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AI Inquiry · Tarp Group’s net profit growth relies on investment income; how sustainable is this?

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2026 profit outlook cautious.

China Real Estate News Reporter Zeng Dongmei | Guangzhou Report

In 2025, some listed cement companies experienced a phase of profit recovery, but long-term development bottlenecks remain unresolved.

On March 18, Guangdong Tarp Group Co., Ltd. (hereinafter “Tarp Group”, 002233.SZ) released its performance report showing that in 2025, the company’s operating revenue decreased by 3.99% year-on-year to 4.107 billion yuan, while net profit attributable to the parent company increased by 17.87% to 634 million yuan.

However, the profit growth was not due to an improvement in industry prosperity, but benefited from lower costs of coal and other raw materials, as well as increased investment income, both of which are uncertain factors. Therefore, the company adopts a conservative outlook for 2026, setting its annual net profit target at 530 million yuan, a 17.6% decrease year-on-year.

Although Tarp Group states this is an internal operational goal rather than a profit forecast, it also believes that cement demand in 2026 will still be in a downward trend, and the industry situation remains grim. A company insider admitted that the cement industry has not yet emerged from the trough, and short-term profit improvement in the main cement business is limited.

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Investment income contributed 30% of profits

Tarp Group is one of the 60 large enterprises supported by the state for structural adjustment in the cement industry, and one of the larger regional cement leaders in Guangdong Province. It mainly produces and sells various silicate cements and ready-mixed concrete, with three major production bases in Meizhou, Huizhou, and Longyan, Fujian.

In 2025, benefiting from improved regional market climate and a low sales base in 2024, the company achieved a 1.14% increase in cement sales year-on-year, with “cement + clinker” sales up 0.91%. However, due to weak market demand and intensified industry competition, cement prices fell by 4.25% year-on-year. The sales volume growth could not fully offset the downward pressure on prices, leading to a 3.99% decline in operating revenue.

Profit growth was driven by cost reductions and increased investment income. Specifically, due to lower procurement prices for coal and other raw materials, and the company’s efforts to reduce costs and improve efficiency, the average sales cost of cement decreased by 8.28% year-on-year, a larger drop than the decline in sales prices, which helped increase the company’s gross profit margin by 2.37 percentage points, improving profitability. Additionally, benefiting from a market rebound, Tarp Group’s investment income in 2025 saw year-on-year growth.

According to the announcement, in 2025, Tarp Group’s gains from securities investments and financial management amounted to about 2.36 billion yuan, accounting for 29.56% of total profit, and fair value changes of financial assets contributed about 1.13 billion yuan, accounting for 14.17%. These two sources alone contributed over 40% of the company’s profits. After excluding these non-recurring gains and losses, the net profit attributable to the parent in 2025 would have increased by only 10.5%.

Analyzing past performance data, it is clear that non-recurring gains and losses have played an important role in smoothing Tarp Group’s performance fluctuations. For example, in 2024, net profit attributable to the parent fell by 27.46% year-on-year, but after excluding non-recurring items, the decline widened to 46.65%.

It is understood that among Tarp Group’s financial assets, 20% are securities investments, with a maximum investment limit of 1.3 billion yuan in 2025. Company insiders explained that the gains from non-recurring income from financial management are relatively low-risk and sustainable, but due to large fluctuations in the secondary market, securities investment returns are not sustainable. The company also reduced its securities investment limit in 2026. This means that if the stock market weakens this year, the company’s profit growth may face some pressure.

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Net profit target lowered by double digits this year

The development of the cement industry is closely linked to the scale of fixed asset investment, infrastructure construction, and the real estate sector. Tarp Group stated in its annual report that in 2025, the real estate market continued to undergo deep adjustments, infrastructure investment growth slowed, and the national cement market faced a “volume reduction, weak prices, and profit pressure” severe situation. Despite industry efforts to promote “anti-involution” and increase staggered production, weak demand and regional competition still exert pressure on the market, and the industry outlook remains grim. In 2025, national cement output was 1.693 billion tons, down 6.9% year-on-year, hitting a new low since 2010.

Regional market demand has also not yet recovered. Tarp Group’s cement sales mainly revolve around three production bases, with transportation by road to surrounding markets. Therefore, the economic development speed, fixed asset investment scale, and real estate development investment in Guangdong Province, especially in the eastern Guangdong region, directly impact the company’s operations. In 2025, Guangdong’s GDP grew by 3.9% year-on-year, fixed asset investment fell by 17.3%, and real estate development investment declined by 23.6%. The total cement consumption was 131 million tons, down 5.98% year-on-year, with cement prices hitting recent lows.

Key factors affecting cement company profitability include cement production and sales volume, sales prices, and production costs. Tarp Group believes that in 2026, national cement demand will still be in a downward channel, but the decline will narrow to about 6%. Whether the industry can reach consensus and implement policies such as “overproduction control” and “staggered production” will be crucial for restoring profitability.

In recent years, Tarp Group has reduced cement production significantly. In 2021, its cement output was close to 20 million tons, and by 2025, sales had decreased to 16.04 million tons. The company’s goal for 2026 is to produce and sell 16 million tons of cement, with a net profit of 530 million yuan, down about 17.6% from the 640 million yuan achieved in 2025.

A company insider stated that the net profit target mainly reflects cautious expectations for the cement main business. Besides the difficulty in increasing production and sales prices, production costs are also a concern. The company previously revealed that in the first three quarters of 2025, a 70% reduction in coal prices contributed significantly to the decrease in per-ton cement costs. However, rising coal prices in the second half of 2025 will impact production costs in 2026.

It is also noteworthy that Tarp Group is cultivating new growth points such as environmental protection and new energy, but in 2025, these sectors accounted for only 3.2% of revenue, making it difficult to significantly contribute to profits.

Duty Editor: Su Zhiyong

Chief Editors: Li Hongmei, Wen Hongmei