CHINA RESOURCES BUILDING MATERIALS TECHNOLOGY HOLDINGS(01313.HK)：ASP RECOVERS SIGNIFICANTLY IN 4Q24; UPBEAT ON PRICE HIKES IN 2025-格隆汇

机构：中金公司
研究员：Qing GONG/Yan CHEN/Maoda YANG

　　2024 results in line with our expectationsChina Resources Building Materials Technology Holdings announced its 2024 results: Revenue fell 10% YoY to Rmb23bn and net profit attributable to shareholders fell 67% YoY to Rmb211mn, in line with preannouncement and market expectations. 2024 sales volume down YoY: In 2024, the firm's sales volume of cement and clinker fell 11% YoY to 61.71mnt, and the decline was slightly larger than the industry average, showing the firm’s stronger motivation to sustain prices and profit. In 4Q24, sales volume fell 19% YoY to 17.84mnt.
　　Intense price competition in 1-3Q24; sharp QoQ recovery in 4Q24: In1-3Q24, price and gross profit per tonne faced downward pressure due to fierce price competition. The firm's cement and clinker ASP was Rmb244/t in 2Q24 (-Rmb29/t YoY). Due to falling coal costs, the firm's unit cost rose Rmb30 YoY to Rmb208/t, and its gross profit per tonne increased Rmb5/t YoY to Rmb37/t. In 4Q24, ASP rose Rmb22/t QoQ and Rmb20/t YoY to Rmb259/t, driving up gross profit per ton by Rmb25/t to Rmb54/t.
　　Expenses per tonne up YoY: We estimate that the firm's total expense per tonne for cement and clinker rose Rmb9 YoY to about Rmb58 in 2024, mainly due to the impact of impairment in 4Q24.
　　Production and sales volume of aggregate business up significantly;gross margin under mild pressure: In 2024, the firm's aggregate sales volume rose 52% YoY to 69.35mnt, with ASP largely flat at Rmb36/t and gross margin at 35% (-19ppt YoY, mainly due to depreciation of new production lines).
　　Operating cash flow stable; capex down. In 2024, the firm's netoperating cash flow was Rmb3.8bn, and capex was Rmb3bn.
　　Solid balance sheet; dividend ratio increased to maintain dividends:At end-2024, net borrowing ratio was 28%, and liability-to-asset ratio was only 36.5%. The firm declared a dividend of about HK$0.03/sh, implying a payout ratio of about 91%. We estimate the implied dividend yield would be 5% if dividend payout ratio remains at around 46% in 2025.
　　Trends to watch
　　earnings growth. The firm’s price hikes in southern China, its core market, progressed smoothly. It had announced two rounds of price hikes in Guangdong as of mid-March. Looking ahead to 2025, we believe the management will strengthen focus on profit, and the firm’s profit per tonne in southern China has large growth potential. Considering the firm's sufficient provisions in 2024 and a low base of earnings for 2025, we see ample upside in earnings.
　　Financials and valuation
　　Given steady cement prices and falling coal prices in regional markets, we raise our 2025 net profit forecast 7.5% to Rmb1.22bn and introduce our 2026 net profit forecast of Rmb1.52bn. The stock is now trading at 9.4x 2025 and 7.4x 2026e P/E. We maintain our OUTPERFORM rating and target price of HK$2.5, implying 13.5x 2025e and 10.5x 2026e P/E, implying 44% upside.
　　Risks
　　Demand recovery and/or price coordination disappoint; competition intensifies.