Cement company shares skyrocket to historic highs

March 29, 2022 - 07:42

Shares of cement companies are skyrocketing to record highs amid positive market forecasts.


Worker loading products on a conveyor belt at Hà Tiên 1's plant. Shares of Hà Tiên 1 Cement (HT1) experienced a significant increase of 45 per cent, from VNĐ17,500 per share to VNĐ25,400 per share in the past year.   — Photo courtesy of HT1

HÀ NỘI  — Shares of cement companies are skyrocketing to record highs amid positive market forecasts.

Shares of VVMI La Hiên Cement Joint Stock Company (CLH) soared by more than 200 per cent to reach VNĐ39,300 per share in the past year, the highest price recorded so far since its inception on the stock market.

Vicem Hải Vân Cement JSC (HVX) witnessed a sharp rise of 99.3 per cent during the past year, from VNĐ4,000 (US$0.17) per share to VNĐ7,970 per share.

Hà Tiên 1 Cement (HT1) experienced a significant increase of 45 per cent, from VNĐ17,500 per share to VNĐ25,400 per share.

Vicem Bút Sơn Cement JSC (BTS) saw its shares climbing five per cent in the past year.

Prosperous earnings

Regarding the business results, in 2021, although domestic cement consumption decreased by about five per cent, the cement industry still set a record consumption of 105.6 million tonnes of products.

Production output of VVMI La Hiên Cement Joint Stock Company (CLH) increased by thr per cent to nearly 806 million tonnes.

Total revenue increased 12 per cent to VNĐ734 billion, of which revenue from the cement segment was almost flat compared to 2020, reaching VNĐ680 billion. Revenue of commercial clinker increased sharply by 117 per cent over the same period of 2020 to more than VNĐ51 billion, exceeding 68 per cent of the yearly plan.

Thanks to cost savings, CLH's profit before tax in 2021 reached more than VNĐ68 billion, up 19 per cent compared to the previous year and exceeding 73 per cent of the yearly target.

As of December 31, 2021, CLH's total assets reached VNĐ308 billion, a slight increase compared to the beginning of the year, mainly due to the value of production machinery lines. The enterprise had more than VNĐ51 billion of undistributed profit after tax.

On April 12, CLH will hold the 2022 Annual General Meeting of Shareholders to summarise the operation results as well as tasks for 2022. According to the company, CLH expects the production and consumption of cement and clinker in 2022 to reach 690,000 tonnes and 50,000 tonnes, respectively.

Total revenue in 2022 is expected to reach VNĐ680 billion and profit after tax is estimated at VNĐ56 billion.

Regarding the investment plan, the total estimated value in 2022 is forecast at approximately VNĐ17 billion, including VNĐ910 million spent on the renovation of the furnace heat exchanger tower 2 project and preparing the technical report of the 120-tonne weighing station. The rest will be reserved for projects such as electronic weighing stations, upgrading automation system II or purchasing equipment for production.

The 2021 dividend payment plan underwent a significant change. Accordingly, although the plan was approved at the beginning of the year at a dividend rate of 15 per cent, the company adjusted the rate to 35 per cent.

According to statistics, CLH has had many years of continuous high dividend payments in the cement industry. The company's dividend payment rates in recent years have recorded a regular average of 15 per cent to 17 per cent in cash – a high level compared to the market price of only about VNĐ10,000. Particularly in 2019, CLH paid dividends at a total rate of up to 40 per cent, including 20 per cent ​​in cash and 20 per cent in shares.

By 2022, CLH's dividend is expected to remain as high as 25 per cent.

Vicem Bút Sơn Cement JSC (BTS) achieved a revenue of VNĐ2.98 billion in 2021, down 2.6 per cent year-on-year. But post-tax profit totaled VNĐ50 billion, a sharp rise of 360 per cent year-on-year.

Vicem Hải Vân Cement JSC (HVX) reported revenue at VNĐ678 million in 2021, up 6 per cent year-on-year.

In a report earlier this year on the outlook for the cement industry, SSI securities company forecast that domestic demand could return to a normal growth rate of 5 per cent to 7 per cent in 2022 compared to the recovery of civil construction segment and public investment. On the other hand, export growth could slow down due to slowing Chinese demand.

SSI Research expects domestic cement production capacity to increase by 10 per cent to 15 per cent. Together with the deceleration of the export channel, this will lead to stronger competition in the domestic market. — VNS