CNBM reports 56% drop in first-half profit, China

CNBM reports 56% drop in first-half profit, China
25 August 2015

China National Building Materials (CNBM) reported a 56 per cent decline in net profit for the first half of 2015, in line with the recent profit warning.

JP Morgan's Asia Metals and Mining Analyst, Daniel Kang, notes that excluding a positive contribution from fair value adjustments to financial assets, a loss would have been reported.

Operating cash flow fell 16 per cent YoY and restrained capex allowed a positive FCF to be maintained, albeit a hugely reduced figure, -76 per cent QoQ. Elsewhere receivables expanded sharply by 37 per cent whilst inventory days also rose (12 per cent QoQ).

Looking towards the remainder of this year, improvements may be in store. While CNBM began with a weak start to the third quarter inventories are now beginning to ease, JP Morgan notes. Mr Kang thinks the markets may soon be picking up supported by urban and infrastructure stimulus, particularly as traditional fourth quarter peak season approaches.

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