Morningstar: Lowering China Resources Building Materials Technology (01313)'s reasonable valuation per share to HK$1.10, revenue fell 15% in the first half of 2026

The Zhitong Finance App learned that Morningstar released a research report stating that the reasonable valuation of China Resources Building Materials Technology (01313) was lowered by 24% from HK$1.45 to HK$1.10 per share, indicating that the stock lacks a competitive moat. The target price reflects the bank's more conservative long-term profit assumption. The stock's valuation is still reasonable, and most of the upside for profit margin recovery is reflected in the stock price. The company's revenue declined 15% in the first half of 2026. Due to lower sales prices of cement, concrete and aggregates, gross margin fell to 8.3% from 18.5% in the same period last year, resulting in an operating loss of 393 million yuan. The interim dividend remained at HK$0.014 per share.

Morningstar indicated that due to weak starts of infrastructure and real estate projects that continue to suppress demand, gross margin narrows more seriously than expected. Since the bank currently predicts that the rate of recovery in cement prices will slow down, the 2026-2030 operating margin assumption was lowered by 130 to 320 basis points. Higher coal prices are putting additional pressure on profitability, but a return to normal domestic production should gradually ease the headwinds in terms of costs. Coupled with improved infrastructure demand, the bank still predicts that gross margin will rise from 16.7% in 2025 to 17.4% in 2030. The performance of the concrete business remains steady, and the impact of the 19% drop in prices should be offset by a 16% increase in sales. Due to its strong market position in major provinces such as Guangdong, it supports the bank's forecast that the long-term revenue growth of the concrete business will be faster than that of cement products.