Core Viewpoint - The company is evolving its business model from a traditional profit-sharing approach to a value co-creation ecosystem through the "platform + creator" strategy, aiming to build competitive barriers that are difficult to replicate [1][2] Group 1: Strategic Initiatives - The company emphasizes a dual approach of leveraging technology as a spear and co-creation as a shield to reshape the value chain amid industry changes [1] - The "partner" system initiated in 2018 has transformed the company into an open empowerment platform, attracting resource-based partners to build an ecological system together [1][2] Group 2: Product and Service Strengths - The company has established a robust supply chain directly connected to major firms like BASF and Sinopec, supported by a five-step quality inspection system and third-party controls [1] - A standardized construction system has been created, backed by a certified craftsmanship academy, focusing on standardized processes, modern equipment, and professional talent [1] Group 3: Market Position and Competitive Advantage - The company’s competitive edge lies in its technological leadership, supported by a national key laboratory for advanced materials, addressing critical technical challenges [2] - The company has achieved green product certification in 2022 and developed innovative materials for specific applications, enhancing safety and reliability in construction [2] Group 4: Project Experience and Future Opportunities - The company has successfully executed major projects, including 85% of waterproof engineering for Olympic venues and the Hong Kong-Zhuhai-Macao Bridge, creating replicable methodologies for future projects [2] - The company is strategically positioning itself in emerging sectors such as high-standard farmland and water conservancy pipelines, mobilizing resources to seize new market opportunities [2]

Group 1 - The housing inspection concept rose by 2.90%, ranking 8th among concept sectors, with 37 stocks increasing, including Su Bote, Huajian Group, and Zhonggang Tianyuan hitting the daily limit [1] - The top gainers in the housing inspection sector included Zhonggang Tianyuan with a 9.97% increase, Anhui Construction with a 4.23% increase, and Dongfang Yuhong with a 6.49% increase [3][4] - The sector experienced a net outflow of 0.52 billion yuan in main funds, with 19 stocks receiving net inflows, and Zhonggang Tianyuan leading with a net inflow of 78.19 million yuan [2][3] Group 2 - The main fund inflow ratios for Su Bote, Zhonggang Tianyuan, and Anhui Construction were 58.95%, 38.92%, and 17.95% respectively [3] - The housing inspection sector's fund inflow list showed significant activity, with Zhonggang Tianyuan leading in main fund flow at 78.19 million yuan [3][4] - Stocks like Xin Dian Software, Ying Jian Ke, and Cheng Bang Co. saw declines of 2.65%, 1.99%, and 1.92% respectively, indicating some volatility within the sector [1][5]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Chinese Building Materials - **Quarter**: 2Q25 - **General Outlook**: The demand backdrop remains tough, with expectations of double-digit year-over-year (yoy) declines in net profit for most companies in the sector, except for Skshu Paint due to favorable raw material conditions and headcount optimization [1][11] Core Insights - **Demand Trends**: Underlying demand has slowed across almost all companies and distributors, with a slight narrowing in yoy decline for new builds. Secondary property transactions and infrastructure fixed asset investment (FAI) growth have also decelerated [5][11] - **Pricing Environment**: Pricing has stabilized sequentially, with 4Q24 confirmed as the pricing bottom for most companies. However, price restoration efforts for certain products have not been effective, leading to skepticism about the execution of recent price hikes [5][11] - **Earnings Expectations**: Most companies are expected to see a double-digit decline in earnings, with Skshu Paint being the exception. The focus will be on the execution of price hikes and the potential for earnings growth in 3Q25 if these hikes are successful [1][11] Company-Specific Insights - **Skshu Paint**: EPS forecasts have been raised by 12-41% for 2025E-27E due to raw material tailwinds. However, concerns remain about the sustainability of margin recovery and competition from larger brands [6][8][55] - **Oriental Yuhong**: The company is positioned to expand market share in a fragmented waterproofing market, despite challenges in the property sector. It is expected to pay an interim dividend of approximately RMB 2 billion [42][11] - **Beijing New Building Materials (BNBM)**: The company is optimistic about its gypsum board business and new product expansions, including waterproofing and coatings, which are expected to drive earnings growth [48][11] - **Vasen**: The company faces earnings downgrade potential due to the property market downturn and competition. It is rated as a sell due to unfavorable risk-reward dynamics [8][52] - **Yuhong and BNBM**: Both companies are rated as buy due to expected earnings recovery and attractive dividend yields [8][11] Financial Metrics and Estimates - **Revenue and Profit Estimates**: Most companies are expected to see a yoy decline in revenue due to negative pricing impacts and sluggish demand. Skshu Paint is expected to maintain flat revenue due to its exposure to the secondary property market [11] - **Margin Expectations**: Margins are expected to compress yoy for most companies, with Skshu benefiting from raw material tailwinds. Seasonal improvements and lower SG&A expenses are anticipated for some companies [11] - **Target Prices**: Target prices for companies have been revised, with changes ranging from -5% to +32% based on updated earnings estimates and valuation adjustments [7][11] Risks and Considerations - **Market Risks**: Key risks include weaker-than-expected construction activities, unexpected increases in raw material costs, and potential impairment losses related to receivables from developers [45][50] - **Competition Risks**: Intensified competition in certain product categories may negatively impact volumes and margins for companies like Vasen and Skshu Paint [7][8] Conclusion - The Chinese building materials sector is facing significant challenges with demand and pricing pressures. However, select companies like Skshu Paint, Oriental Yuhong, and BNBM are positioned to navigate these challenges effectively, with potential for recovery in the latter half of 2025 if recent price hikes are successfully implemented [1][11][48]

Core Insights - The housing inspection sector has seen a significant increase of 4.35%, ranking fifth among concept sectors in terms of growth, with 41 stocks rising, including Jinju Group, Chongqing Construction, and Subote, which reached their daily limit [1][2] - The sector attracted a net inflow of 473 million yuan from main funds, with 28 stocks receiving net inflows, and seven stocks exceeding 30 million yuan in net inflow, led by Leizhi Group with 118 million yuan [2][3] Sector Performance - The housing inspection concept sector's performance is highlighted by the following stocks: - Leizhi Group: 10.04% increase, 11.66% turnover rate, 117.51 million yuan net inflow, 30.87% net inflow ratio [3] - Oriental Yuhong: 5.98% increase, 4.86% turnover rate, 70.29 million yuan net inflow, 6.43% net inflow ratio [4] - Chongqing Construction: 10.14% increase, 3.13% turnover rate, 63.60 million yuan net inflow, 28.38% net inflow ratio [4] Notable Declines - The stocks with notable declines include: - *ST Dali: -0.19% decrease, 0.54% turnover rate [5] - Te Fa Service: -0.07% decrease, 2.86% turnover rate [5]

Core Viewpoint - The 30th anniversary celebration of Dongfang Yuhong highlighted the company's journey from grassroots to a leading player in the building materials industry, emphasizing resilience, strategic determination, and a commitment to core values [1][3]. Group 1: Company Culture - The company instills the motto "never abandon, never give up" into its DNA, encouraging employees to focus on climbing towards the goal of becoming a world-class building materials service provider [3]. - Dongfang Yuhong has demonstrated its commitment to employee value by supporting staff in difficult times, such as assisting sick employees and providing aid to bereaved families [3]. - The company has maintained a long-standing tradition of community service, having provided authoritative consultation or assistance to over 140,000 individuals through its "Service the Public, Reject Leakage" initiative [3]. Group 2: Strategic Determination - Dongfang Yuhong's development over the past 30 years showcases its ability to respond to uncertainties with a focus on quality and technological advantages, creating a competitive market position [5]. - The company emphasizes a long-term value perspective, which has allowed it to navigate industry cycles effectively, proving that "slow is fast" and "staying true leads to innovation" [5]. Group 3: Value Proposition - The company adheres to a strict quality-first philosophy, committing to never produce non-standard products and ensuring that customer service meets high standards [8]. - Dongfang Yuhong's investment logic is rooted in its core values, which emphasize the importance of knowing what not to pursue, thereby establishing a solid foundation for sustainable growth [8][10]. - The company's technological advancements are deeply connected to its unwavering commitment to quality, which has been a cornerstone of its success over the past three decades [10].

Core Insights - The celebration of Dongfang Yuhong's 30th anniversary highlighted the company's journey from its inception in Hunan to becoming a global leader in the waterproofing industry, emphasizing the importance of perseverance and innovation [1][9] - The event showcased the company's commitment to technological advancement and quality standards, with industry leaders expressing high expectations for Dongfang Yuhong's future contributions to the construction waterproofing sector [2][3] Group 1: Company Achievements - Dongfang Yuhong has been recognized as the global leader in construction waterproofing materials, according to a market research report by Frost & Sullivan, which will be completed in July 2025 [9] - The company has successfully navigated five development phases, driven by a strong commitment to innovation and quality, aiming to become a world-class building materials service provider [1][9] Group 2: Industry Impact - The Secretary-General of the China Waterproofing Association praised Dongfang Yuhong for its exemplary contributions to the industry, setting benchmarks in technology standards and product quality [2] - Dongfang Yuhong is expected to continue leading the Chinese waterproofing industry to higher standards and showcase Chinese quality on the global stage [2] Group 3: Cultural and Team Spirit - The celebration featured performances that highlighted the spirit of teamwork and individual contributions, reinforcing the company's culture of recognition and appreciation for its employees [2][4][8] - The event included various artistic expressions that reflected the company's values and the collective journey of its workforce over the past three decades [4][8] Group 4: Technological Innovation - The Vice President of Dongfang Yuhong's Manufacturing Group discussed the company's focus on key technological advancements that drive its growth and reshape the industry landscape [3] - The emphasis on technology as a core engine for development was reiterated, showcasing the company's commitment to continuous innovation [3] Group 5: Global Vision - Dongfang Yuhong's commitment to globalization was highlighted by its Hong Kong subsidiary, which expressed determination to be a pioneer in global markets [6][7] - The company aims to define standards rather than merely follow them, indicating a proactive approach to international collaboration and sustainable development [7]

Core Viewpoint - The official launch of the Yarlung Tsangpo River downstream hydropower project has led to a significant surge in the water conservancy and cement sectors, with related ETFs experiencing substantial gains in trading volume and price [1][3]. Group 1: ETF Market Performance - The E Fund Building Materials ETF (159787) saw a half-day increase of 8.23%, with a trading volume of 26.74 million yuan [2][3]. - The Building Materials ETF (159745) recorded a half-day trading amount of 234 million yuan, indicating high trading activity [1][3]. - Year-to-date, the Building Materials ETF (159745) has seen an increase of 23.1 million shares, with a change rate of 28.11% [2]. Group 2: Industry Price Trends - Many building material prices are currently at historically low levels, with the national average price of high-standard cement down by 31 yuan/ton year-on-year and 17 yuan/ton month-on-month [3]. - Float glass prices have decreased by 27.2% year-on-year and 6.1% month-on-month [3]. - The industry is expected to improve due to a combination of stable growth policies and an enhanced competitive landscape [3]. Group 3: Index Composition - The CSI All Share Building Materials Index includes listed companies involved in the building materials sector, reflecting the overall performance of these companies [4]. - Major weighted stocks in the index include Conch Cement (14.46%), Beijing New Building Materials (11.04%), and Oriental Yuhong (9.05%) [5].

Investment Rating - Industry rating is maintained at "Outperform" [5] Core Viewpoints - The cement industry is expected to achieve a total profit of 15-16 billion yuan in the first half of 2025, recovering from a loss of 1.1 billion yuan in the same period last year. Several cement companies have announced significant profit increases, with Tianshan Co. and Jidong Cement reducing losses by 2.5 billion and 660 million yuan respectively. Other companies like Tapai, China Resources, and Wan Nian Qing have seen profit growth exceeding 80%, while Huaxin Cement's profit increased by 50-55% [2][18] - The substantial improvement in performance is attributed to several factors: 1) Major companies have enhanced their price stability awareness since Q4 last year, leading to a price increase of approximately 20 yuan/ton in the average cement price year-on-year; 2) Cement production decreased by 4.3% year-on-year, with the decline narrowing significantly; 3) The average coal price fell by about 200 yuan/ton year-on-year [2][18] - Short-term cement prices are still slightly declining due to seasonal factors, but the downward space is limited. Prices are expected to rise as demand enters the peak season in August. Current cement valuations are relatively low, with a price-to-book ratio of only 0.7, which is at the 17th percentile over the past three years. The Ministry of Industry and Information Technology has announced a new round of growth stabilization plans for the building materials industry, which is expected to catalyze further valuation recovery [3][18] Summary by Sections Market Review - The Shanghai Composite Index rose by 1.09%, while the building materials sector (CITIC) fell by 0.02%. Notable stock performances included Lifan Shuke (+26.9%), Shiming Technology (+15%), and Hainan Ruize (+13.9%). The recommended stocks from the previous week showed mixed results, with China National Materials (+8.8%) and Huaxin Cement (+0.9%) performing well, while Sanhe Pile (-4.5%) and International Composite (-1.4%) declined [1][12] Recent Real Estate Fundamentals - In the week of July 4-10, the sales area of commercial housing in 30 major cities was 1.3391 million square meters, a year-on-year decrease of 22.55% [14] Key Sub-industry Tracking - Cement: National cement market prices continued to decline, with a drop of 1%. The price drop was mainly concentrated in East and Southwest China, with a range of 10-30 yuan/ton. However, demand is expected to improve slightly with better weather conditions [16] - Glass: The domestic photovoltaic glass market remained stable, with prices holding steady. The average price of float glass increased slightly to 1211.96 yuan/ton, with production costs varying based on fuel types [17] - Fiberglass: The market for non-alkali yarn showed a downward trend, with prices declining slightly. The overall demand remains weak, although there is some support from wind power orders [17]

Investment Rating - The investment rating for the construction materials industry is "Positive" (maintained) [1] Core Views - The central urban work conference emphasized urban renewal, which is expected to drive demand for construction materials such as pipes, waterproofing, and coatings. This will lead to significant improvements in the real estate chain's fundamentals [3] - The report recommends several companies in the consumer building materials sector, including Sankeshu (channel expansion), Dongfang Yuhong (waterproofing leader), Weixing New Materials (high retail business ratio), and Jianlang Hardware. Beneficiary companies include Beixin Building Materials (gypsum board leader) [3] - The National Development and Reform Commission's action plan for the cement industry aims to control cement clinker capacity at around 1.8 billion tons by the end of 2025, which is expected to accelerate energy-saving and carbon reduction efforts [3] Market Performance - The construction materials index fell by 0.23% in the week from July 14 to July 18, 2025, underperforming the CSI 300 index by 1.32 percentage points. Over the past three months, the CSI 300 index rose by 7.17%, while the construction materials index increased by 4.36%, underperforming by 2.82 percentage points. In the past year, the CSI 300 index rose by 14.68%, and the construction materials index increased by 16.62%, outperforming by 1.94 percentage points [4][13] Cement Sector - As of July 18, 2025, the average price of P.O42.5 bulk cement nationwide was 280.87 CNY/ton, down 0.71% month-on-month. The clinker inventory ratio was 67.24%, up 1.35 percentage points [6][27] - The report highlights regional price variations, with Northeast China stable, North China up by 0.74%, and East China down by 1.90% [26] Glass Sector - The spot price of float glass as of July 18, 2025, was 1214.63 CNY/ton, an increase of 0.71% from the previous week. The inventory of float glass nationwide decreased by 175 million weight boxes, a decline of 3.05% [82][84] - The average price of photovoltaic glass remained stable at 116.02 CNY/weight box [89] Fiberglass Sector - The market price for non-alkali 2400tex direct yarn ranged from 3300 to 4100 CNY/ton, with variations depending on the manufacturer [6] Consumer Building Materials - As of July 18, 2025, the price of asphalt was 4570 CNY/ton, stable week-on-week, and up 2.93% year-to-date. The price of titanium dioxide was 13050 CNY/ton, down 1.14% month-on-month [6]

Investment Rating - Industry Rating: Recommended [4] Core Insights - The establishment of China Yajiang Group marks the orderly advancement of major engineering projects, with significant investment opportunities in geotechnical engineering and civil explosives [1][8] - The demand for civil explosives is expected to concentrate further, benefiting companies like Guangdong Hongda and Xuefeng Technology [1] - The traditional industry is experiencing a "anti-involution" trend, with recommendations for cement leaders such as Conch Cement and Huaxin Cement [1][9] - Domestic substitution is gaining momentum, with recommendations for companies like Maijia Xincai and Songjing Co., which are expected to benefit from tariff relief and increased shipping demand [1][10] Summary by Sections 1. Market Trends - In the 29th week, new housing and second-hand housing market transaction volumes showed a downward trend, with new housing transaction area in 30 major cities down by 25% year-on-year [2][23] - The average price of cement in the national market is 356 RMB/ton, continuing to decline with a drop of 1% [3][27] 2. Investment Opportunities - Major water conservancy and hydropower projects are expected to generate substantial demand for engineering, building materials, and civil explosives, with total investment in the Yarlung Hydropower Project estimated at approximately 1.2 trillion RMB [8] - The civil explosives industry is undergoing consolidation, with the Ministry of Industry and Information Technology aiming to reduce the number of production enterprises to 50 by 2025 [8] 3. Cement Industry Analysis - Cement prices are under downward pressure, particularly in East and Southwest China, with average shipment rates around 43.2% [3][27] - The cement market is expected to continue experiencing price fluctuations due to weak overall demand and high inventory levels [27][54] 4. Recommendations - Recommended companies include Conch Cement, Huaxin Cement, and companies in the waterproofing sector like Dongfang Yuhong and Keshun Co. [1][9] - For domestic substitution, companies like Maijia Xincai and Songjing Co. are highlighted for their growth potential in the ship coating sector [1][10]