Executive Summary:
- Revenue growth and scale: CNBM reported QQ2 2025 revenue of 93.29 billion CNY, up 151.98% year over year (YoY) with a stable QoQ trajectory. Gross profit reached 18.11 billion CNY, representing a gross margin of 19.41% driven by higher volumes across cement, concrete and new materials segments.
- Profitability dynamics: Despite strong top-line growth, operating income remained negative at -0.95 billion CNY (operating margin -1.02%), reflecting sustained fixed-cost absorption and ongoing SG&A investment amid a diversified product mix. EBITDA stood at 13.45 billion CNY with an EBITDA margin of approximately 14.41%. Net income was 4.19 billion CNY (net margin 4.49%), up sharply YoY, aided by non-operating income and tax effects; basic EPS was 0.50 CNY.
- Cash flow and liquidity: Operational cash flow per share was 1.76 CNY and free cash flow per share 1.31 CNY, underscoring positive cash generation despite a cautious liquidity profile. The company carries a modest cash balance relative to short-term obligations, with a current ratio of 0.761 and a cash ratio of 0.130, signaling tighter short-term liquidity.
- Balance sheet and leverage: The firm exhibits elevated leverage with a debt ratio of 0.411 and a debt-to-equity ratio of 1.788. Long-term debt to capitalization stands at 0.470 and total debt to capitalization at 0.641, indicating room for balance-sheet optimization but a meaningful exposure to cyclicality in the construction materials cycle. Dividend payout is 22.5% with a dividend yield around 3.3%, supported by FCF generation.
- Investment implications: The quarter shows robust revenue scaling and meaningful cash generation, yet the negative operating income highlights risk from fixed costs and potential margin pressure in a cyclical sector. CNBM's diversification into new materials and international exposure could offset domestic cyclicality, but leverage and liquidity remain key risk factors to monitor going into H2 2025 and into 2026.