2025 earnings miss our expectation Beijing New Building Materials announced its 2025 results: Revenue fell 2% YoY to Rmb25.3bn and net profit attributable to shareholders fell 20% YoY to Rmb2.9bn. In 4Q25, the firm’s revenue was Rmb5.4bn and net profit attributable to shareholders was Rmb0.32bn. The firm's earnings missed our expectation, possibly because its gypsum board business remained under pressure.

Trends to watch

Gypsum board business under pressure; sales volume shows resilience. In 2025, the firm's revenue from gypsum board business fell 8.7% YoY to Rmb11.962bn with sales volume declining 1.1% YoY to 2.147bn sqm. Industry-wide sales volume dropped 2.7% YoY to 3.066bn sqm and the firm’s market share was 70%. Per-unit price of gypsum board products fell 8% YoY to Rmb5.57/sqm, per-unit cost of gypsum board products fell 5% YoY to Rmb3.52/sqm and per-unit gross profit of gypsum board products was Rmb2.05/sqm.

We attribute the pressure on the firm’s gypsum board business to two factors. First, falling completions of homes weighed on demand. Second, intensifying competition affected selling prices of gypsum board products. However, the decline in the firm's sales volume of gypsum board products was smaller than the industry average, reflecting resilience in the firm’s sales volume of gypsum board products. Meanwhile, the firm's gypsum board production facilities in Thailand (annual production capacity at 40mn sqm) have been put into operation, implying continued progress in expanding its international presence.

Waterproofing and coatings businesses have maintained growth momentum. In 2025, revenue from waterproofing construction materials rose 3% YoY to Rmb4.8bn with gross margin staying largely flat at 18.8%. Revenue from coiled waterproofing materials fell 0.24% YoY to Rmb3.3bn. Revenue from coatings rose 23% YoY to Rmb5.1bn with gross margin remaining largely flat at 33%. Carpoly announced revenue of Rmb3.7bn and net profit of Rmb314mn in 2025. Beijing New Building Materials acquired a 51.42% stake in Zhejiang Da Qiao You Qi, which we think may contribute to the firm’s revenue and profit in the future. The firm’s waterproofing and coatings businesses have maintained growth momentum.

Accounts receivable turnover days well under control; expense ratio edged up. The firm's accounts receivable turnover days rose by 2.5 days YoY to 34 days in 2025, increasing slightly possibly due to structural changes in businesses. The firm's overall expense ratio rose 0.9ppt YoY to 15.2%, with selling expense ratio rising 0.7ppt YoY and G&A expense ratio rising 0.3ppt YoY, possibly due to business diversification and expansion.

Financials and valuation

As the gypsum board business is under pressure and recovery of product prices may take some time due to a low base, we cut our 2026 and 2027 EPS forecasts by 8.5% and 3.6% to Rmb1.95 and Rmb2.34. The stock is trading at 13x 2026e and 11x 2027e P/E. As growth potential of the firm’s waterproofing and coatings businesses may boost its average valuation, we maintain our TP of Rmb28, implying 14x 2026e and 12x 2027e P/E, offering 10% upside.

Risks

Sharper-than-expected declines in gypsum board sales volume; disappointing recovery of product prices.