UOB Kay Hian Private Limited
Date of Report: Tuesday, 19 August 2025
China Resources Building Materials Technology: Cement Margins Soar, Concrete Growth Accelerates in 1H25

Overview: Strong Earnings Momentum and Margin Expansion

China Resources Building Materials Technology (CR Bldg Mat, 1313 HK) delivered a robust 1H25 financial performance, marked by a striking 85% year-on-year earnings jump to Rmb306.7 million. The results were fully in line with market expectations, driven by a rebound in cement margins and significant growth in the concrete segment. Gross margin improved to 18.5% (+3.5ppt), buoyed by stronger average selling prices (ASP) for cement and lower coal costs.

Stock Snapshot and Shareholder Overview

Share Price: HK$1.92
Target Price: HK$2.30 (Upside: +19.8%)
Market Cap: HK$13,407.2m (US$1,713.6m)
Major Shareholder: China Resources National Corporation (73.3%)
Sector: Materials (GICS)
52-week High/Low: HK$2.31/HK$1.39
FY25 NAV/Share: HK$6.41
FY25 Net Debt/Share: HK$1.67

Key Highlights of 1H25 Results

Attributable net profit: Rmb306.7m (+85.0% YoY)
Gross margin: 18.5% (up from 15.0% in 1H24)
Cement volumes: Down 12.6% YoY, reflecting a focus on pricing discipline
Concrete sales: Up 36% YoY, driven by supply chain integration and asset-light model adoption
Aggregates: Revenue up 21% YoY; gross margin pressured by new facility depreciation
EPS: Rmb0.044 (+83.3% YoY)
DPS: HK$0.014 (down 30% YoY)

Segment Analysis: Cement, Aggregates, and Concrete

Cement: Pricing Discipline, Margin Recovery, and Sector Dynamics

– Cement volumes fell 12.6% YoY as the company prioritized pricing over volume, maintaining ASP at Rmb247/tonne (+3.8% YoY). – Unit cost dropped to Rmb200.7/tonne (-4.5% YoY), mainly due to cheaper coal (Rmb681/tonne, -18% YoY), with management expecting 2H25 coal costs to remain in the Rmb620–670/tonne range. – Gross margin for cement products jumped to 20.1% (+8.0ppt YoY), with gross profit per tonne rising to Rmb50 in 1H25 (from Rmb29 in 1H24). – Infrastructure projects now account for 60.4% of sales (+5.5ppt YoY), while real estate’s share declined to 21.2% (-4.1ppt YoY). – Inventories stabilized at ~59% of capacity. – Full-year cement sales guidance stands at 57 million tonnes (-7% YoY).

Aggregates: Growth in Sales, Margin Pressure from New Depreciation

– Sales volumes rose to 36.3 million tonnes (+23.2% YoY), but ASP slipped to Rmb36.2/tonne (-1.6% YoY). – Regional price declines (Guangdong -Rmb7/tonne to Rmb49, Guangxi -Rmb2/tonne to Rmb24) were offset by a higher sales mix from Guangdong. – Unit cost increased to Rmb27/tonne, up Rmb5 YoY, due to higher depreciation from new facilities and underutilization from delays and bottlenecks. – Gross margin dropped sharply to 25.3% (-14.1ppt YoY). – Management guides full-year aggregates sales at 79 million tonnes (+14% YoY), with price pressure expected to persist into 3Q25.

Concrete: Volume Surge and Margin Expansion via Asset-Light Model

– Concrete sales soared to 6.9 million cubic meters (+36.0% YoY), even as ASP fell to Rmb302.7/cbm (-11.9% YoY). – Growth was powered by integrated industrial parks, enhanced supply chain synergies, and a light-asset strategy leveraging third-party processors. – Concrete operations within industrial parks saw profitability triple YoY; non-park stations also returned to profitability. – Gross margin improved to 14.0% (+1.4ppt YoY) as cost reductions outpaced ASP declines.

Operational and Regulatory Updates: Industry Reforms and Market Outlook

Administrative Expenses: Up 32% YoY due to a one-off Rmb110m asset impairment and a bonus accrual timing adjustment, with no permanent change to cost structure.
Sector Reforms: From Jan 1, 2026, output exceeding 1.1x approved clinker capacity will be classified as overproduction, targeting industry oversupply (>20% nationwide; >30% in Guangxi).
Production Downtime: 2025 guidance—Guangdong: 95 days, Guangxi: 160, Fujian: 170.
Green Electricity Quotas: Starting 2025, mandatory green energy quotas (Guangdong 32%, Guangxi 51%, Hainan 27%, Fujian 25%) will require producers to buy green certificates, increasing costs but accelerating industry consolidation.

Financials: Key Metrics, Forecasts, and Valuation

Earnings Revision, Risks, and Valuation

Earnings forecasts for 2025/26/27 were revised down by -26%/-4%/-4% mainly due to a Rmb300m impairment from the capacity replacement program (guided range: Rmb200m–400m).
The stock remains rated BUY with a target price of HK$2.30, pegged to 0.3x 2025F P/B (-1.5SD).
Management expects sector reforms and industry consolidation to stabilize supply-demand dynamics, support pricing discipline, and benefit leading players.

Key Share Price Catalysts

Inclusion in the carbon trading market
Acceleration of infrastructure construction activities

Conclusion: Positioned for Medium-Term Recovery and Growth

China Resources Building Materials Technology stands out in the building materials sector for its disciplined pricing, margin resilience, and proactive adaptation to industry reforms. With solid financials, a clear strategy for downstream integration, and positioning for ongoing sector consolidation, CR Bldg Mat is well placed for medium-term outperformance. Investors should watch for continued regulatory tailwinds, green policy implementation, and infrastructure-led demand as key catalysts for further gains.