Guangdong Tapai Group: Net profit of 1Q14 increased by 224.47%


Updated Thu, 29 May 2014 15:02:23 GMT

China - Guangdong Tapai Group Co., Ltd recorded a good performance during the first half of 2014. According to the quarterly performance report of Tapai Group, net profit of the company increased greatly by 224.47% YoY. In addition, Tapai Group expected its net profit to grow by 180%-230% in 1Q14. Securities Traders Research Report shows that since the beginning of this year, cement price in Guangdong has remained high, and the demand in the main market of the company is expected to continue.

As in the 1st quarterly performance report, net profit attributable to shareholders of the listing corporation in the first half of 2014 is expected to grow by 180%-230%, which was owed to effective improvement in the supply and demand relationship in the regional cement market, great increase in cement price compared with the same period last year, as well as significant improvement in profitability.

Good performance of the company is closely related to the cement price. The 1st quarterly report shows that cement output of the company in 1Q14 was 2.61mln ton, a YoY increase of 2.9%; sales volume was 2.39mln ton, a YoY growth of 9.6%; the average sales price of cement increased by 23.2%; average cost of cement declined by 4.5%; integrated gross margin of the company increased from 21.3% to 37.9%, an increase of 16.7 percentage points; net profit attributable to shareholders of the listing corporation (deducting non-recurring gains and losses) increased significantly by 310.4% YoY.

Seeing from different regions, more than 85% of the company’s income came from Guangdong. Since the beginning of this year, cement price of Guangdong has remained high. Key construction projects plan summary of Guangdong Province in 2014 shows that in 2014, Guangdong plans to invest 450bln yuan, among which about 229.8bln yuan will be invested in infrastructure, and the situation that high demand for cement in the fourth quarter of 2013 is expected to continue in the year of 2014. In the aspect of the supply, since 2012, new clinker production capacity of Guangdong has been falling greatly, and the backward cement production capacity was eliminated by 17mln ton in 2013, which ranked the first in elimination volumes across the country. The supply growth slowed, and the improvement in supply and demand pattern will bring improved profit.

In 2014, the regional supply and demand pattern is expected to be further improved. On the capacity eliminating list issued by the state in 2013, Guangdong Province had planned to eliminate 14.18mln tons of cement production capacity, and its elimination volume ranked the first. While Guangdong Province actually eliminated 16.87mln tons of backward cement production capacity, which exceeded the index. At present, the total clinker production capacity under construction is 17mln ton, and as the capacity will not be completely released in 2014, thus the supply and demand pattern is expected to be further improved even if the demand growth slows.