As of September 23, 2022, the national cement storage capacity ratio was 68.50%, up 0.50pct from last week, up 4.25pct from last month and 24.56pct from the same period last year.

(Producer/Author: CITIC Construction Investment Securities, Yang Guang)

. Cement industry: heavy assets resource-based industry, with obvious regional characteristics

1.1 Cement is one of the most important building materials

Cement is the most important basic raw material in building materials, and the downstream application scenarios are relatively rich. Cement refers to a powdery hydraulic inorganic gelling material. It is stirred with water and formed into a slurry. It can harden in air or better harden in water, and can firmly glue sand, stone and other materials together. According to the cement use classification, my country's cement products mainly include general cement, special cement and characteristic cement. Cement is widely used in industrial civil buildings, highways and railways, airports and ports, reservoir dams, oil, electricity, marine engineering and other fields. Special cement has played a role in earthquake relief, flood control and flood control, engineering rescue, border military engineering, etc.

Cement industry is an asset-heavy and resource-based industry, and the production link includes "two mills and one burn". The upstream industries of the cement industry are mainly limestone , marl , clay, gypsum and other materials; downstream applications are mainly in infrastructure construction, construction engineering, water conservancy, decoration and other fields. Cement production mainly includes three links: raw material powder grinding, kiln calcining, and clinker powder grinding (referred to as "two mills and one burning"). Limestone and clay are the main raw materials, and correction raw materials or auxiliary raw materials will be added, and raw materials will be made by crushing, ingredient and fine grinding. Then feed them into the cement kiln to calcinate the clinker. Then add an appropriate amount of gypsum and auxiliary raw materials to grind the clinker to obtain cement. Coal is both fuel, and the burned ash powder also serves as raw materials to become part of the clinker. From the downstream perspective, cement can be applied to infrastructure, real estate and civilian fields through direct and indirect methods of cement products. According to Zhuochuang Consulting data, the demand in the infrastructure field will increase to 42% in 2021, becoming the main field of downstream cement applications.

1.2 Cement industry has obvious characteristics: low inventory, regional, seasonal

Low inventory: Cement products have a short shelf life and almost zero inventory. Due to the reason why cement material is not water resistant, the shelf life of cement is generally around three months. The inventory period exceeds three months must be passed again before it can be used. This greatly limits the inventory of cement companies and traders, making the production and sales of cement companies highly match. Comparing the inventory turnover days in the three industries of cement, glass and concrete products, it can be seen that the inventory turnover days in the cement industry are relatively short, with the industry average falling to 38 days in 2021, while the inventory turnover days in glass and concrete products both exceeding 60 days; as of September 23, 2022, the national cement inventory capacity ratio was 68.50%, up 0.50pct from last week, up 4.25pct from the previous month, and up 24.56pct from the same period last year.

Regionality: Cement is a typical "short-legged product", with CR4 exceeding 40% in most provinces. Cement is a typical short-legged product with low unit price and large weight. The land transport radius is 200-300 kilometers, water transport can be extended to more than 500 kilometers, and railways can achieve 1,000 kilometers (very few). At present, my country's cement production and sales areas are divided into six major regions: Northeast, North China, Northwest, East China, South China and Southwest. Among them, due to the large demand for products, the East China region ranks first in terms of output. In 2021, the cement production in East China region will account for 34.3%. From the perspective of industrial capacity concentration, the top four cement enterprises in Tibet, Jilin and Haikou provinces have a capacity concentration of more than 70%, while most other cities are between 40% and 70%, while the capacity concentration of some provinces in East China and North China is relatively low.

Seasonality: Cement production has typical quarterly characteristics, and the reasons for staggered peak production in the north and south are different. The cement industry has obvious seasonal characteristics, and its production rhythm is greatly affected by weather and regional policies. Among them, for northern enterprises, winter is the main season for staggered production. First, the north is heating in winter, air pollution is severe, cement plants are shut down, reducing environmental pressure; second, the weather in the north is too cold and difficult to construct. For southern enterprises, in June and July every year, it will affect the middle and lower reaches of the Yangtze River in my country, especially in East China where cement production is relatively concentrated. Cement is prone to moisture, and the downstream demand is weak, which will seasonally lower cement prices.Therefore, generally speaking, the peak season for Southern Cement is in the second and fourth quarters, and the peak season for Northern Cement is in the second and third quarters; around July, the national single-month cement production was at a low level throughout the year.

2. Cement demand is bound to real estate infrastructure, supply tightens and maintains high prices

2.1 Demand side: Deeply bind real estate infrastructure, infrastructure focuses on hedging real estate growth rate decline

Cement is an investment-driven industry, and production changes are on the same trend as the growth rate of infrastructure and real estate investment. The cement industry is a typical investment-driven industry, closely related to the development of the national economy and the investment in fixed asset and has strong cyclical characteristics. We count the growth rate of the total value of infrastructure and real estate investment in the country from 2005 to 2021 and the growth rate of cement production. The two basically show the same trend. In 2021, the total investment growth rate of infrastructure and real estate investment in increased by by 1.99% year-on-year, of which infrastructure investment increased by 0.21% year-on-year, and real estate investment increased by 4.40% year-on-year; national cement production decreased by 0.59% year-on-year under full-scope statistics.

cement production has entered the platform period since 2013, and has stabilized at 2.2-2.4 billion tons for eight consecutive years. Cement output has entered the platform period since 2013, and has stabilized at 2.2-2.4 billion tons for eight consecutive years. Although the total investment in infrastructure and real estate has increased year by year, cement production has remained at a high level in recent years. The cement output driven by investment per billion yuan is generally showing a downward trend, and the cement output data driven by unit investment from 2018 to 2021 has stabilized.

2.1.1 Infrastructure: Investment was sluggish in 2021, and steadily grew in 2022

Infrastructure investment was sluggish in 2021, and it increased significantly in the first half of 2022. In 2021, the total amount of national infrastructure investment was 18.87 trillion yuan, an increase of 0.21% year-on-year. Compared with the compound growth rate of 2% in 2019, the growth rate of infrastructure investment is at a low level. Since the beginning of 2022, under the tone of stable growth, the growth rate of investment in infrastructure construction in has recovered significantly, with the cumulative growth rate of infrastructure investment from January to August being 10.37%; from the absolute amount, the investment in infrastructure from January to August 2022 exceeded the same period in 2020 and 2021, while the data on the project and capital side show that the subsequent infrastructure investment will remain at a high level, which will further drive the demand for building materials products such as cement and waterproofing to increase.

Central Economic Work Conference releases signals of stabilizing growth, and all departments actively implement the stable tone. On December 6, 2021, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the economic work in 2022. The meeting emphasized that the macro-policy of should be stable and effective, actively increase effective investment, and enhance the internal driving force of development, which sent a signal of stable economic growth in 2022. Subsequently, all departments will follow up and implement it to ensure the implementation of the policy of stabilizing growth from the fiscal policy and monetary policy. On April 29, 2022, the Political Bureau of the CPC Central Committee once again emphasized the need to increase macro-policy regulation and stabilize the economy; at the same time, we must make every effort to expand domestic demand, play a key role in effective investment, and comprehensively strengthen infrastructure construction. It can be seen that under the tone of stabilizing growth, infrastructure investment will become the key tool for stabilizing social growth. The focus of the work will be on promoting physical workload in the second half of 2022, and the implementation of the project is expected to form actual demand. Affected by extreme weather and repeated epidemics in the first half of the year, although a series of relevant policies to stabilize growth were introduced in the first half of the year, the formation of physical workload was relatively slow. In August, when the construction peak season is about to enter, the State Council, the Central Bank of , the National Development and Reform Commission and other state departments repeatedly emphasized the need to "form physical workload as soon as possible". On August 31, the State Council stated that "the State Council has sent another batch of supervision and service working groups to go to several provinces to promote policy implementation." Driven by policy and construction environment optimization, the process of "forming physical workload" will continue to accelerate, and thus form actual demand for building materials.

Funding side: Special bonds are increased again, and the funding side is expected to receive support. In terms of the issuance progress of special bonds, the total issuance of special bonds from January to August 2022 was 3509.433 billion yuan, and the cumulative issuance ratio of the annual quota reached 96.15%. This year's special bond issuance progress is the fastest in recent years.In terms of issuance amount, the planned issuance quota this year is 3650 billion yuan, the same as last year's planned quota, but the issuance progress this year is relatively fast, and the State Council meeting held on August 24 pointed out that "we must make good use of the balance limit of more than 500 billion yuan of special bonds and will be issued before the end of October", indicating that 500 billion yuan of special bonds will still be issued in the future. The actual issuance of special bonds for the whole year of 2022 is expected to exceed significantly in 2021, and the funds for infrastructure projects are relatively abundant.

Project side: The planned investment amount has grown rapidly year-on-year, and orders for construction enterprises remain abundant. In terms of newly started fixed investment projects, the cumulative year-on-year growth rate of total planned investment in the first half of the year was 22.9%, far higher than 2.7% and 13.5% in the same period in 2021 and 2020; while the investment indicators of newly started construction lead infrastructure investment for about half a year, it is expected that the growth rate of infrastructure investment in the second half of the year will remain high. Judging from the orders of the four major construction central enterprises of China Construction , China Communications Construction , China Railway Construction , China Railway Construction , the year-on-year growth rate of the newly signed infrastructure contract in the first half of the year was 22.2%. From the absolute value, the amount of newly signed infrastructure contracts in the first half of the year far exceeded 2020 and 2021, the highest level since the epidemic. As infrastructure projects start one after another in the second half of the year, infrastructure investment has strong support. Judging from the start-up situation, according to incomplete statistics, a total of 4,781 projects were started across the country in August, with a total investment of approximately 2822.77 billion yuan, a year-on-year increase of 52.1%; from September 1 to September 19, many places signed and completed a number of major projects, with a total investment of more than 1.1 trillion yuan, which helped to implement stable growth.

2.1.2 Real Estate: There is obvious pressure in 2021, and the policy in 2022 is bottoming out and rebounding

Real estate start-up and investment funds are under significant pressure, and the growth rate continues to weaken. According to data from the Bureau of Statistics, since 2021, the accumulated year-on-year growth rate of new housing construction has gradually declined, and the newly started housing construction area in 2021 decreased by 11.40% year-on-year to 1.989 billion square meters; the pace of land acquisition in real estate has slowed down, which has led to a decline in the growth rate of land purchase area. In the future, the newly started housing construction area will continue to remain in a downward trend. From January to August 2022, the newly started housing construction area decreased by 37.20% year-on-year to 879 million square meters. The total amount of real estate development investment in 2021 increased by 4.40% year-on-year to 1.476 billion yuan, a decrease compared with the same period last year; the year-on-year growth rate of real estate development investment in January-August 2022 continued to decline, with the year-on-year growth rate dropping to -7.40%, which was under significant pressure.

Real estate policy easing expectations continue, and the policy surface bottomed out and rebounded in 2022. The real estate policy in 2021 still maintains the main tone of housing for living, not for speculation, but since October, with the cold sales of real estate companies and the outbreak of risk events in individual enterprises, real estate policies have shown relaxation expectations. The Ministry of Housing and Urban-Rural Development, the People's Bank of China, the China Banking and Insurance Regulatory Commission and other regulatory departments have frequently expressed their support for the stable and healthy development of the real estate industry, and have carried out moderate relaxation of policies from multiple dimensions such as financing, land, and home purchase. It is also clearly stated that the problem of Evergrande is an individual phenomenon, and the overall health of the real estate industry; in September 2022, the China Banking and Insurance Regulatory Commission and the China Banking and Insurance Regulatory Commission proposed that the risks in key areas have changed from rapid divergence to obvious convergence, and the momentum of real estate financialization and bubble formation has been substantially reversed. It is expected that the current real estate policy will bottom out and rebound, forming a certain support for cement demand.

Central level: Real estate stability policies are frequently issued, and completion data is expected to recover under the promotion of the guaranteed housing. The meeting of the Political Bureau of the Central Committee held on July 28, 2022 pointed out that it is necessary to stabilize the real estate market, implement policies based on the city and make full use of the policy toolbox, ensure the delivery of buildings and stabilize people's livelihood. This is the first time at the central level that the building is guaranteed to be paid. The State Council has held several meetings, emphasizing the need to support rigid and improved housing needs, and flexibly use phased credit policies and special loans for guaranteed to be paid. On August 19, 2022, the Ministry of Housing and Urban-Rural Development, the Ministry of Finance and the People's Bank of China and other departments also announced that they would introduce measures to support the completion of construction and delivery of residential projects that have been sold and overdue delivered; in September, the National Development Bank of has paid relevant funds to Shenyang, and the first batch of special loans of 5 billion yuan in Zhengzhou has also been issued.

Local level: Local governments establish relevant funds to promote the completion of projects.After the central government proposed the "security and payment of buildings", local governments have successively introduced policies for housing security and payment, mostly through the establishment of special relief funds . On July 29, Zhengzhou, Henan issued a policy to establish a special fund for relief, with a scale of 10 billion yuan; on August 21, Nanning, Guangxi established Nanning City stable real estate fund , with the first phase of the fund scale of 3 billion yuan; on August 25, Changzhi, Shanxi issued a policy to improve the commercial housing project ledger and implement a leadership-based joint system. The real estate development project of more than 1 billion yuan is jointly organized by county and district leaders, and projects of more than 1 billion yuan are jointly organized by relevant municipal departments, and projects of more than 5 billion yuan are jointly organized by municipal leaders. After the funds are gradually in place, the completion end is expected to accelerate.

In summary, under the neutral assumption, cement production in 2022 is expected to decline by 10.26% year-on-year. From January to August 2022, due to the impact of the epidemic, market demand recovered slowly, and the national cumulative cement production fell sharply year-on-year, down 14.2% year-on-year. By fitting the pulling effect of real estate and infrastructure investment on cement production in the past year, we found that this coefficient gradually declined to 6,300 tons of cement production per billion yuan. Based on the neutral assumption of the growth rate of real estate and infrastructure investment in 2022, it is expected that the growth rate of infrastructure investment will rebound in 2022, while the growth rate of real estate investment will decline. Under the neutral expectation, the annual cement production is expected to decline by 10.26%.

2.2 Supply side: peak-staggered production is carried out normally, supply continues to tighten under the "dual control" policy

2.2.1 Supply side reform promotes the increase in industry concentration, environmental protection + production restrictions promotes supply tightening

0 Cement industry concentration continues to increase, and leading enterprises have obvious location advantages. As of the end of 2021, the concentration of clinker in my country's top ten cement enterprises reached 58%, an increase of 11 percentage points from 2011. The control of regional markets has been strengthened, the willingness to coordinate self-discipline has been strengthened, and the market competition relations have been eased to a certain extent. Strong enterprises have a high market share in their main business areas, and their leading location advantages are obvious. The competitive landscape of various regions is better than the overall competitive landscape of the country.

Cement staggered production has become the norm, and the overall supply has been tightened. In 2021, all provinces have completed the annual peak-staggered production arrangements according to the peak-staggered production plan. In 2022, all provinces have issued policies to strengthen the implementation of peak-staggered production. For example, the Guangdong Provincial Department of Industry and Information Technology and the Department of Ecology and Environment issued a document requiring the cement industry to do a good job in peak-staggered production-related work. Therefore, it is expected that the implementation efforts of each province will be enhanced and the implementation effect will be improved. At the same time, the staggered production time range of each province will increase compared with 2021, and the overall staggered production tends to be normalized, and the overall supply of cement enterprises has been tightened.

energy consumption dual control policy has been increased, and the progress of new production lines has slowed down. In 2021, as the first year of the development of carbon neutrality , various places have successively issued strict "two highs" project control policies, while major cement provinces such as Shandong, Yunnan, Guangdong, and Jiangsu have continued to increase their policies, strictly control cement production by limiting production, power limit and even shutting down production of cement enterprises, and at the same time limiting the implementation of new production capacity. In 2022, many provinces issued a notice on the approval and upgrading of the "two highs" projects, and the progress of cement production line construction has slowed down under strict approval.

new production capacity replacement regulations are implemented, and continue to promote the high-quality development of the cement industry. On July 20, 2021, the Ministry of Industry and Information Technology issued a notice on the implementation measures for the capacity replacement of cement glass industry. The revised "H Cement and Glass Industry Capacity Replacement Implementation Measures " will come into effect on August 1, 2021. Since the water and mud glass industry started supply-side reform in 2016, the Ministry of Industry and Information Technology has intensively implemented a number of management measures to achieve the effect of controlling excess capacity and reducing new capacity. In this document, we see that from the scope of capacity replacement to the proportion of old capacity replacement has been stricter than before. In 2017, the replacement ratios of the replacement method were 1.5:1 and 1.25:1, respectively, and the replacement ratio increased to 2:1 and 1.5:1. The national industrial structure adjustment catalog restricted cement clinker production line is used as a replacement indicator and a cross-provincial replacement indicator, and the capacity replacement ratio is not less than 2:1. The formal implementation of this replacement method has led to the introduction of supply-side reform policies for the cement industry in various provinces, which will help reduce unnecessary capacity replacement, maintain the supply-side tightening trend of the cement industry, and promote the continued development of the cement industry towards high-quality development.

2.2.2 The dual carbon policy promotes the optimization of the industry structure, and the leader increases investment in environmental protection and focuses on long-term development

single ton cement clinker production emissions of about 0.85-0.90 tons carbon dioxide , of which calcined carbon emissions account for a relatively high proportion. According to , China Cement Association data, my country currently produces 1 ton of clinker and emits about 0.85-0.90 tons of carbon dioxide. During the clinker production process, the raw material limestone is calcined and decomposed by high temperature to form calcium oxide and a large amount of carbon dioxide, and finally produces clinker. In this process, coal is used as the main fuel and combustion produces a large amount of carbon dioxide. According to McKinsey's report, the carbon dioxide emitted by the process of limestone calcination in cement production accounts for about 55%-70% of the total carbon emissions in the entire production process; the carbon dioxide generated by the combustion of fuel during high-temperature calcination accounts for about 25%-40% of the total carbon emissions in the entire production process. There are four main ways to reduce energy consumption in the production link, and the environmental protection costs of cement enterprises will increase. From the analysis of the production link, there are several main ways to reduce energy consumption: ① Optimize the quality of raw coal, cement enterprises need to strictly control indicators such as heat generation, volatile content, and strengthen monitoring of indicators that affect combustion performance, such as coke slag characteristics, moisture, sulfur content, etc. ② Stabilize the quality of clinker, stabilize the raw material components, raw material feeding volume, coal powder components, coal feeding volume and ensure continuous operation of the equipment, thereby improving production efficiency and reducing coal consumption. ③ Equipment technical transformation, comprehensive monitoring, diagnosis and analysis of the operation of major energy-consuming equipment, optimize equipment usage scenarios, implement daily inspection systems, and improve the continuous operation efficiency of equipment. ④ To develop new fuels, a few leading domestic enterprises have the conditions for research and development, and try to replace coal with photovoltaic power generation, wind power and biomass power generation. The above four ways to reduce energy consumption reduce energy consumption in the cement production process from the updating of production equipment and the use of clean energy, but to a certain extent, it increases the environmental protection costs of cement enterprises, and the environmental protection pressure faced by some small and medium-sized cement enterprises has increased.

Cement is a high-energy-consuming industry in the building materials industry, and energy conservation and carbon reduction are imminent. In 2020, the national building materials industry's carbon dioxide emissions were about 1.5 billion tons, accounting for 14.5% of China's carbon emissions. Among them, the cement industry's carbon dioxide emissions reached 1.35 billion tons, accounting for more than 13% of my country's carbon emissions. As the country with the largest carbon dioxide emissions in the world and a medium-term industrialized country, China has huge pressure on the global carbon emission reduction and work, especially bringing huge challenges to the development of the building materials industry, mainly manifested in: 1. The difficulty of project approval is constantly increasing; 2. The cost of energy conservation and emission reduction is constantly increasing; 3. The cost of purchasing carbon emission rights increases the burden on enterprises. The "dual carbon" target accelerates the exit of inefficient production capacity and promotes the optimization of the supply structure. Inefficient production capacity refers to the "zombie production capacity" that has a small economic output of land resources and has been suspended for a long time. Its energy consumption, environmental protection, safety and technical level are often difficult to meet the standards. On October 18, 2021, the National Development and Reform Commission of and five departments jointly issued the "Action Plan for Promoting Energy Conservation and Carbon Reduction in Key Metallurgical and Building Materials Industry Strict Energy Efficiency Constraints (2021-2025)". The plan requires that by 2025, the proportion of capacity in the cement industry's energy efficiency reaches the benchmark level will exceed 30%; on October 11 of the same year, the "Energy Consumption Limit for Cement Unit Products" (Second Revised Edition) was released, and under the standard limit of 117 kgce/(t clinker) of about 25% of the backward production capacity will be eliminated. In summary, the inefficient and low-quality cement production capacity that does not have the advantage of scale has a large carbon emission base and high energy consumption per unit product. It is difficult to increase investment in energy substitution, energy conservation and emission reduction and intelligence, and withdrawal of inefficient production capacity has become a trend.

Leading enterprises continue to increase investment in environmental protection and achieve the strong as always strong in long-term green development. Under the main tone of green development, leading cement enterprises have increased their investment in environmental protection, actively explored new measures to save energy, reduce emissions and reduce carbon emissions, and promote green and low-carbon development through scientific and technological innovation, and reduce carbon dioxide emission intensity through production capacity replacement, improving energy utilization efficiency, and improving raw fuel replacement rate.Among them, Conch Cement plans to invest 5 billion yuan in 2022 to develop new energy businesses such as photovoltaic power plants and energy storage projects, and achieve full coverage of photovoltaic power generation in subordinate factories. It is estimated that by the end of 2022, the installed capacity of photovoltaic power generation will reach 1GW and the annual power generation capacity will be 1 billion kWh; Huaxin Cement and Hunan University have developed a production line to use cement kiln tail flue gas to produce concrete products. Taking the annual production line of 100 million steamed bricks as an example, 26,000 tons of carbon dioxide will be used annually, and the promotion of the national carbon reduction will reach 52 million tons per year. It can be seen that due to its advantages in capital and R&D levels, leading enterprises have played the role of industry leaders in the early stages of green development transformation. In the future, with the continuous in-depth exploration of the technology path for energy conservation and emission reduction, they will achieve the strong as always strong in long-term development.

In the short term, the traditional peak season is approaching, the cement market shows a weak recovery, and the sector valuation is expected to recover. Cement prices reached a peak of 626.5 yuan/ton in November 2021, and have since begun to decline continuously, and have now reached the early stage of the rise in the traditional peak season. The construction rate of engineering projects is expected to increase, providing the main basis for the price increase of cement. Recently, cement companies in the Yangtze River Delta and Pearl River Delta regions have successively issued price increases, with prices planned to increase by 20-30 yuan/ton; at the same time, the shipment rate has increased month-on-month. It is expected that the cement sector will usher in a phased market.

2.3 Cost and profit: The cost support price is high, and the profitability continues to decline in 2022

Energy cost is the main cost of cement production, and the proportion of energy costs of cement enterprises in 2021 has increased significantly. The proportion of raw materials in cement costs is about 20%, coal burning accounts for about 30%, electricity accounts for about 15%, depreciation accounts for about 18%, labor and other 17%. The material consumption ratio of cement production process is 1.2 tons of lime stone produces 1 ton of clinker and 1 ton of clinker produces 1.3 tons of cement; its coal-to-power consumption ratio is 120 kilograms of standard coal and 1 ton of cement, and the comprehensive energy consumption is about 91 kilowatt-hours. In 2021, the domestic coal market was complex and changeable, and the increase in coal prices hit a record high. As an energy-dependent industry, the cost of cement has also increased significantly, and the proportion of fuel and power costs in many companies has increased.

cost supports cement prices at historical highs, and overall shows a slow downward trend. In addition to being affected by short-term supply and demand, cost is another major factor in corporate pricing. In 2021, cement prices showed a trend of decline first and then rising. Since reaching a historical high in October 2021, cement prices have fallen rapidly as coal prices fall, but they still remain at a five-year high. Since 2022, with the gradual decline in energy prices and the relatively limited demand throughout the year, regional competition has significantly intensified, and cement prices have generally fallen rapidly. As of September 23, the traditional peak season for price increase in the cement industry has not arrived. The average price of high-standard cement in national tax was 420.82 yuan/ton, an increase of 1.06% month-on-month; from the perspective of inventory, the national cement inventory capacity ratio was 68.75%, an increase of 0.50pct from last week, and a year-on-year increase of 4.25pct from last month.

price increase to hedge costs, and profitability is still under pressure. Although the average cement price is at a historical high, the sharp rise in costs and the decline in cement production have led to a decline in profits across the industry. In 2021, the cement industry achieved operating income of 1075.4 billion yuan, a year-on-year increase of 7.3%; the total profit was 169.4 billion yuan, a year-on-year decrease of 7.58%, with good revenue performance and pressure on the profit side; in the first half of 2022, 19 listed companies in the cement industry achieved a total net profit of 19.239 billion yuan, a year-on-year decrease of 21.44%; from the perspective of leading companies, the gross profit margins of cement products in Conch Cement, Jidong Cement and Huaxin Cement all declined in 2021, down 3.55pct, 7.41pct and 6.87pct respectively, and the profitability was significantly suppressed, and the hedging of the pressure on cost pressure from rising prices was limited; in the first half of 2022, the gross profit margins of cement products of Conch Cement, Jidong Cement and Huaxin Cement fell to 34.20%, 23.54%, 26.41%, the decline in demand further increased operating pressure, and the price declined, which then compressed profit margins.

policies are intensively introduced to ensure coal supply and stabilize coal prices, and the profitability of the cement industry is expected to improve.The high coal prices in 2021 compressed more profits in the cement industry. In addition, at the beginning of 2022, relevant national departments intensively introduced policies on coal supply and price control, and efforts to ensure and stabilize coal supply and price stability have been continuously strengthened. Since mid-to-late February, the national daily coal production has continued to remain above 12 million tons for more than a year-on-year increase of more than 10%. On February 24, the National Development and Reform Commission further triggered the "Notice of the National Development and Reform Commission on Further Improving the Coal Market Price Formation Mechanism", Notice pointed out: It will guide coal prices to operate within a reasonable range, and at the same time improve the coal and electricity price transmission mechanism, and improve the coal price regulation mechanism. Under the guidance of the central and local policies, coal supply and prices are expected to be stable, and the profitability of the cement industry is expected to be restored to a certain extent.

3. Focus on the regional leader in extending industrial layout of convertible bond fundraising

3.1 Jidong Cement: a leading cement in North China, convertible bond fundraising helps production capacity + business structure optimization

3.1.1 The largest cement manufacturer in the north, with cement production capacity ranks third in China

Tangshan Jidong Cement Co., Ltd. (referred to as "Jidong Cement"), was established on the basis of the former Hebei Hebei Hedong Cement Plant. It was initiated and established by Hebei Jidong Cement Group Co., Ltd. in May 1994. It was listed on the Shenzhen Stock Exchange in 1996. It is the largest cement manufacturer and supplier in northern China. As of June 30, 2022, the company's annual clinker production capacity reached 110 million tons and cement production capacity reached 176 million tons. The main markets cover 13 provinces (municipalities and autonomous regions) including Hebei, Beijing, Tianjin, Shaanxi, Shanxi, Inner Mongolia, Jilin, Chongqing, Henan, etc. The company has obvious market share and market competitive advantages in the north, especially in the Beijing-Tianjin-Hebei region, and its cement production capacity ranks third among domestic cement manufacturing enterprises.

Operating income has grown steadily, and the profit side is temporarily under pressure. The company's long-term growth trend of performance is obvious, with revenue CAGR of 18.33% from 2006 to 2021; the overall fluctuation level of profit side is relatively large. In 2015, due to the overall cement overcapacity and decline in demand in North China, low-price competition occurred and caused losses in the entire industry in North China. The company lost nearly 2 billion yuan; since 2016, the company launched a strategic restructuring to absorb Jinyu Group's cement business to solve the problem of competition among peers, and regain profits that year, and achieved significant growth in 2018-2019. The weakening of the growth rate of real estate infrastructure investment in the past two years has led to a decline in sales volume, while coal prices hit new highs to drive cement prices up. The combined effect of volume and price has led to a slowdown in revenue growth. In the first half of 2022, the company's revenue achieved a counter-trend growth, with a year-on-year increase of 3.24% to 16.845 billion yuan; net profit attributable to shareholders was 1.141 billion yuan, a year-on-year decrease of 7.08%. The pressure on the profit side was mainly due to the sharp increase in coal costs.

company is deeply involved in the Beijing-Tianjin-Hebei market, radiating to Shaanxi, Shanxi and Inner Mongolia regions. The company's clinker production capacity accounts for more than 50% of the total production capacity in the Beijing-Tianjin-Hebei region, and is in a leading position in the regional market. In addition to the Beijing-Tianjin-Hebei region, the company relies on its scale, cost and brand advantages to also have production capacity layouts in many provinces such as Shanxi, Inner Mongolia, Shaanxi, Liaoning, , Chongqing, , etc., mainly concentrated in North China. Currently, the company ranks second in the clinker production capacity in Inner Mongolia and ranks first in the Shanxi region; in 2021, the company acquired a 4500t/d clinker and cement production line related assets of Hongwei Cement and acquired 100% equity of Shanxi Fulong Shui Cement to further enhance its market share and competitiveness in Shanxi Province. Among the company's revenue sources, the proportion of North China region has remained above 60% for a long time and has continued to rise; as of the first half of 2022, the company's revenue sources accounted for 78.24%, and the revenues of Northwest and Southwest regions accounted for an equivalent proportion, both of which were around 6%-7%.

product structure is optimized, and solid waste hazardous waste disposal and aggregate provide new growth points. Cement and clinker are the company's largest main business, with revenue of 31.941 billion yuan in 2021, accounting for 87.90% of revenue, and the long-term revenue share remains above 85%.Since 2019 and 2020, the company has added hazardous disposal of solid waste hazardous waste and aggregate business revenue respectively; in 2021, the company's convertible bond fundraising will expand the harmless disposal capacity of solid waste hazardous waste, with a disposal capacity of 4.68 million tons/year, covering various types of hazardous waste, , domestic sludge, domestic waste, etc.; completed the construction of the sand and gravel aggregate project, and added 10 million tons of aggregate production capacity. In the first half of 2022, the revenue of solid waste hazardous waste disposal business was RMB 629 million, and the revenue of aggregate business was RMB 527 million, accounting for 3.73% and 3.13% respectively. New businesses are expected to expand in the future and provide profit growth points.

The company's gross profit margin has remained at 25%-37% for a long time, and the overall period expense rate has declined. Before 2015, the company's gross profit margin remained above 25%. After a loss in 2015, the company quickly carried out strategic restructuring and other adjustments, and the gross profit margin returned to its original level since 2017. At the same time, the company actively promotes enterprise "training" to strengthen expense control, and the management + R&D expense ratio is stable at 10-15%, and the sales expense ratio and financial expense ratio are declining year by year. In the long run, the company's gross profit margin remained between 25-37%, and its net profit margin remained above 10%. However, due to the sharp rise in coal prices in the past two years, gross profit margin and net profit margin have declined. In the first half of 2022, the company's comprehensive gross profit margin was 23.66%, a year-on-year decrease of 6.07pct; the period expense ratio fell by 1.18pct to 14.70%; the net profit margin reached 7.30%, a year-on-year decrease of 5.11pct. Against the backdrop of adverse changes in upstream coal prices, the company's profitability is under pressure.

reorganization expands the scale of production capacity and consolidates the leading position of North China. Since 2016, the company has launched a strategic restructuring, absorbing about 50 million tons of Jinyu Group's cement business, and the capacity scale has increased significantly. From 2015 to 2020, the company's cement production increased from 51.49 million tons to 94.61 million tons, and the clinker production increased from 42.98 million tons to 82.14 million tons. The production scale expanded by about twice, and its market share in the Beijing-Tianjin-Hebei region reached more than 50%, and its leading cement position in North China has been consolidated. In 2021, the company's cement production volume was 89.31 million tons, a year-on-year decrease of 5.60%; the clinker production volume was 75.07 million tons, a year-on-year decrease of 9.71%, mainly due to the weakening demand for real estate infrastructure investment.

3.1.2 Convertible bonds raised 2.79 billion yuan, capacity replacement reduces costs and controls costs, coordinated disposal and extends the industrial chain

Convertible bonds raised 2.79 billion yuan, used for cement capacity replacement, raw material development and coordinated disposal projects. The company successfully issued convertible bonds in November 2020, with the actual net funds raised of 2.79 billion yuan. Among them, 1.64 billion yuan was used for the capacity replacement project of the cement cooker production line of Tongchuan Company, a wholly-owned subsidiary of the company, located in Shaanxi Province; 190 million yuan was used for the construction of Yangquanshan Mine annex facilities to ensure the supply of limestone for the raw material required for the production of cement clinker of Tongchuan Company; 140 million yuan was used for the coordinated disposal of solid waste hazardous waste of cement kilns of Yangquan Cement, Panshi Cement, Datong Cement and Fengxiang Cement; the remaining 810 million yuan was used to supplement working capital. In September 2021, the cement clinker production line capacity replacement and the Yangquanshan Mine ancillary facilities construction project were officially put into production. As of June 30, 2022, the project has achieved benefits of 61.7659 million yuan and 6.23 million yuan respectively. From February to August 2021, the coordinated disposal projects of Yangquan Cement, Panshi Cement and Fengxiang Cement were officially put into production one after another; as of June 30, 2022, the net profit achieved by the coordinated disposal project of Panshi Cement was negative, the main reason was that the actual operating time of the equipment was short and the disposal volume was low, resulting in the real profit being less than the company's expectations.

① Cement capacity replacement: Meet industrial policy requirements and help the company reduce costs and control costs. According to the requirements of the Ministry of Industry and Information Technology, newly built cement clinker projects must be reduced or replaced in equal quantities, and 1.25 tons of production capacity must be closed and withdrawn for every 1 ton of production capacity. This time, the company's capacity replacement project was eliminated and relocated to build a 12,500t/d cement clinker production line with a capacity of 10,000t/d, and replace it to build a cement clinker production line with a capacity of 10,000t/d to meet the industrial policy's reduction and replacement requirements and the development requirements of regional excess capacity clearance.Capacity replacement is also necessary for the company itself: from 2014 to 2021, the proportion of fuel and power in the company's cement and clinker cost structure will remain between 40% and 49% for a long time, and the cost side will be greatly affected by changes in fuel prices; in 2021, the fuel and power costs increased by 2.96 billion yuan, and the proportion of cost increased by 7.07pct to 46.17%, which is caused by a sharp increase in coal prices. The new production line is built using the world's most advanced second-generation new dry cement technology. According to data from China Water Sludge Network, this process can reduce the overall energy consumption by about 50%, and directly reduce coal consumption by about 115,000 tons per year. The continuous progress of capacity replacement and the application of new processes will help the company reduce coal costs, improve production efficiency and comprehensive competitiveness.

②Correlation treatment of cement kilns: extend the industrial chain and contribute new profit growth points. The method of using the ultra-high temperature of cement kilns to coordinate the disposal of hazardous waste and solid waste has been proven to be one of the most effective disposal methods through years of foreign practice. In recent years, domestic cement kiln collaborative disposal technology and equipment have gradually been improved and matured. The company added a new harmless disposal business of solid waste hazardous waste in 2019, and its gross profit margin remained at around 45% from 2019 to 2021, higher than the gross profit margin of cement clinker business of 14.14-21.95pct. As of the end of December 2021, the domestic cement kiln collaborative disposal qualification capacity has reached 10 million tons, and some regional markets have entered the stock stage, but most provinces still have a large market space. The company's coordinated disposal projects of Yangquan Cement, Datong Cement and Panshi Cement are located in Shanxi and Liaoning. The two provinces have less than 200,000 tons of hazardous waste qualifications, and the number of licenses obtained is 9 and 5 respectively. There is a certain gap in supply and demand, and there is sufficient market space.

3.2 Tibet Tianlu: The main force in infrastructure in Tibet, expanding production and expanding categories in accordance with regional development needs

3.2.1 Tibet’s largest cement production enterprise, with a multi-business layout around infrastructure development

Tibet Tianlu Co., Ltd. (referred to as "Tibet Tianlu") was established in 1999. It was formerly the Engineering Office of the Tibet Highway Bureau established in 1959. It was listed on the Shanghai Stock Exchange in 2001. It is the only listed company in the Tibet Autonomous Region with infrastructure construction as its main business. The company's main business covers the fields of construction, building materials, trade and minerals. Building materials-related business focuses on cement sales. It is currently the largest cement production enterprise in the Tibet Autonomous Region. In 2021, the company completed a cement production of 4.5051 million tons, accounting for 45.43% of the cement production of large-scale industrial enterprises in Tibet that year.

Revenue has generally grown steadily before 2021, and the profit side is under short-term pressure. From 2006 to 2021, the company's revenue increased from 616 million yuan to 5.777 billion yuan, with a CAGR of 16.09%; net profit attributable to shareholders increased from 18 million yuan to 40 million yuan, with a CAGR of 5.34%. In 2022H1, the company achieved revenue of 1.976 billion yuan, a year-on-year decrease of 18.91%. The reasons for the decline are: 1) Cement supply in Tibet is oversupply, the competitive landscape deteriorates, and the decline in cement prices leads to a decline in sales revenue; 2) Trade revenue is changed from the total amount method to the net method to the confirmation of the trade revenue. In 2022H1, the company lost 142 million yuan, a year-on-year decrease of 305.65%. The reason for the decline is that Tibet has a shortage of coal resources and needs to purchase coal from other places. The transportation distance is long and the production costs have increased significantly.

deepens the market of the Tibet Autonomous Region and actively expands business to other regions. The Tibet Autonomous Region has geographical characteristics such as high cold and hypoxia, low air pressure, and strong ultraviolet radiation. Since its establishment, the company has deepened its infrastructure construction in Tibet, accumulated construction experience in special environments such as plateau permafrost, and has become a local main enterprise in the construction of key projects in Tibet, with regional advantages. From 2010 to 2021, the revenue share of the Tibet Autonomous Region was basically above 70%. In addition to the Tibetan market, the company has actively expanded its business to other regions through acquisitions and other means in recent years, and has added new business revenue in other regions since 2017. In 2019, the company acquired Chongqing Regeneration, and the holding subsidiary was mainly engaged in the production, processing and sales of asphalt concrete in the southwest region and related highway and municipal engineering businesses, thereby further increasing the company's revenue share in other regions. 2022H1 The company's revenue sources accounted for 64.93% of the Tibet Autonomous Region, while other regions accounted for 35.07%.

From construction to construction + building materials to increasing minerals and trade, the business structure tends to be diversified.The company focuses on infrastructure construction in Tibet Autonomous Region, and its business structure has developed from building materials and buildings mainly based on cement and concrete. In recent years, it has added mineral and trade industries, and has expanded municipal engineering, aggregate and other businesses in the construction and building materials industry. From 2010 to 2020, the proportion of road engineering revenue in the construction industry decreased from 57% to 9%; the proportion of cement revenue in the building materials industry increased from 31% to 74%, and then decreased to 45% with the increase in other businesses, and the proportion of commercial concrete revenue increased from 2% to 9%. In 2019, the company added the company's new holding subsidiary, Re-funded Recycled asphalt concrete and related product business. In 2022H1, the business achieved revenue of 112 million yuan, accounting for 6% of revenue; in 2020, the company added the company's new holding subsidiary, Tianlu Guomao's commodity trading business. In 2022H1, the business achieved revenue of 42.15 million yuan, accounting for 2% of revenue.

The company's gross profit margin is under significant short-term pressure, and it fell by 19.86pct in 2022H1 year-on-year. From 2006 to 2020, the company's gross profit margin overall rose, jumping from 16.05% to 26.40% in 2014, and then it stabilized in the range of 26~32%. In the past two years, the company's profitability has been under short-term pressure due to the increasing fierce market competition and the shrinking demand in the cement market. In the first half of 2022, the company's profitability continued to be under pressure, with gross profit margin falling by 19.86pct to 8.55% year-on-year. With the gradual implementation of new projects brought by the 14th Five-Year Plan, the company is expected to usher in space for performance recovery. The management + R&D expense ratio fluctuates and the sales expense and financial expense ratios are relatively stable. Since 2014, in order to improve management efficiency and employee retention, the company has hired a special management team to increase employee salaries and benefits, which has increased management expenses. In the first half of 2022, the management + R&D expense ratio decreased by 0.14pct to 12.39% year-on-year. The previous changes in sales expenses were relatively stable, and only increased significantly in 2020, which was caused by changes in sales contracts and increased freight costs. In the first half of 2022, sales expenses fell by 6.49pct year-on-year to 1.11%, financial expenses rose by 1.18pct year-on-year to 3.89%, and the overall period expense ratio decreased by 5.45pct to 17.40%.

cement production and sales have grown steadily, which is closely related to Tibet's overall cement demand. In 2018, the demand for cement in Tibet's large-scale engineering projects was relatively strong, with the company's cement production and sales reaching 6.42 million tons, a year-on-year increase of 23.46%; the start of key projects has been postponed since 2020, and the demand for cement weakened, and the overall cement production growth rate in Tibet dropped from 20.65% in 2018 to 0.38% in 2020; the company's cement production and sales growth rate decreased accordingly, and it tended to have a steady growth. In 2021, the company's cement production reached 4.5051 million tons, a year-on-year decrease of 30.69%.

3.2.2 Convertible bonds raised 1.09 billion yuan, expanding production to meet regional needs, and acquiring and cultivating new profit points

Convertible bonds raised 1.09 billion yuan, used for clinker, cement and concrete expansion, and repurchase Regeneration Shares acquisition and capital increase projects. The company successfully issued convertible bonds in August 2019, raising a total of 1.09 billion yuan. Among them, 380 million yuan will be used for the construction of clinker cement production line in Chamdo; 150 million yuan will be used for the construction of cement grinding station in Linzhi; 400 million yuan will be used for the expansion of commercial concrete production and environmentally friendly transformation of the original line in Shigatse; 220 million yuan will be used for the subscription and capital increase of Chongqing Jiao Regeneration. After the transaction is completed, Chongqing Jiao Regeneration will become the company's holding subsidiary; the remaining 300 million yuan will be used to supplement working capital. In March 2020, the acquisition and capital increase project of Chongqing Jiaojiao Regeneration was completed. At present, all projects have reached the scheduled usable state, but due to environmental protection inspection restrictions, the Changdu production line is in a state of rectification, and the corresponding project demand for the Linzhi production line is insufficient. Therefore, as of now, each project has lost 20.61 million yuan.

① Expansion of cement clinker production: layout in the eastern Tibetan region to meet regional needs. Although the overall cement supply in the Tibet Autonomous Region has increased, there is still an uneven regional layout. Cement production lines are mainly distributed in western Tibet areas such as Lhasa and Shigatse, while the development in eastern Tibet is relatively lagging behind. There is a large market gap in the context of the construction of multiple key infrastructure projects. Taking Linzhi in the eastern Tibet as an example, from 2021 to 2022, the reference price of 42.5 grade cement in Linzhi remained between 595 and 683 yuan/ton, while the price of cement in Shigatse in western Tibet fell to 498 yuan/ton at the lowest, and the overall high-standard cement price in Tibet fell to 460 yuan/ton at the lowest.Linzhi cement prices remain stable in the face of the decline in the overall cement prices in Tibet, reflecting the relatively sufficient cement market demand in the Linzhi area. The Chamdo clinker cement production line project and the Linzhi cement grinding station project are both located in western Tibet, aiming to fill the market gap, and there is expected to be sufficient capacity to digest.

②Chongjiao Recycling Co., Ltd. Acquisition: expand the business structure and improve profitability. Chongqing Jiaojiao Regeneration is the first national high-tech enterprise in Chongqing that focuses on the recycling and reuse of construction solid waste and full pavement construction and maintenance services. Its main business is the production, processing and sales of recycled asphalt concrete, municipal road engineering construction and technical consultation and testing services, etc. It occupies a large market share in the southwest region, especially in Chongqing. In 2019, Chongqing Jiao Recycling's revenue was included in the company's merger scope in December, contributing a total revenue of 90.88 million yuan; in 2020, Chongqing Jiao Recycling's asphalt concrete and related products business contributed 387 million yuan, and technical services contributed 41.56 million yuan, accounting for a total revenue of 6.06%. This acquisition will help the company enrich the business structure of the building materials and construction industry, expand the business area, and cultivate new profit points.

3.3 Wannianqing: Jiangxi regional leader, continuously improving the ability to coordinate energy utilization and business

3.3.1 Jiangxi regional market share is the first, reducing costs and increasing efficiency is effective

Jiangxi Wannianqing Cement Co., Ltd. (referred to as "Wanianqing") was founded in 1997 by Jiangxi Cement Plant as the sole initiator and listed on the Shenzhen Stock Exchange in the same year. It is the first listed company in the building materials industry in Jiangxi Province. The company is the earliest manufacturer in the country to adopt the new domestic dry cement process line. It now has 6 clinker production bases, including Wannian, Yushan, Ruijin, Yudu, Leping, De'an, etc., and 7 grinding companies. The annual clinker production capacity is 15 million tons and cement production capacity is 26 million tons. The company's cement products are best sold in most areas of Jiangxi, Jiangxi, eastern Jiangxi, northern Jiangxi, as well as surrounding provinces such as Fujian, Zhejiang, and Guangdong, and rank first in Jiangxi's market share.

has grown rapidly in the past five years, and achieved a joint growth of revenue + profit in 2021. From 2006 to 2021, the company's revenue CAGR reached 21.02%, and the net profit attributable to shareholders reached 40.62%. In 2015, affected by the domestic macroeconomic downturn, the company's net profit attributable to shareholders declined year-on-year; in 2017, thanks to the "supply-side structural reform" of the cement industry, the company's operating income and net profit attributable to shareholders began to significantly increase; in 2020, under the dual influence of the new crown epidemic and the Jiangxi flood season, the company's net profit attributable to shareholders was increased by 8.15%. Against the backdrop of rising energy prices in 2021, the company achieved operating income of 14.205 billion yuan in 2021, an increase of 13.37% year-on-year; net profit attributable to shareholders was 1.593 billion yuan, an increase of 7.61% year-on-year. In 2022H1, dragged down by the recession of the cement industry, revenue fell 1.79% year-on-year to 5.844 billion yuan, and net profit attributable to shareholders fell 40.53% year-on-year to 492 million yuan, mainly due to the sharp decline in cement gross profit margin.

Management + technology to reduce costs and increase efficiency, and the period cost rate is at a low level in the industry. From 2006 to 2022H1, the company's long-term gross profit margin was 24%, and the gross profit margin fluctuated simultaneously with the net profit margin, resulting in significant cost reduction results. In 2022H1, the company's gross sales profit margin fell by 8.75pct to 19.58%; the net sales profit margin fell by 7.39pct to 11.67%. In recent years, the company has continuously improved management energy efficiency. On the one hand, it has improved the direct supply of raw materials procurement and established a long-term cooperation mechanism with large state-owned mines. The direct supply volume in 2020 reached 70%; on the other hand, it has adjusted the procurement plan in a timely manner based on coal prices, and the procurement prices of cement and clinker fell throughout 2020. In addition, the company invested 262.3498 million yuan in 2019 to steadily promote three projects and scientific and technological activity projects, implemented 345 technical transformations, with a completion rate of 65.22%, and the standard coal consumption decreased by 1.88kg/t year-on-year; in 2020, it invested 119.71 million yuan to promote five technical transformation projects, and energy consumption is expected to further decrease. In the first half of 2022, the company's management + R&D expense ratio fell by 0.18pct to 4.84% year-on-year, the sales expense ratio fell by 0.03pct to 1.14% year-on-year, and the financial expense ratio rose by 0.05pct to 0.15% year-on-year, and the three major expense ratios were at a relatively low level in the industry.

deeply cultivates the Jiangxi market and radiates to Fujian, Zhejiang and Guangdong.Jiangxi Province is located in the hinterland of the Yangtze River Delta, the Pearl River Delta and the southern Fujian Triangle. Due to the complex terrain, cement products from other provinces are not easy to enter, forming a semi-closed regional market with more output than input. The cement industry in Jiangxi has reached 80%, and the company's market share in Jiangxi is 23%, ranking first, and its products are best sold in southern Jiangxi, eastern Jiangxi and northern Jiangxi. As of 2022H1, the company's revenue source accounted for 97.46% of the East China region, of which 90.80% were accounted for 90.80%; Hubei region accounted for 1.47% and Guangdong region accounted for 1.07%.

extends the upstream and downstream industrial chains and develops the aggregate and trade industries. The proportion of the company's cement business revenue has dropped from 84% in 2010 to 59% in 2020, and its business structure has gradually become diversified. In the upstream, the company has used mining resources to layout its aggregate business. The three aggregate projects were completed and put into production in 2020, with a total production capacity of 9 million tons; in the downstream, De'an Company and Yudu Company have coordinated the construction of cement kilns in order to promote solid waste projects, jointly improving the company's cost-end control capabilities; relying on resource advantages, the company has added and developed the logistics trade industry in 2020, the Ganzhou Logistics Park project has started construction, and the bulk raw materials and building materials trade platform has been built and operated. In 2022H1, the company's trading business contributed 1.518 billion yuan in revenue, accounting for 26%.

actively expands the market, and cement and clinker production has grown steadily. From 2011 to 2021, the company's cement production CAGR was 5.17%, and the clinker production CAGR was 3.71%. The company adheres to the business strategy of "share priority and sales promotion" and actively expands channels such as mixing stations and engineering markets, while strengthening marketing team building and brand marketing to consolidate and increase market share. In 2021, the company's cement production volume was 24.6867 million tons, an increase of 2.45% year-on-year; the clinker production volume was 17.7953 million tons, an increase of 6.25% year-on-year. Under the negative impact of the epidemic and the decline in demand, the company has actively expanded the market and fully utilized its regional leading advantages, which has led to a year-on-year increase in cement clinker production in 2021.

3.3.2 Convertible bonds raise 1 billion yuan, expand and improve the coordination capabilities of production and technical transformation, expand and optimize production capacity,

Convertible bonds raise 1 billion yuan, used for clinker cement production expansion and technical transformation projects. The company successfully issued convertible bonds in June 2020, with a total amount of funds raised of 1 billion yuan and a net amount of funds raised of 997 million yuan. Among them, 397 million yuan will be used for the construction of a 6600T/D clinker cement production line in De'an County, and the waste heat power generation system will be built simultaneously and the urban domestic waste treatment project will be reserved. After reaching production, 1.98 million tons of cement clinker can be produced annually; 560 million yuan will be used for the construction of a 2×5100t/d clinker cement production line in Wan'an County, and the waste heat power generation system will be established simultaneously and the urban domestic waste collaborative treatment system will be reserved. After reaching production, 3.06 million tons of cement clinker can be produced annually. On November 31, 2020, the De'an Line clinker cement production line was officially put into production; on September 30, 2021, a clinker cement production line of Wannian Cement Plant has been put into production. As of the end of 2021, the two projects achieved a total profit of 170 million yuan.

Expand production technology transformation to improve coordination capabilities and expand and optimize production capacity. ①The expansion and technical transformation project of clinker cement are equipped with low-temperature waste heat generation systems, which can recycle waste heat of waste gas discharged into the atmosphere, accounting for 35% of the heat consumption of clinker firing system, increasing the energy utilization rate to more than 95%, and it is expected to further reduce fuel power costs; at present, the qualification capacity of cement kilns coordinated disposal in Jiangxi Province is less than 200,000 tons, and the market demand is relatively strong. This expansion and technical transformation project reserves a coordinated disposal system for urban domestic waste, which will help promote the coordinated disposal of cement kilns and cultivate new profit points. ② The fundraising project follows the requirements of total capacity control. After the ignition of the new clinker cement production line in De'an County was successfully completed, an old production line located in the same area was completely stopped; the two production lines, expansion and technical transformation, both adopt process technologies with lower energy consumption and higher intelligence, and are close to the distribution area of ​​raw material limestone resources, expanding and optimizing the company's original production capacity in northern Jiangxi, which is conducive to seizing the market space after Jiangxi Province eliminates backward production capacity.

(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)

selected report source: [Future Think Tank]. system error