Exchange: HKSE | Sector: Basic Materials | Industry: Construction Materials
Q2 2025
Published: Jun 30, 2025
Earnings Highlights
Revenue of $93.29B up 152% year-over-year
EPS of $0.50 increased by 412.5% from previous year
Gross margin of 19.4%
Net income of 4.19B
"Transcript not provided for QQ2 2025; management quotes unavailable in the data provided." - CNBM IR
China National Building Material Company Limited (3323.HK) QQ2 2025 Results Analysis – Revenue Momentum Amid Operating Profit Pressure and Elevated Leverage
Executive Summary
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.
Income Before Tax: 9.32B CNY; Pre-tax margin 9.99%
Financial Highlights
Key Metrics and Trends (QQ2 2025 vs prior periods)
- Revenue: 93.29B CNY; YoY growth 151.98%; QoQ growth 0.00%
- Gross Profit: 18.11B CNY; Gross Margin 19.41%; YoY gross profit growth 200.77%; QoQ 0.00%
- Operating Income: -0.95B CNY; Operating Margin -1.02%; YoY change in operating income -242.66%; QoQ 0.00%
- EBITDA: 13.45B CNY; EBITDA Margin 14.41% (EBITDA-to-revenue)
- Income Before Tax: 9.32B CNY; Pre-tax margin 9.99%
- Net Income: 4.19B CNY; Net Margin 4.49%; YoY net income growth 410.29%; QoQ 0.00%
- EPS (diluted): 0.50 CNY; YoY EPS growth 412.50%; QoQ 0.00%
- Asset Utilization: Asset Turnover 0.184; Fixed Asset Turnover 0.401; Inventory Turnover 3.49; Receivables Turnover 0.956; Payables Turnover 1.265
- Working Capital & CCC: DSO 94.15 days; DIO 25.82 days; DPO 71.13 days; Operating Cycle 119.97 days; CCC 48.84 days
- Liquidity: Current Ratio 0.761; Quick Ratio 0.654; Cash Ratio 0.130; Cash per Share 3.62; Dividends: Payout Ratio 22.5%; Dividend Yield 3.26%
- Leverage & Capital Structure: Debt Ratio 0.411; Debt/Equity 1.788; Long-Term Debt to Capitalization 0.470; Total Debt to Capitalization 0.641; Interest Coverage: not meaningful in current negative EBIT environment
- Valuation (as of QQ2 2025): Price-to-Book 0.249; Price-to-Sales 0.311; Price-to-Earnings 1.730; EV/EBITDA 15.67; Price-to-CFO 1.95; Dividend Yield 3.26%
- Cash Flow Efficiency: Operating Cash Flow to Sales 0.159; Free Cash Flow to Sales 0.075; Cash Conversion Cycle 48.84 days
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
93.29B
151.98%
0.00%
Gross Profit
18.11B
200.77%
0.00%
Operating Income
-950.37M
-242.66%
0.00%
Net Income
4.19B
410.29%
0.00%
EPS
0.50
412.50%
0.00%
Key Financial Ratios
currentRatio
0.76
grossProfitMargin
19.4%
operatingProfitMargin
-1.02%
netProfitMargin
4.49%
returnOnAssets
0.83%
returnOnEquity
3.6%
debtEquityRatio
1.79
operatingCashFlowPerShare
$1.76
freeCashFlowPerShare
$1.31
dividendPayoutRatio
22.5%
priceToBookRatio
0.25
priceEarningsRatio
1.73
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript Highlights:
- Management commentary: No QQ2 2025 earnings call transcript was provided in the data. As such, specific management quotes or theme-based quotes from the Q2 call could not be sourced. Once the transcript is available, the highlights will focus on: (1) demand outlook for cement and construction materials in China, (2) pricing power and cost control, (3) progress on new materials and international expansion, and (4) capital allocation decisions including dividend policy and deleveraging steps.
Transcript not provided for QQ2 2025; management quotes unavailable in the data provided.
— CNBM IR
Transcript not provided for QQ2 2025; management quotes unavailable in the data provided.
— CNBM IR
Forward Guidance
Forward Guidance and Outlook:
- Formal guidance: The QQ2 2025 data set does not include explicit forward-looking guidance from CNBM. Given the cyclicality of the cement and construction materials cycle in China, investors should monitor sector indicators and management commentary on capex plans, urban renewal projects, and property market stabilization.
- Industry context: Chinese infrastructure investment and urban development cycles typically drive cement demand with lead times; any policy stimulus or accelerated infrastructure program could bolster volumes and pricing in H2 2025 and into 2026.
- My assessment: If CNBM can translate revenue strength into improved operating leverage, the negative operating income could reverse with scale benefits and cost discipline. However, the elevated leverage (debt-to-capitalization ≈ 0.64) and weak liquidity signals imply that margin recovery hinges on demand stabilization and cost management. Key factors to monitor: (i) domestic construction activity and housing market signals, (ii) cement price dynamics and input cost trends (energy, bulk materials), (iii) progress on non-core or new materials businesses contributing higher-margin revenue, and (iv) cash generation and deleveraging trajectory.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
3323.HK Focus
19.41%
-1.02%
3.60%
1.73%
0914.HK
27.20%
16.10%
1.35%
11.08%
1313.HK
20.30%
4.37%
0.45%
13.40%
1088.HK
37.40%
28.60%
3.16%
15.87%
1898.HK
24.30%
15.90%
2.40%
9.77%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investment Thesis: CNBM offers a low-to-moderate risk exposure to a cyclical, capital-intensive sector with meaningful top-line growth potential and robust cash generation. The QQ2 2025 results show substantial year-over-year revenue growth and positive net income, but margin recovery is contingent on stabilizing demand and effective cost management given elevated leverage. Valuation is compelling on a price-to-book basis (~0.249x) and price-to-earnings (~1.73x), suggesting a potential margin of safety if leverage is sustainably reduced and the company executes on its non-traditional growth initiatives (new materials, international projects).
- Catalysts to watch: any signs of stabilization in the Chinese property market, accelerated infrastructure spend, and faster deleveraging that improve liquidity ratios. Continued free-cash-flow generation supports dividend consistency; however, investors should monitor debt maturity profiles and capex requirements that could weigh cash flows in the near term.
- Risk-adjusted stance: Neutral to mildly bullish, contingent on post-Q2 deleveraging progress and a clearer path to operating-income recovery as volume momentum sustains and cost controls take effect.
Key Investment Factors
Growth Potential
Diversified product portfolio (cement, concrete, new materials) and geographic reach provide multiple revenue streams and potential resilience against domestic cyclicality; potential upside from export opportunities and the expansion of high-margin new materials.
Profitability Risk
Cyclicality of construction demand in China, high leverage and liquidity constraints, potential input cost volatility (energy, clinker components), competition in a fragmented cement market, and regulatory environment. Negative operating income in QQ2 2025 signals fixed-cost absorption risk that could weigh on margins if demand softens.
Financial Position
Positive free cash flow per share and operating cash flow per share indicate cash generation strength, supporting dividend cash returns. However, elevated debt ratios and relatively tight liquidity metrics require ongoing deleveraging and optimization of working capital.
SWOT Analysis
Strengths
Large-scale diversified building materials business (cement, concrete, new materials, engineering services) with exposure to multiple end-markets.
Solid cash generation metrics per share (operating cash flow per share 1.755; free cash flow per share 1.307) supporting shareholder value through dividends.
Global footprint and international ambitions in Europe, the Middle East, Southeast Asia, and other regions.
Weaknesses
Negative QQ2 2025 operating income indicates fixed-cost pressure and potential underutilization of assets in the short term.
Tight liquidity indicators (current ratio 0.761) and a relatively high leverage profile (debt ratio 0.411, debt/equity 1.788) limit financial flexibility.
Cyclical sensitivity to China’s construction and real estate market.
Opportunities
Policy-driven infrastructure investments and urban development could lift cement and materials demand.
Expansion in the high-margin new materials segment and potential revenue diversification beyond traditional cement products.
Export opportunities and international projects could improve utilization and pricing power.
Threats
China’s property downturn risk and potential cyclical downturn in construction activity.
Commodity price volatility, energy costs, and potential regulatory changes affecting construction materials.
Competitive intensity in a fragmented cement market and pressure on margins during downturns.
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