We are a comprehensive building material enterprise engaged in the production and sale of cement, clinker, concrete and aggregate, and operating businesses of environmental protection, equipment manufacturing, EPC engineering and cement-based new building materials. Since the founding of our predecessor, Huaxin Cement Plant, in 1907, and over a century of doing business in the PRC, our manufacturing brand is renowned nationwide. According to the China Cement Association, we ranked 5th among all leading Chinese cement manufacturers in terms of operating income of cement in 2020 with a market share of 2.6%.
We currently produce and sell a variety of cement products, mainly under the trademarks “華新堡壘” (Huaxin Castle) and “華新師傅” (Huaxin Master). Operating income generated from our cement and clinker, concrete and aggregate businesses represented approximately 95.4% of our total operating income in 2020. We also operate other ancillary businesses, mainly including the environmental protection business, the cement-based new building materials business, the equipment manufacturing business and EPC engineering business, the operating income from which represented approximately 3.9% of our total operating income in 2020.
We are committed to producing our products in an environmentally friendly manner. Our strong industry expertise and our research and development capabilities enable us to successfully develop various waste processing and green production technologies, such as “Huaxin Technology and Application of Effective and Ecological Co-processing of Solid Wastes in Cement Kiln” (華新水泥窯高效生態化協同處置固體廢棄物 成套技術與應用), “Cement Kiln Pure Low-Temperature Residual Heat Power Generation Technology” (水泥窯純低溫餘熱發電技術) and the “Nitrogen Oxide Emissions Reduction by Combination of ’Low-NOx Combustion + Staged Combustion + Selective Non-catalytic Reduction (SNCR) + Cement Kiln Biomass Co-processing’ Technology” (低氮燃燒+分級燃 燒+SNCR+水泥窯協同處置生物質降氮技術).
As of September 30, 2021, we had more than 250 subsidiaries or branches across 14 provinces, autonomous regions and municipalities in China and six foreign countries, including 43 integrated cement production plants with 52 clinker production lines, 13 independent cement grinding plants, 63 concrete batching plants and 23 aggregate production plants in China. As of the same date, we operated nine production plants in five countries outside China, namely Tajikistan, Kyrgyzstan, Uzbekistan, Cambodia and Tanzania consisting of six integrated cement production plants which were equipped with six clinker production lines in total, as well as one independent cement grinding plant, one cement packaging bag manufacturing plant and one concrete batching plant. As of September 30, 2021, our overall BDP capacity for clinker was approximately 73.9 million tons per year, our capacity for cement grinding was approximately 114.8 million tons per year (including the capacities for trial operation), our production capacity for concrete was approximately 35.5 million cubic meters per year, and our production capacity for aggregate was approximately 76.3 million tons per year.
During the Track Record Period, we sold most of our products in China, primarily in Hubei, Hunan, Sichuan, Chongqing, Yunnan, Guizhou, Henan, Guangdong and Tibet. We sell our cement directly to end-customers through our extensive sales network as well as through distributors. As of September 30, 2021, we had 105 regional sales offices covering 122 cities in 18 provinces, autonomous regions and municipalities in China, and seven regional sales offices in six countries abroad. More than 90% of our customers use the Huaxin Market system and the Major Client Management System, which are our self-developed systems supporting the entire business process of order placement, payment, logistics and settlement.
We have won numerous awards and recognitions for our renowned brands throughout the years. For example, our brands have been listed among China’s 500 Most Valuable Brands (中國500最具價值品牌) for eight consecutive years and we ranked 80th in 2021 with a brand value of RMB70.3 billion, and been listed among the Top 500 Asia Brands (亞洲品牌五百強) for five consecutive years and ranked 168th in 2020. We also ranked 258th among the Top 500 Chinese Manufacturing Enterprises (中國製造企業500強) in 2020, have been listed among the Top 100 Chinese Listed Enterprises (中國上市公司百強企業) for three consecutive years and ranked 86th in 2020, and been listed on the Fortune China 500 List (《財富》中國500強) for 11 consecutive years and ranked 308th in 2020. Our “華新堡壘” (Huaxin Castle) trademark was honored as a Well-known Trademark in China (中國馳名商標), and is one of the oldest cement production brands in the PRC, according to the CIC Report.
In 2018, 2019, 2020 and the nine months ended September 30, 2020 and 2021, our operating income was approximately RMB27,466.0 million, RMB31,439.2 million, RMB29,356.5 million, RMB20,411.7 million and RMB22,453.9 million, respectively, and our net profit was approximately RMB5,705.5 million, RMB7,020.8 million, RMB6,173.6 million, RMB4,430.6 million and RMB3,894.4 million, respectively.
On October 18, 2021, the NDRC and other departments jointly issued Several Opinions of the National Development and Reform Commission and other departments on Promoting Energy Conservation and Carbon Reduction in Key Fields by Strictly Restricting Energy Efficiency (《國家發展改革委等部門關於嚴格能效約束推動重點領域節能降碳的若干意見》) and Action Plan on Promoting Energy Conservation and Carbon Reduction by Strictly Restricting Energy Efficiency in Key Industries of Metallurgy and building Materials (2021–2025) (《冶金、建材重點行業嚴格能效約束推動節能降碳行動方案 （2021–2025年）》) (the “Action Plan”). The Action Plan sets out a mandatory minimum energy efficiency standard for clinker production of 117 kgce/t, and a voluntary, advanced standard of 100 kgce/t. By 2025, production facilities representing more than 30 percent of production capacity in cement and clinker industries are expected to meet the reach standard through the adoption of energy-saving and carbon emission reduction measures. In light of the new environmental protection regulations, we target to improve the energy consumption efficiency and reduce the fuel consumption for clinker production to 117 kgce/t by the end of 2022. Moreover, we plan to improve the energy efficiency of our kiln lines with a production capacity of 2,500 tons or less to 100 kgce/t.
For details of the measures we plan to take, see “Business — Environmental Compliance and pollution Controls — Our Green Production Technologies.” In accordance with the Industrial Policy for the Cement Industry (《水泥工業產業政策》), the PRC government has implemented policies eliminating backward production capacity, with a focus on supporting construction of new dry-process cement projects with a daily output of 4,000 tons or more in resource-rich areas. During the Track Record Period, we shut down four kiln lines with a total daily production capacity of approximately 8,000 tons of clinker, representing approximately 4.0% of our total production capacity, and had built a new cement kiln line with an annual capacity of 2.85 million tons of clinker, or 7,800 tons per day, as part of our capacity replacement plan.
Source: Huaxin Cement (06655) Prospectus (IPO Date : 22/03/2022) |