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China’s property market has been in a prolonged downturn since 2022. The spillover impact of the country’s real estate crisis, coupled with a general slowdown in China’s economy after the COVID-19 pandemic has had a profound impact on the country’s cement manufacturers. Visible Alpha consensus estimates for key Chinese cement companies, including China National Building Material (HKG: 3323), Anhui Conch Cement (SSE: 600585), and China Resources Cement (HKG: 1313), reveal a challenging outlook for the cement industry in the forecast period.

In contrast, as previously discussed in an earlier article, the Indian cement industry is poised for growth. Major players in the industry, including UltraTech Cement (NSE: ULTRACEMCO), ACC (NSE: ACC), and Ambuja Cements (NSE: AMBUJACEM), are expected to achieve steady growth. According to Visible Alpha consensus, revenues for UltraTech Cement, ACC, and Ambuja Cements are forecasted to increase by +13%, +12%, and +12% year over year respectively in 2023 for these Indian cement companies.

Concrete concerns: Muted revenue projections for China’s cement manufacturers

After implementing continuous COVID-19 response measures since 2020, China re-opened its doors to the world in December 2022. However, the depressed real estate market, declining demand, and falling prices have led cement revenues for key players, including China National Building Material (HKG: 3323), Anhui Conch Cement (SSE: 600585), and China Resources Cement (HKG: 1313), to decline since then. In 2022, China National Building Material, China’s leading cement producer, reported a -19% year-over-year decline in total cement and clinker revenue.

Having been impacted by pandemic-related restrictions as well as domestic and international headwinds, the country’s cement industry is now starting a fresh chapter with new obstacles. The cement downcycle is expected to persist through 2023, driven by China’s developer credit crisis. According to Visible Alpha consensus, Chinese cement companies are expected to continue to see a declining trend in 2023, with China National Building Material estimated to see a -18% year-over-year decline in cement and clinker revenues. Anhui Conch Cement, which observed a -17% decline in cement and clinker revenue in 2022, is expected to continue to see revenues decrease by -10% in 2023. Similarly, China Resources Cement is anticipated to experience a -20% decline in cement and clinker revenues in 2023, following a -26% decrease in 2022. Looking forward, analysts expect revenues to continue to decline in 2024, across all key players, albeit less aggressively. Further, revenues are forecasted to remain significantly below pre-pandemic levels until 2028.

Figure 1: Leading cement manufacturers’ revenue breakdown and projections

Leading cement manufacturers revenue breakdown and projections

Dwindling prices and shrinking volumes

The slowdown in revenue projections is also reflected in the average realized price and sales volume projections for the three cement companies. Amid China’s worsening property downturn, average realized prices for all three manufacturers have been on a decline. Prices dropped by -6%, -11%, and -16% year over year in 2022 for China National Building Material, Anhui Conch Cement, and China Resources Cement, respectively. Based on Visible Alpha consensus, prices are projected to decline further in 2023. China National Building Material is estimated to see a decline of -14% year over year, with prices reaching an estimated low of CN¥285 per ton of cement in 2023. Similarly, Anhui Conch Cement’s cement prices are projected to fall -11% year over year, and China Resources Cement by -13%. Growth is estimated to remain almost flat in the forecast period.

Similarly, the sales volume of cement & clinker fell drastically in 2022, and projection estimates suggest further declines in 2023 and the forecast period beyond.

Figure 2: China’s real estate downturn results in sales decline and price slump

China real estate downturn result in sales decline and price slump


From peak profits to margin erosion

2017-2019 was a period of exceptionally high profits for Chinese cement companies. This was fueled by a thriving real estate sector and unprecedented cement demand. In 2019, China National Building Material achieved a gross margin of 40%, while Anhui Conch Cement reached 32% and China Resources Cement hit 40%. However, as revenue, ASPs, and volumes come under pressure, gross margins have also taken a hit. Gross margins have been on a decline since 2020, and are estimated to reach their all-time low in 2023. China National Building Material is estimated to see gross margins reach 16% in 2023, while Anhui Conch Cement and China Resources Cement are estimated to see gross margins decline to 18% and 14% respectively.

On a per-ton basis, these cement companies are expected to see their gross profits per unit of cement & clinker almost halve in 2023. Shrinking demand, falling prices, and high costs are estimated to shrink China National Building Material’s gross profits to CN¥60 per ton of cement & clinker. This is compared to CN¥151 per ton of cement & clinker in 2019. Similarly, Anhui Conch Cement’s gross profits per unit are estimated to decline to CN¥73 per ton of cement & clinker, and China Resources Cement to CN¥40 per ton.

Figure 3: Continued profit erosion for leading cement players

Continued profit erosion for leading cement players

We have examined three Chinese cement companies, delving into several key performance indicators (KPIs) such as cement revenues, average realized prices, volume sold, and gross margins. For a more comprehensive insight into the various factors influencing the broader cement industry and where investors should look to find an investment edge, please refer to our recently published Guide to Cement Industry KPIs.

In our weekly round-up of the top charts and market-moving analyst insights: the move to accelerated computing is driving Nvidia’s (NASDAQ: NVDA) data center segment growth; analysts lower earnings and FCF projections for RTX (NYSE: RTX) after Airbus jet grounding announcement; Lundin Mining’s (TSE: LUN) copper mine acquisition is poised to boost production and cut costs.

Nvidia’s Data Center Segment Driven by Move to Accelerated Computing

Generative AI’s (GAI) continuing move toward accelerated computing has created a sharply increased demand for Nvidia’s (NASDAQ: NVDA) data center platform, especially its data center GPUs (graphics processing units).

According to Visible Alpha’s consensus, analysts expect the data center segment to account for 76.1% of Nvidia’s total revenue in fiscal 2024, a substantial increase from 55.6% in 2023. Nvidia’s total revenue is estimated to rise by 103% year over year in fiscal 2024, primarily driven by an estimated 178% year-over-year increase in data center revenue. Revenue generated from the data center segment in 2024 is projected to reach $41.7 billion in FY 2024 from $15 billion in FY 2023. Analysts also expect the company overall to generate $26.9 billion in operating income in 2024, up from $4.2 billion in 2023.

To learn more about Nvidia’s latest developments and insights following the company’s Q2 FY2024 earnings report, explore our Post-Q2 FY2024 Earnings Update on Nvidia.


Analysts Lower Earnings and FCF Projections for RTX After Airbus Jet Grounding Announcement

RTX Corporation (formerly Raytheon Technologies) (NYSE: RTX), the U.S. aerospace and defense company, announced on September 11, 2023, the grounding of an estimated 600-700 of its Pratt & Whitney Geared Turbofan (GTF) engines from Airbus A320neo jets. The reason for the grounding is to conduct quality inspections between 2023-2026 due to a manufacturing flaw. RTX operates through four segments: Collins Aerospace, Pratt & Whitney, Raytheon Intelligence & Space, and Raytheon Missiles & Defense, and this issue primarily impacts the Pratt & Whitney segment of the company.

As a result, analysts have adjusted their EPS and free cash flow expectations downward, with a projected decrease in diluted EPS (GAAP) of -44% year over year and free cash flow of nearly -14% year over year in 2023, according to Visible Alpha consensus estimates. Analysts expect an operating loss of -$1.25 billion in 2023 for the company’s Pratt & Whitney segment, but recovery is expected to commence starting in 2024. (Note: These data points are from Visible Alpha’s custom consensus, focusing only on brokers who have factored RTX’s announcement into their models.)


Mine Acquisition to Boost Lundin’s Copper Production, Cut Costs

Toronto-based mining company Lundin Mining (TSE: LUN) made a significant move in July 2023 by acquiring a 51% ownership stake in SCM Minera Lumina Copper Chile, which operates the Caserones copper-molybdenum mine in Chile. This mine is strategically located just around 100 kilometers away from Lundin’s Candelaria operation in Chile and only 20 km from its Josemaria project, located across the border in Argentina.

Based on Visible Alpha consensus estimates, following the acquisition, Lundin’s cash cost per unit net of by-products – copper (per Kton) is projected to trend downwards starting in 2024, while copper production volume is expected to pick up. The geographic proximity among the three mines is expected to create opportunities for synergies in terms of supply, logistics, and management. Analysts anticipate that these synergies will result in cost reductions for the company as shared resources and infrastructure are efficiently optimized. In 2024, copper production is projected to ramp up to 370 Ktons from an expected 292 Ktons in 2023 (+26.5% expected year-over-year). Meanwhile, cash cost per unit, net of by-products, is estimated to be $3.98 per Kton of copper in 2024, down from a projected $4.82 per Kton in 2023 (-17.5% expected year-over-year).


Key Takeaways

  • Cement demand in India has experienced robust growth due to increased spending on infrastructure, momentum in urban housing projects, and a recovery in rural demand.
  • Additionally, coal prices have reached a two-year low, resulting in cost deflation and improved profit margins.
  • The combination of rising demand and lower costs is benefiting the entire cement industry in India.

Indian cement manufacturers are expected to see a growth surge in 2023 and beyond, buoyed by a combination of robust demand and a decline in coal prices. Key players in the industry, including UltraTech Cement (NSE: ULTRACEMCO), ACC (NSE: ACC), and Ambuja Cements (NSE: AMBUJACEM) are expected to achieve steady growth, with revenue up 21%, 9%, and 13% respectively in 2023, according to Visible Alpha consensus.

Capacity expansion and a positive demand environment are expected to drive this growth, while the easing of input costs along with cost optimization measures are projected to improve margins.

Revenues are expected to continue to grow in the forecasted years. Among the leading players, UltraTech, India’s largest cement manufacturer, is expected to outpace peers with strong revenue expectations throughout the forecast period. Demand in the industry is projected to remain strong as India’s government remains focused on infrastructure developments while rapid urbanization fuels demand for real estate.

Figure 1: Total Revenue Projections

Softening Coal Prices to Aid Margin Outlook for Indian Cement Manufacturers


Operating margins for these leading players have been declining over the last two years due to high input costs. In 2023, analysts expect operating margins for leading cement manufacturers to decline sharply, mainly driven by a substantial 45% year-over-year increase in power and fuel expenses, along with a 41% increase in raw material expenses.

Figure 2: Power & Fuel Expenses

Softening Coal Prices to Aid Margin Outlook for Indian Cement Manufacturers

Note: YoY growth calculated based on the annual aggregates of major expense lines for UltraTech Cement (NSE: ULTRACEMCO), ACC (NSE: ACC), and Ambuja Cements (NSE: AMBUJACEM).

However, analysts expect margin prospects to be positively influenced starting in 2024, due to the anticipated reductions in power and fuel expenses, which constitute a significant portion of the overall expenses for cement manufacturers.

According to Visible Alpha consensus, in 2023, UltraTech Cement, ACC, and Ambuja Cements are estimated to spend 31%, 27%, and 35% of their total costs and expenses, respectively, on power and fuel. However, by 2024, these percentages are projected to decrease, with power and fuel expenses expected to represent 28%, 24%, and 31% of the total costs and expenses for UltraTech Cement, ACC, and Ambuja Cements, respectively.

Figure 3: Coal Prices

Softening Coal Prices to Aid Margin Outlook for Indian Cement Manufacturers


The projected declines in power and fuel expenses can be attributed mainly to coal, a crucial component in the cement manufacturing process and a key expense line in power and fuel expenses for cement companies. Coal prices surged in 2021-22 as production failed to keep pace with rebounding coal demand post-COVID.

However, India’s coal production is expected to recover starting in 2023, resulting in improved availability and easing prices. This easing of coal prices is expected to bring relief to cement manufacturers as costs go down. Lower fuel prices along with strong volume growth is projected to drive margin improvements starting in 2024.

Figure 4: Operating Margins

Softening Coal Prices to Aid Margin Outlook for Indian Cement Manufacturers

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