On August 21, China Resources Cement (HK1313) announced its interim results for the six months ended 30 June 2020 (the "Period"). During the Period, the Company's consolidated turnover decreased by 3.0% over the corresponding period last year to approximately HK$16.88 billion. Profit attributable to owners of the Company increased by 11.3% over the corresponding period last year to HK$4.19 billion, reaching the historically new high. The Board suggested pay out the interim dividend per share of HK$0.275, and dividend payout ratio was 45.8%.
On August 24, the Group organized the interim results presentation meetings via telephone conference, amounting to 100 analysts and fund managers participated in the meeting, which reflected the capital market's intensive attention to the Group. On August 24, the stock price closed at HK$11.58 with 7.62% increase, reaching the new high of the stock price. And the total market capitalization broke through HK$ 80 billion for the first time.
In the face of novel coronavirus epidemic, the Group set up a leading group and a working group for epidemic prevention and control work in January, with the Chief Executive Officer as the group leader to coordinate epidemic prevention and control work and form public health contingency plans, relevant systems and regulations for epidemic prevention and control. After establishment, the leading group and the working group for epidemic prevention and control work held many video conferences, informed the epidemic prevention and control work, established the contingency resolution plans, required each unit to place the lives, safety and physical health of employees as the first priority, implemented the various measures on epidemic prevention and control, and purchased the materials for the epidemic prevention and control by multiple actions. The leaders of the groups visited the production plants and monitored the situation of epidemic prevention and control as well as the resumption of production and operation for many times. The Group also included novel coronavirus epidemic into "China Resources Cement Gratitude Fund" aid project to prevent the employees from delaying the disease condition due to the economic issues. As of the end of April 2020, the rate of commencing construction had reached 100%, mainly resuming to the normal sales standards and achieving the balance of production and sales. With the guarantee of inner scientific epidemic prevention and control and regular resumption of production and operation, the Group also donated the funds for epidemic prevention and control to the relevant units of each business region. As of the end of June 2020, the Group had donated anti-epidemic funds amounting to RMB 650 thousand and anti-epidemic materials of RMB 192.7 thousand for the epidemic prevention and control.
Construction of Excellent Operational System to Enhance the Core Competitiveness
CR Cement conscientiously implements the management theme of "reform and innovation for quality development", and continues to launch in-depth work on lean management work with the main focus on the construction of excellent operational system. In the first half of 2020, the Group continued to optimize production and operation management. By setting target values for major operational indicators, the Group fostered the continuous improvement of operational indicators such as coal consumption and energy consumption at each cement production plant. The Group persistently promoted the application of innovation achievements at each production plant,and strived to drive for raising the operational standards of each production plant.
In the first half of 2020, the Group purchased a total of approximately 4.24 million tons of coal. The proportion of direct procurement from coal producers was approximately 80%. Meanwhile, logistics management is one of the Group's key measures in maintaining its market competitiveness. As of the end of June, the Group controlled the operations of 36 silo terminals with annual capacity of approximately 26.6 million tons, which are mainly located in the Pearl River Delta Region. This consolidates the Group's leading market position in Guangdong.
The Building of the Corporate Brand Value for "Runfeng Cement"
Implementation of effective corporate brand strategies and reinforcement of management and maintenance on the brand are important measures for the Group to enhance its core competitiveness and embrace market opportunities and challenges. In the first half of 2020, the Group continued to intensively work on the construction and management of brand image, optimized the management of franchise stores to expand brand influence. In March 2020, the Group engaged the “World Brand Lab” to evaluate the brand value of "Runfeng Cement". The final report showed that the brand value of "Runfeng Cement" in 2020 was RMB51,958 million.
Promoting Digital Transformation, Innovation-driven Development
The Group continues to enhance its R&D capabilities. In April 2020, the laboratory of China Resources Cement Technology Research and Development Limited became a laboratory accredited by the China National Accreditation Service for Conformity Assessment. In the first half, the Group's Technology Research and Development Centre provided checks and tests for cement production plants to further reduce consumption of coal and energy and optimize production costs. On the other hand, the Technology Research and Development Centre provides support for the development of new businesses by actively developing countertop products, highly malleable cement-based engineered stone and early-strength nucleating agent products for rapid demolding of precast concrete components.
Phase 1 of the Group's intelligent manufacturing pilot project at the production plant in Tianyang, being the first cooperation with Siemens Ltd., China, officially commenced operation. the Group, CITIC Holdings Co., Ltd., subsidiary of Foxconn Industrial Internet Co., Ltd. and other entities had jointly set up Shenzhen CRF Digital Technology Co., Ltd., which is dedicated to creating intelligent manufacturing solutions and digital platforms for the industries of automobile parts and building materials including cement, facilitate transformation and upgrade of the industry, and achieve high-quality development.
Production Safety, Energy Saving and Emission Reduction, and Fulfilling the Corporate Social Responsibility
As of the end of June 2020, 28 cement production plants of the Group (inclusive of grinding stations) had passed the on-site assessments as the First-Class Enterprise in National Production Safety Standardization and the limestone mines of 17 cement production plants have passed the assessments as the Second-Class Enterprise in National Production Safety Standardization. Meanwhile, the Group places strong emphasis on corporate social responsibility and responds to the Chinese government’s policies on energy saving and emission reduction. The average emission concentrations of nitrogen oxides, sulphur dioxide and particulate matters are all lower than the national standard limits of pollutant emissions. The Group proactively researched and advanced pilot projects on ultra-low emissions to enhance technological standards and management standards of environmental protection.
Transformation and Innovation, and Promoting the extension along the industry chain
Through its positioning in Southern China, the Group promotes transformation and innovation, and actively seizes the opportunities for extension along the industry chain. In the first half of 2020, the Group completed the construction of one clinker production line with annual production capacity of approximately 1.4 million tons and two cement grinding lines with total annual production capacity of approximately 2.0 million tons in Anshun City, Guizhou. Meanwhile, the Group established the New Business Office to coordinate the development and planning of new business projects and promote regional market research, project acquisition and construction work. breakthroughs had been achieved in the new businesses of aggregates, engineered stones and prefabricated construction.
As of the end of June 2020, the Group’s annual aggregates production capacity based on its own existing cement mines was approximately 10.6 million tons. In addition to the newly acquired aggregates mines, the total annual aggregates production capacity of the Group is expected to reach approximately 22.6 million tons. On the aspect of prefabricated construction, the Group newly acquired land for prefabricated construction in Jiangmen City, Guangdong, Laibin City, Guangxi, and Baise City, Guangxi. The Group had planned for a total of 8 prefabricated construction projects and the design annual production capacity of precast concrete components is expected to reach approximately 1.5 million m3 after completion.
On the green development aspect, the Group cooperated with leading domestic environmental protection technology companies in exploring new technologies for co-processing fly ash and hazardous industrial waste generated after incineration of municipal waste by use of cement kilns to enhance processing efficiency and the standards of safety and environmental protection. As of the end of June 2020, the Group had 8 co-processing projects in total with annual processing capacity of 1.25 million tons. In the first half of 2020, the Group obtained a franchise license for the resourceful utilization of construction waste in Changjiang, Hainan, and planned to build a construction waste disposal plant project, which will contribute to improving the local urban environment, foster energy saving and emission reduction, reduce the consumption of natural resources, and promote the green development of the industry.
Jointly Promoting the sustainable development of China's Cement Industry
Looking ahead, with the national supply-side structural reforms and strict environmental policies, the cement industry has faced new challenges and opportunities. The Group will persistently develop the three core strengths of the "lowest total costs, leading market position in the region, innovationdriven development". The Group is dedicated to enhancing efficiency and quality of operation and further improving the management standards of environmental protection, safety and health. The Group will deepen brand marketing and the construction of sales channels, strengthen the capability in research and development of new products, new technologies and new materials for the creation of competitive advantage by differentiation.
Meanwhile, the Group will fulfill corporate social responsibility, foster green development of the industry. In addition, the Group will seize the opportunities in the development of the Greater Bay Area, accelerate the pace of transformation and innovation, and promote the development strategy for extension along the industry chain. The Group will also continue to seek opportunities for strategic cooperation with domestic and overseas leading enterprises for the joint promotion of sustainable development of the cement industry in China.
