Summary of Beijing New Building Materials (BNBM) Conference Call Company Overview - **Company**: Beijing New Building Materials (000786.SZ) - **Industry**: Building materials, specifically gypsum boards, waterproofing, and coatings Key Takeaways 1. **Pricing Trends**: - Improvement in Average Selling Price (ASP) across all major products observed in August [1] - Sequential price improvement noted in 3Q25 due to two rounds of ASP hikes in March and August [5] 2. **Market Position**: - BNBM maintained a leading market position with approximately 68% market share in gypsum boards, focusing on premium products and gaining market share in commodity products [5] - Ambitious market share targets set for waterproof and coating segments [1] 3. **Product Performance**: - New product sales volume in 1H25 surpassed the full-year level of 2024, indicating strong demand for high-end products [5] - Positive year-over-year growth in sales and net profit for waterproof membranes and coatings, driven by channel expansion and cost efficiencies [8] 4. **Capacity Expansion**: - Announced capacity expansion plans in Ningbo, targeting an annual production capacity of 80 million square meters for gypsum boards and 20,000 tons for metal framing [5] - Plans to expand high-end GF board capacity to 20 million square meters by the end of the year [6] 5. **Market Demand Outlook**: - Management expects market demand for gypsum boards to rise gradually to approximately 4 billion square meters by 2030, driven by renovation and reconstruction needs [6] - Anticipation of a duopoly market in the waterproof industry in China [8] 6. **Cost Management**: - Cost-saving initiatives led to a 4% year-over-year reduction in costs in 1H25, contributing to gross profit margin improvement for high-end products [5] 7. **Strategic Focus**: - Continued focus on market share expansion through differentiated high-end products and penetration into rural markets [5] - Plans for proactive market consolidation in commodity products through dynamic pricing strategies and acquisitions [5] 8. **Investment Thesis**: - BNBM is positioned to benefit from rising renovation demand, which may offset potential slowdowns in property completions in China [10] - New business expansions in waterproofing and coatings are expected to drive earnings growth [10] 9. **Risks**: - Key risks include weaker-than-expected property completions, unexpected increases in raw material prices (notably paper and energy), and execution challenges in acquisitions [12] 10. **Valuation**: - Target price set at RMB 32.00, representing a potential upside of 23.8% from the current price of RMB 25.84 [13] Additional Insights - Management highlighted the importance of entering the prefabricated decoration market, which has a significant market size potential [6] - The company aims to achieve a leading position in both architectural and industrial coatings, targeting a 10%+ market share in selected segments [8]