Wisdom Investor APP learned that GTJA released a research report stating that it maintains a 'shareholding' rating for CNBM (03323), considering the longer and larger losses in the cement sector, and continued profit pressure in the materials sector. The net income forecast for 2024-2026 was lowered to 1.175, 2.276, 2.987 billion yuan (-2.803, -2.376, -2.055 billion yuan), with the target price lowered to 3.23 Hong Kong dollars. The company achieved revenue of 83.471 billion yuan in the interim report of 2024, a year-on-year decrease of 18.5%, with a net profit attributable to the owners of -2.018 billion yuan, a year-on-year loss, lower than expected. The cement core business in the basic building materials sector continued to make losses, but the losses narrowed in Q2. The new materials sector, including fiber glass, blades, separators, and other areas, still maintained growth capabilities.

GTJA's main opinions include:

The loss in the cement sector narrowed slightly quarter-on-quarter in Q2, with a stronger willingness to increase prices in the staggered Q3 industry.

In the first 24 hours of 2024, the company achieved a cement and clinker sales volume of 0.114 billion tons, a year-on-year decrease of 19.9%, greater than the industry's 10% decline in sales volume. Judging that under the industry's cliff-like drop in demand, while the nationwide regions faced the impact, the company, as an industry leader, sacrificed some sales volume to maintain supply-demand balance. The price of cement and clinker for the company was 241 yuan/ton, a year-on-year decrease of 19.1%. From April to May, clinker prices along the Yangtze River fluctuated, with no significant overall price increase, but the cost-end coal price fell quarter-over-quarter. It is expected that the company's per ton of cement loss will narrow quarter-over-quarter in Q2. As Q3 approaches, due to persisting profit pressure in the industry, the willingness to stagger price increases across all regions of the country is strengthening. It is expected that the company's comprehensive prices and profits will show some recovery quarter-over-quarter in Q3.

The new materials sector sees increased volume but reduced profits, with bright spots in overseas project services and operation services.

1) New materials sector: The revenue of the new materials sector in the first 24 hours of 2024 was 23.55 billion yuan, a year-on-year increase of 0.6%, with a gross margin of 23.7%, down by 2.30 percentage points. Sales volumes of gypsum board, fiberglass, carbon fiber, blades, and separators business saw year-on-year changes of +6.9%, +19.4%, 10.9%, -21.6%, and +15.1% respectively, with prices changing by -2.1%, -18.4%, -38.2%, -15.7%, and -34.5% respectively. The company's leading position in the new materials field is reflected in the good growth in various segments, but the increased competition in new materials has led to a decline in profitability. 2) Engineering services sector: Achieved revenue of 20.57 billion yuan in the first 24 hours of 2024, a year-on-year increase of 1.7%, with a gross margin of 18.6%, up by 1.0 percentage point. Amid increasing pressure in downstream cement market, the domestic new contract signings are under pressure, but there are bright spots in operation and overseas areas, with a new overseas contract signings increase of 9% year-on-year and a 41% increase in operation new contracts.

Capital expenditures have mildly decreased, and financial risks are under control.

In the first half of 24 hours, the company's capital expenditures were 13 billion yuan, up 8% year-on-year. The total amount of capital expenditures has moderately decreased and the structure has been optimized, shifting towards new materials, overseas, and private equity investments. The company's accounts receivable amount to 86.6 billion yuan, down 3.4 billion yuan year-on-year, with an asset-liability ratio of 60%, ensuring manageable financial risks.

Risk warning: Inadequate staggered implementation, rising coal prices for raw materials.