Executive Summary
Dongwu Cement International Limited reported QQ2 2025 results that reflect a challenging quarter characterized by top-line softness and ongoing profitability headwinds, despite some near-term liquidity resilience. Revenue stood at HKD125.811m with a negative gross profit of HKD5.756m and an EBITDA of HKD611k, indicating a narrowly positive cash-generating result on an operating basis but a material operating loss of HKD25.795m. Net income came in at a loss of HKD9.155m, translating to an EPS of -0.0166. The company’s YoY metrics show revenue down by 24.5% while certain earnings metrics improved versus the prior year (gross profit, operating income, and net income registered positive YoY moves in the reported figures, per the provided ratios). The quarter also featured substantial selling, general and administrative expenses (SG&A) of HKD20.039m, contributing to an operating expense load of HKD151.606m and pressuring margins. Despite the near-term profitability challenge, the balance sheet remains cash-rich with HKD268.6m of cash and a total asset base of HKD959.5m, supporting liquidity through a period of demand uncertainty. The cash flow statement shows negative operating cash flow of HKD3.20m, heavy investing cash outflows (HKD218.6m), and financing outflows (HKD89.08m), yielding a net increase in cash of HKD124.8m and a year-end cash balance of HKD276.3m. Investors should watch for improvements in price realization, volume recoveries, and disciplined capex to translate liquidity into sustainable profitability. The current period underscores the need for management to execute on cost control, working capital optimization, and capital discipline to restore margins as industry conditions evolve.
Key Performance Indicators
Key Insights
Revenue: HKD125.811m; YoY revenue change: -24.52%; QoQ change: 0.00%
Gross Profit: HKD-5.756m; Gross Margin: -0.0458; YoY gross profit change: 17.82%; QoQ: 0.00%
Operating Income: HKD-25.795m; Operating Margin: -0.2050; YoY change: 24.96%; QoQ: 0.00%
Net Income: HKD-9.155m; Net Margin: -0.0728; YoY change: 52.05%; QoQ: 0.00%
EPS: -0.0166; EPS (diluted): -0.0166; YoY EPS change: 52.02%; QoQ: 0.00%
EBITDA: HKD0.611m; EBITDA Margin: 0.4856%
Interest Expense: HKD6.094m; Depreciation & Amortizati...
Financial Highlights
Revenue: HKD125.811m; YoY revenue change: -24.52%; QoQ change: 0.00%
Gross Profit: HKD-5.756m; Gross Margin: -0.0458; YoY gross profit change: 17.82%; QoQ: 0.00%
Operating Income: HKD-25.795m; Operating Margin: -0.2050; YoY change: 24.96%; QoQ: 0.00%
Net Income: HKD-9.155m; Net Margin: -0.0728; YoY change: 52.05%; QoQ: 0.00%
EPS: -0.0166; EPS (diluted): -0.0166; YoY EPS change: 52.02%; QoQ: 0.00%
EBITDA: HKD0.611m; EBITDA Margin: 0.4856%
Interest Expense: HKD6.094m; Depreciation & Amortization: HKD11.509m
Weighted Average Shs Outstanding: 552.0m; Cash Flow from Ops: HKD-3.197m; Free Cash Flow: HKD-7.242m
Net Cash Provided by Operating Activities: HKD-3.197m; Net Cash Used in Investing Activities: HKD-218.624m; Net Cash Used in Financing Activities: HKD-89.078m; Net Change in Cash: HKD124.828m; Cash at End of Period: HKD276.255m; Cash Balance/Share: HKD0.487; Current Ratio: 1.725; Quick Ratio: 1.078; Cash Ratio: 0.867
Debt Snapshot: Total Debt HKD295.796m; Net Debt HKD27.149m; Short-Term Debt HKD180.710m; Long-Term Debt HKD115.086m; Interest Coverage: -4.23; Debt to Equity: 0.756; Debt to Capitalization: 0.431; Price to Book: 3.75; P/BV vs. peers indicates a premium to book value; Dividend Yield: 0.10% (approximate); ROA/ROE are negative in the quarter.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
125.81M |
-24.52% |
0.00% |
| Gross Profit |
-5.76M |
17.82% |
0.00% |
| Operating Income |
-25.80M |
24.96% |
0.00% |
| Net Income |
-9.16M |
52.05% |
0.00% |
| EPS |
-0.02 |
52.02% |
0.00% |
Key Financial Ratios
operatingProfitMargin
-20.5%
operatingCashFlowPerShare
$-0.01
freeCashFlowPerShare
$-0.03
dividendPayoutRatio
-1640%
Management Commentary
Note: No earnings-call transcript text was provided in the dataset. The following highlights are derived from the reported results and typical management topics in the Basic Materials sector. - Strategy and mix: Management is expected to address margin erosion through cost control, capacity utilization optimization, and price realization in a pressured Chinese cement market. - Operations and cost: Elevated cost of revenue relative to revenue driven margin compression; SG&A at HKD20.039m indicates selling and administrative costs remain a meaningful burden in QQ2 2025. - Market conditions: The PRC construction materials market remains competitive with potential overcapacity; demand sensitivity to infrastructure spending and property cycles is a key driver. - Balance sheet discipline: Cash balance remains robust at HKD268.6m, supporting liquidity; leverage metrics and negative interest coverage highlight the need for active debt management and working capital optimization.
Forward Guidance
No explicit forward guidance was provided in the QQ2 2025 results. Given the negative profitability metrics and the macro backdrop of China’s cement market, management’s near-term emphasis is likely to be on cost containment, stabilizing revenue through price discipline and volume recovery, and strengthening working capital efficiency. Our assessment suggests achievability hinges on: 1) a rebound in infrastructure-related cement demand, 2) stabilization or improvement in cement ASPs to narrow gross losses, 3) disciplined capex and optimized debt structure to restore interest coverage and cash conversion. Investors should monitor (a) sector infrastructure spending announcements, (b) trend in utilization and capacity discipline within the company’s plants, (c) working capital development, and (d) any liquidity-durable financing activity that could affect leverage and cash flow.