Building Materials. They've got some business segment that is kind of categorized in the property and management sector and we are still in the integration process, and that segment was during a loss-making period.
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Okay. So the question is about the management view on the winter cuts for the cement business this year, and then is there any kind of different or significant difference for the impacts versus last year's. So BBMG management thinks that although the government this year says that no across-the-board winter cuts present for the implementation, but BBMG management thinks that the overall impacts for this year would be more significant than the last year's. For the first part, because this year, some regions in South China were also ordered to have production cuts; and then for the Northeast regions, for example, Jilin and Heilongjiang provinces, winter cuts was already ordered to be implemented from 1st of November to the 30th of April next year, lasting around 6 months. And this is already higher than the overall requirements by 1 month. And for example, for Hebei province, although the government ordered no across-the-board cuts, but they have higher requirements of emission standards of sulfur dioxide and nitrogen dioxide. And then as for the vehicles, they've got also higher emission standard. So overall, this year's winter cut impacts are going to be more significant than in last year's.
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So the question is regarding the cement demand outlook for the 2019, especially in the operating area, in Xiongan, impacts. And BBMG thinks that for the 2019, the national cement demand could be slightly flattish versus 2018. And then right now, we could see that the plans for the Xiongan area development and also plans -- government plans for sort of supporting and boosting the northeast traditional industrial area development. So all these kind of measures would drive up the demand for the 2019. And regarding the Xiongan demand, in translation, we have now seen several highway projects under construction and high-speed ways -- roads under construction, which could also translate or supports the 2019 demand.
[Foreign Language] China Galaxy, Chi Man Wong.
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Okay. So we've got 2 questions. The first question is actually about the third quarter impairment, and this is around RMB 300 million during the third quarter. It's quite flattish versus the last year, it's RMB 244 million the third quarter of '17, and -- so it's quite normal. And then for the second question, it's about the 2018 full year cement and clinker sales volume guidance. The management remains the same sales volume guidance for the full year of around 100.2 million tonnes. And although we have seen that the 9 months of '18 sales volume are slightly down 2.7% year-on-year, but if we look at the shipment volume -- daily shipment volume right now, it's quite decent, around 410,000 tonnes to the 470,000 tonnes. And if we aggregate by the 10 months of '18, sales volume already got a 1% year-on-year hike. So overall, we remain the same full year sales volume guidance of around 100 million tonnes.
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Okay. So the first question is actually regarding to the off-peak production for the North China this year. Because the government has ordered no across-the-board cuts, is there any sort of cement or clinker production lines will be impacted on the pollution conditions or the weather? So the answer is, actually, so this year's off-peak production only curtails the clinker production line and cement line facilities were not impacted. For the clinker production lines overall, regions, during the heating season, the facilities are required to cut by 50%. But only some of the facilities could be exempted unless that they've met the certain emission standard. And if the clinker production lines were curtailed, then the cement production would only be dependent upon the consumption of existing inventories. But -- so [ Maggie ] also asks about -- for the waste treatment facilities. Waste treatment, in coordination with cement kilns or the facilities responsible for heating during the heating season, will be exempted from the off-peak production this winter. And then for the BBMG, the Beijing facilities and Tianjin will be all exempted from the -- an off-peak production; and Hebei would have 50% of facilities which will be exempted from their production. So overall, if you look at the Tianjin, Beijing and Hebei area, for the BBMG operating production lines, there will be less than 50% of the facilities that would be impacted by the off-peak production. And then the second question is about -- for the 9 months '18, property new start actually hiked significantly by 170% year-on-year, but the pre-sale amount was not really decent. And what is the reason behind it? And management actually explains that the project kickoff phases needs to have certain prerequisites, and then the BBMG is right now proceeding with -- in line with management plan and a number of projects that are applicable or that met as the requirements increase. So that's the reason of the new start hike. And over -- going forward, for the upcoming 2019, the overall pace of the new start will still be in line with the expectation and the management would stick to the original phases for the new start.
[Foreign Language] HSBC, [ Amy ].
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So for the first question is regarding -- the cement price actually dropped during the third quarter of '18 in the Northeast area, and some cement volume flowed to, from the Northeast region, flowed to the North China market. And then [ Amy ] is asking about the management view about this. So indeed, the third quarter '18 Northeast cement selling price dropped material -- significantly. But right now, the average selling price has recovered versus the September level, and now the selling price has recovered to around RMB 320 per tonne for the Northeast market. And the price drop was primarily due to the price war amongst the extremely oversupplied capacity market in Northeast region. And -- but in the future, Northeast region, for example, Liaoning and Jilin, Heilongjiang provinces, they will implement off-peak production starting from the 1st of November, and by then, there won't be any inflow into the North China markets. And from a sectoral perspective, during September, the inflow from the Northeast to the North China market was having a limited volume, and the impact on average selling price was under control. So now we come to the second question for the 2019 property segment guidance. [Foreign Language]
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And now we are -- [Foreign Language] Just for -- currently, we are still sort of striving to reach the 2018 target. But going forward, if we look at the 2019 property guidance, if the market remains stable and our production or activity plan is executed smoothly, we think the 2019 property segment profitability will be no less than this year's profit. But detailed guidance, we are still under discussion. Thank you.
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So the question is regarding the downstream growth split for the 2019 around the operating regions of BBMG. And so overall, the downstream split for the BBMG operating segments was around -- for infrastructure, around 33%; and then property segment, including social and commercial housing, all together get 44%; and then the remaining rural markets related to the housing constructions, et cetera, accounts for around 23%. In terms of the market share of different grades: 42.5-grade cement has market share of 78%; and then 32.5-grade cement has a market share of 21%. And going forward, if we go -- if we look at the 2019 demand growth, management thinks that the infrastructure could increase slightly year-on-year, and then property segment may face pressure and then dip slightly year-on-year, but remains largely stable.
[Foreign Language] [Operator Instructions]
[Foreign Language] Thank you, everyone, for dialing in. Thank you.
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Thank you for your participation. This conclude the conference.