Core Viewpoint - China Resources Building Materials Technology Holdings reported a significant decline in revenue and net profit for 3Q25, largely in line with expectations, indicating ongoing challenges in the cement market due to weak demand and rising supply-demand imbalances [1][2]. Group 1: Financial Performance - Revenue fell 11% YoY to Rmb4.86 billion, while attributable net profit dropped 83% YoY to Rmb24.32 million [1]. - The firm's total sales volume of cement and clinker decreased 5.3% YoY to 14.12 million tonnes, which was a milder decline compared to the industry's 6.6% drop [1]. - The per-tonne average selling price (ASP) of cement and clinker decreased Rmb32 YoY to Rmb205, while the per-tonne cost also fell Rmb32 YoY to Rmb173, resulting in a stable per-tonne gross profit of Rmb32 [1]. Group 2: Business Segments - Sales volume for concrete and aggregate businesses increased significantly, with concrete sales rising 11% and aggregate sales up 32% YoY in 3Q25 [2]. - The unit gross profit for the concrete business increased Rmb7 YoY to Rmb46 per cubic meter, while the per-tonne gross profit for aggregates fell Rmb5 YoY to Rmb8.3 [2]. Group 3: Expense and Cost Management - The expense ratio for cement and clinker rose, with expenses per tonne increasing Rmb3 YoY to Rmb50 [3]. - Selling, general and administrative (G&A), and financial expense ratios changed by +0.2 percentage points, +1.9 percentage points, and -0.5 percentage points YoY, respectively [3]. Group 4: Industry Outlook - The cement industry is preparing for potential price hikes in November-December, with expectations that the "anti-involution" campaign may support earnings recovery [3]. - The utilization rate of clinker capacity is projected to rise to about 60% by 2026 if overproduction restrictions are strictly implemented [3]. - Management is focusing on strengthening profit margins and prioritizing pricing strategies, indicating potential upside for profit per tonne in southern China [3]. Group 5: Valuation and Forecast - EPS forecasts for 2025 and 2026 have been cut by 66% and 48% to Rmb0.06 and Rmb0.11, respectively, due to fixed asset impairments and lower-than-expected sales volume and prices [4]. - The stock is currently trading at 28x 2025 estimated P/E and 14x 2026 estimated P/E, with a target price cut by 12% to HK$2.2, implying a 34x 2025 estimated P/E and 17x 2026 estimated P/E with a 24% upside [4].
CHINA RESOURCES BUILDING MATERIALS TECHNOLOGY HOLDINGS(01313.HK)：VOLUME AND PRICE OF CEMENT UNDER PRESSURE IN THE SLACK SEASON; ANTI-INVOLUTION CAMPAIGN LIKELY TO BOLSTER EARNINGS RECOVERY