Bank of America Securities: Lower CR BLDG MAT TEC (01313) target price to 1.2 Hong Kong dollars, first-quarter net loss in line with expectations.

Bank of America Securities released a research report stating that in consideration of the first quarter loss, they have lowered the profit forecasts for CR BLDG MAT TEC (01313) for the years 2026 and 2027 by 32% and 27% respectively. The target price has been decreased from 1.3 Hong Kong dollars to 1.2 Hong Kong dollars, maintaining a "underperform" rating due to valuation premium and lack of short-term catalysts. China Resources Building Materials incurred a net loss of 188 million yuan in the first quarter of this year, corresponding to a loss of 0.027 yuan per share, in line with the previously announced forecast of 170 to 200 million yuan. Despite a nationwide demand contraction of 7.1%, the company saw an increase in cement and clinker sales volume by 3.6% to 11.7 million tons year-on-year. However, the average gross profit per ton significantly dropped from 42 yuan in the same period last year to 26 yuan, reflecting the company's competitive strategy of sacrificing profit margins for sales. Other businesses are facing similar challenges. The industry generally expects profit margins to improve quarter by quarter for the remainder of the year, as production control measures take effect and the focus shifts from sales to profits. The bank believes that China Resources Building Materials will follow a similar trend.