Core Viewpoint - China National Building Material (CNBM) is expected to see revenue growth from 2025 to 2027, with projected revenues of 191.22 billion, 199.33 billion, and 207.00 billion yuan, representing year-on-year growth rates of +5.5%, +4.2%, and +3.8% respectively. Net profit attributable to shareholders is forecasted to be 4.12 billion, 4.89 billion, and 5.48 billion yuan, with year-on-year growth rates of +72.4%, +18.7%, and +12.1% respectively, leading to corresponding PE ratios of 6.7, 5.7, and 5.1. The report initiates coverage with a "Buy" rating [1][2]. Group 1: Company Overview - CNBM is a state-owned enterprise under the State-owned Assets Supervision and Administration Commission, and it is the largest non-metallic materials platform in China, with a strategic shift towards new materials and related capital investments [2]. - In 2024, CNBM reported revenues of 181.3 billion yuan (down 13.8% year-on-year) and a net profit of 2.39 billion yuan (down 38.2% year-on-year) [2]. Group 2: New Materials Segment - The new materials segment generated 48.5 billion yuan in revenue in 2024 (up 1.9% year-on-year) and contributed significantly to the company's profit, with a net profit of 2.61 billion yuan (down 23.8% year-on-year) [3]. - The segment is structured into three tiers: 1) Mature industries contributing over 85% of revenue, including gypsum board and fiberglass, with gypsum board holding a market share of over 60% [3]. 2) Emerging industries like lithium battery separators and carbon fiber, which are rapidly growing despite recent revenue declines [3][4]. 3) Cutting-edge technologies such as silicon nitride ceramic balls, which enhance product performance in high-tech applications [4]. Group 3: Financial Performance and Strategy - The basic building materials segment, while under pressure from low demand and overcapacity, is expected to recover, with revenues of 91.1 billion yuan in 2024 (down 23% year-on-year) and a net loss of 0.825 billion yuan [6]. - The company is implementing cost reduction strategies and expanding internationally, with overseas cement sales increasing by 15% year-on-year in 2024 [6]. Group 4: Engineering Services - The engineering services segment achieved revenues of 45.5 billion yuan in 2024 (up 0.8% year-on-year) and a net profit of 1.407 billion yuan (down 3.1% year-on-year), maintaining a strong market position [7]. - The company secured new orders worth 63.4 billion yuan in 2024, with a significant portion coming from international markets, which helps mitigate domestic demand pressures [7]. Group 5: Capital Expenditure and Shareholder Returns - CNBM's capital expenditure decreased to 23.5 billion yuan in 2024 (down 23.1% year-on-year), with a focus on new materials and international expansion [8]. - The company maintains a high dividend policy, with a cash dividend rate of over 50% in 2024, corresponding to a dividend yield of 4.81% [8].