Morningstar has reduced its fair value estimate for CR BLDG MAT TEC (01313) by 24%, lowering it from HK$1.45 to HK$1.10 per share. The valuation adjustment reflects the firm's more conservative long-term profitability assumptions, as the stock lacks a competitive moat, and most of the upside from margin recovery is already priced into the current share price.

The company reported a 15% decline in revenue for the first half of 2026. Due to lower selling prices for cement, concrete, and aggregates, the gross margin contracted to 8.3% from 18.5% in the same period last year, resulting in an operating loss of RMB 393 million. The interim dividend was maintained at HK$0.014 per share.

Morningstar noted that the margin compression was more severe than anticipated, as weak construction activity in infrastructure and real estate projects continues to weigh on demand. Given the slower-than-expected recovery in cement prices, the firm has revised its operating margin assumptions downward by 130 to 320 basis points for the 2026 to 2030 period.

Rising coal prices have added further pressure on profitability, though a return to normal domestic production should gradually ease cost headwinds. Combined with improving infrastructure demand, Morningstar still forecasts gross margins to rise from 16.7% in 2025 to 17.4% by 2030.

The concrete business remains resilient, with a 19% drop in prices expected to be offset by a 16% increase in sales volume. The company's strong market position in key provinces such as Guangdong supports the forecast that long-term revenue growth in the concrete segment will outpace that of its cement products.