BEIJING NEW BUILDING MATERIALS(000786)：GYPSUM BOARD REMAINS RESILIENT; EMERGING BUSINESSES ENJOY HIGH-QUALITY GROWTH

2024 results miss our expectations Beijing New Building Materials announced its 2024 results: Revenue rose 15% YoY to Rmb25.8bn and net profit attributable to shareholders grew 3.5% YoY to Rmb3.65bn. In 4Q24, revenue rose 1.5% YoY to around Rmb5.46bn, and net profit declined 35% YoY to about Rmb502mn. The results missed our expectations due to falling sales volume of gypsum boards in 4Q24. 1) Sales volume of gypsum boards remained solid; earnings expanded. In 2024, sales volume of gypsum boards slid 0.05% YoY to 2.17bn sqm, and revenue fell 5% YoY to Rmb13.1bn. Due to pressure on market demand and falling prices of raw materials and fuel materials, the firm’s gypsum board ASP fell 5% YoY to Rmb6.04/sqm, while its gross margin rose 0.02ppt YoY to 38.5%. In 4Q24, gross margin of gypsum board declined due to the slack season and rising costs, leaving blended gross margin largely flat YoY at 27% (-3ppt QoQ) in 4Q24. 2) Keel revenue edged down. In 2024, keel revenue fell 0.1% YoY to Rmb2.3bn (sales volume up 6% YoY), and gross margin rose 0.3ppt YoY to 19%. 3) Waterproofing business grew despite headwinds; cash flow improved. In 2024, revenue of the waterproofing business rose 19% YoY to Rmb4.6bn, of which coiled materials rose 19% to Rmb3.3bn. Net profit of this business rose 7% to Rmb164mn (implying a net margin of 3.5%), accounts receivable fell Rmb345mn to Rmb1.58bn (with turnover days down 55 days YoY to 125 days despite industry- wide increases), and net operating cash flow rose 34% to Rmb470mn. 4) Coatings business generated high profit. After the acquisition of Carpoly in 2024, the company’s coatings business generated revenue of Rmb3.6bn, net profit of Rmb252mn (a net margin of 7%), and operating cash flow of Rmb0.63bn. 5) Gross margin remained flat and net margin fell slightly. The firm’s gross margin remained largely flat at 29.9% (excluding taxes and surcharges) in 2024. Due to the acquisition, selling, G&A, and R&D expense ratios rose 1.35ppt, rose 0.7ppt, and fell 0.1ppt YoY to 5.6%, 4.3%, and 4.1%, and net margin fell 1.6ppt YoY to 14.1%. 6) Strong cash flow and excellent asset structure. The firm’s net operating cash flow was Rmb5.1bn (cash-to-revenue ratio at 100% and ratio of net operating cash flow to net profit at 141%), mainly due to the firm’s efforts to manage accounts receivable and inventory (turnover days fell one and 10 days YoY); and debt-to-asset ratio was 24%. 7) Stable dividend payout ratio. The dividend payout ratio increased to 40% in 2024, corresponding to a dividend yield of 3% in 2024. Trends to watch Gypsum boards to remain resilient; waterproof materials and coatings gaining momentum. We believe the firm’s gypsum board business will maintain high-quality growth driven by transformation strategies (gypsum board business rose 17% in home decoration market and 21% YoY in county and township markets in 2024). We expect the firm to maintain high earnings from this segment by improving product mix. Meanwhile, waterproofing and coatings segments are gaining momentum. We expect the company to gain market share in the two segments, which may contribute incremental growth as the firm enhances management, manages costs, and steps up marketing. Financials and valuation As demand for gypsum boards remains under pressure, we lower our 2025 net profit forecast 11% to Rmb4.6bn and introduce our 2026 net profit forecast of Rmb5.5bn. The stock is trading at 10.6x and 8.8x 2025e and 2026e P/E. We maintain an OUTPERFORM rating and keep our target price unchanged at Rmb36, implying 13x and 11x 2025e and 2026e P/E, offering 25% upside, given improving risk appetite. Risks Worse-than-expected pressure on gypsum board demand; disappointing integration of coatings business and/or development of waterproofing business. 【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

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