The Zhitong Finance App learned that CICC released a research report saying that China Resources Building Materials Technology (01313)'s results for the third quarter of 2026 were lower than the forecast. The bank lowered the company's 2026 and 2027 net profit forecasts from 803 million yuan and 823 million yuan to -794 million yuan and 115 million yuan respectively, considering that coal costs have risen above expectations and that the price of cement and aggregates continues to be under pressure. The bank maintained its “outperforming the industry” rating and lowered its target price by 40% to HK$1.33. Considering that the company is currently at the bottom of the historical cycle and product prices have begun to rise, the bank believes that with the tightening of supply constraints in the South China region, the company's profits are expected to gradually recover as pressure on coal prices eases and supply management continues.
CICC's main views are as follows:
Results for the third quarter of 2026 fell short of expectations
The company announced results for the third quarter of 2026. Revenue for the single quarter decreased 13.9% year-on-year to 4.189 billion yuan; net profit to mother was -355 million yuan, compared to 24 million yuan in the same period last year, changing from profit to loss.
Rising coal prices and weak demand are putting pressure on cement clinker profits
Since the beginning of the year, the average price of Q5500 thermal coal at Qinhuangdao Port has increased by 29.3%. During the same period, the average price of cement across the country fell by 10.4%, and the price gap between purchase and sale narrowed markedly. The company's cement clinker sales fell 16% year on year to 11.86 million tons; the average price of a ton decreased by 1 yuan to 204 yuan year on year, the cost of a ton increased by 27 yuan to about 200 yuan, and the gross profit per ton decreased by 28 yuan to about 4 yuan year on year.
Concrete and aggregate profits are under pressure, and expenses rose during the period
In the third quarter of 2026, the company's concrete sales increased 40% year on year, but gross profit per cubic meter fell 21 yuan to 25 yuan year on year; aggregate sales fell 21% year on year, and gross profit per ton fell 4.7 yuan to about 3.6 yuan year on year. The cost of a tonne of full-caliber cement clinker increased by 13 yuan to about 63 yuan over the same period last year, and the total sales, management and financial expenses increased 3.2 percentage points year over year.
Supply constraints in the South China region are being strengthened, and we are optimistic about the gradual restoration of company profits
The bank observed that cement prices in South China have continued to rise by about 15% since the end of September. This round of price increases in South China is different from previous years: the management of overproduction was upgraded from an erroneous peak of industry self-regulation to daily production verification. Coupled with transportation restrictions during the dry water period in the Xijiang River, the storage capacity ratio dropped by about 5 percentage points to 63%. The supply side was a “hard constraint” rather than a “soft erroneous peak.”
The bank believes that the company is expected to reverse losses in the fourth quarter of 2026; in 2027, with the easing of pressure on coal prices and the continuation of supply management, gross profit per ton of cement clinker is expected to gradually rise from the current level of about 4 yuan to 15 to 20 yuan.
Highly elastic regional leader in South China, and valuation repair can be expected
The company accounts for about 70% of production capacity in South China and more than 30% of production capacity in Guangdong. It is a direct beneficiary of this round of regional price restoration. At the same time, the company has an integrated layout of cement, commercial mixing and aggregates, and has strong profit flexibility during the price increase period. As prices improve and pressure on coal costs ease, the bank is optimistic that the company's valuation will gradually recover as the profit cycle bottoms out.
Profit forecasting and valuation
Considering that coal costs have risen above expectations and the combined prices of cement and aggregates continue to be under pressure, CICC lowered China Resources Building Materials Technology's net profit forecast for 2026 and 2027 from 803 million yuan and 823 million yuan respectively to -794 million yuan and 115 million yuan. The current stock price corresponds to the 2026 and 2027 forecast net market ratio (P/B) ratio of 0.15 times.
Risk Alerts
Overproduction control and implementation of price increases fell short of expectations; coal prices remained high.