Core Viewpoint - The recent land auction in Hangzhou generated a total revenue of 50.35 billion yuan from the sale of three plots, indicating strong demand in the real estate market despite economic fluctuations [1] Group 1: Auction Details - The land auction took place on July 29, featuring three plots located in Xihu District, Gongshu District, and Linping District, with a total area of 267 acres and a total construction area of 344,000 square meters [1] - The starting price for the auction was set at 46.1 billion yuan [1] Group 2: Winning Bids - The plot in Gongshu District (GS130201-56) was won by Hangzhou Weixing Xingchen Real Estate Co., Ltd. for a total price of 19.13 billion yuan, with a floor price of 19,600 yuan per square meter and a premium of 28.13% [1] - The plot in Xihu District (XH010101-14) was acquired by a consortium including China Resources, Hangzhou Investment, and Hangzhou Metro for 26.85 billion yuan [1] - The plot in Linping District (LP070103-2) was won by Hangzhou Guoda Real Estate for 4.37 billion yuan [1]

Investment Rating - The investment rating for the construction materials industry is "Positive" (maintained) [1] Core Views - The construction materials index increased by 8.20% in the week from July 21 to July 25, 2025, outperforming the CSI 300 index by 6.51 percentage points [4][13] - The construction materials sector has shown strong performance over the past three months, with an increase of 16.12%, and over the past year, it has risen by 28.09%, both outperforming the CSI 300 index [4][13] - The report highlights significant investment opportunities in the construction materials sector, particularly due to the commencement of major projects like the Yarlung Tsangpo River downstream hydropower project, which is expected to boost demand for related construction materials [3] Summary by Sections Market Overview - The construction materials index has outperformed the CSI 300 index by 6.51 percentage points this week, with a year-to-date increase of 28.09% compared to the CSI 300's 21.06% [4][13] - The average PE ratio for the construction materials sector is 29.88 times, ranking it 17th lowest among all A-share industries, while the PB ratio is 1.28 times, ranking it 7th lowest [20][23] Cement Sector - As of July 25, 2025, the average price of P.O 42.5 bulk cement is 275.19 RMB per ton, reflecting a 2.02% decrease from the previous period [25][27] - The clinker inventory ratio has increased to 69.07%, up by 1.83 percentage points [26] Glass Sector - The spot price of float glass has risen to 1255.79 RMB per ton, an increase of 3.41% [78] - The inventory of float glass has decreased by 4.05%, with a total of 53.34 million weight boxes as of July 25, 2025 [80][81] - The price of photovoltaic glass has slightly decreased to 115.63 RMB per weight box, down by 0.34% [85]

Investment Rating - The report provides a comprehensive valuation table for various companies in the building materials industry, indicating a range of price-to-earnings (PE) and price-to-book (PB) ratios for 2025E and 2026E [1] Core Insights - The report highlights the expected growth in net profit for several companies, with notable increases such as 90 million CNY for Conch Cement in 2025E and 100 million CNY in 2026E, reflecting a strong market position [1] - The PE ratios for the companies vary significantly, with Conch Cement at 15.3 for 2025E and 13.8 for 2026E, while companies like Jidong Cement show a much higher PE of 37.2 for 2025E [1] - The report emphasizes the valuation metrics, with companies like China National Building Material having a low PB ratio of 0.34, indicating potential undervaluation [1] Summary by Category Cement - Conch Cement has a total market value of 138.1 billion CNY, with projected net profits of 90 million CNY in 2025E and 100 million CNY in 2026E, and a PE of 15.3 for 2025E [1] - Huaxin Cement is valued at 31.9 billion CNY, with net profits expected to reach 25 million CNY in 2025E and 30 million CNY in 2026E, showing a PE of 12.7 for 2025E [1] - Other notable companies include Tianshan Shares with a market value of 43.1 billion CNY and projected net profits of 15 million CNY in 2025E [1] Consumer Building Materials - Rabbit Baby is projected to have net profits of 7.5 million CNY in 2025E and 8.5 million CNY in 2026E, with a PE of 11.2 for 2025E [1] - China Liansu is valued at 14.5 billion CNY, with expected net profits of 22 million CNY in 2025E and 24 million CNY in 2026E, showing a low PE of 6.6 for 2025E [1] Glass and Fiberglass - Shandong Pharmaceutical Glass has a market value of 15.1 billion CNY, with projected net profits of 10.5 million CNY in 2025E and 11.5 million CNY in 2026E, and a PE of 14.3 for 2025E [1] - China Jushi is valued at 51.5 billion CNY, with net profits expected to reach 35 million CNY in 2025E and 40 million CNY in 2026E, showing a PE of 14.7 for 2025E [1] New Materials - Zhongfu Shenying has a market value of 19.3 billion CNY, with projected net profits of 0.5 million CNY in 2025E and 1.5 million CNY in 2026E, reflecting a very high PE of 385.0 for 2025E [1] - Jilin Carbon Valley is valued at 8.5 billion CNY, with expected net profits of 1 million CNY in 2025E and 1.3 million CNY in 2026E, showing a PE of 85.0 for 2025E [1]

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]

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 report maintains an "Accumulate" rating for the construction materials industry [1] Core Views - The construction materials sector is expected to benefit from increased fixed asset investments to stabilize economic expectations, particularly with the launch of major hydropower projects [3][4] - The cement market is experiencing a slight price decline, but overall demand is stabilizing, with an average shipment rate of 46% [11][17] - The report highlights the potential for recovery in valuations for leading companies in the sector due to improved supply-demand dynamics and ongoing industry consolidation [4][12] Summary by Sections 1. Sector Overview - The construction materials sector saw a slight decline of 0.23% in the past week, underperforming the broader market indices [3] - The report emphasizes the importance of government policies aimed at stabilizing the economy and boosting demand in the construction materials sector [3][4] 2. Bulk Construction Materials Fundamentals and High-Frequency Data 2.1 Cement - The national average price for high-standard cement is 343.8 yuan/ton, down 3.3 yuan from last week and down 46.2 yuan from the same period last year [18][19] - The average cement inventory level is 65.8%, with a shipment rate of 45.9%, reflecting a slight increase in demand [27] - The report anticipates that the industry's profit center will be better than last year due to enhanced self-discipline among leading companies [4][11] 2.2 Glass Fiber - The report notes a clear trend towards upgrading electronic glass fiber products, with high-end products expected to see increased market penetration [12] - The profitability of ordinary glass fiber remains resilient, supported by growth in domestic demand from sectors like wind power and thermoplastics [12] - Leading companies are expected to benefit from improved product structures and market conditions, with recommendations for companies like Zhongcai Technology and Honghe Technology [12][13] 2.3 Glass - The glass industry is expected to see a supply-side contraction, which may improve the short-term supply-demand balance [13] - The report suggests that leading companies in the float glass sector will benefit from resource advantages and potential excess profit opportunities [13] 2.4 Renovation and Building Materials - The report highlights the positive impact of government policies on domestic demand for renovation materials, with expectations for continued growth in consumer confidence [14] - Recommendations include companies that are well-positioned to benefit from these trends, such as Beixin Building Materials and Arrow Home [14][15] 3. Industry Dynamics Tracking - The report discusses the ongoing policy environment and its implications for the construction materials sector, emphasizing the need for companies to adapt to changing market conditions [4][14] - The report also tracks the performance of various companies within the sector, providing insights into their financial metrics and market positioning [15][16]

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]

Investment Rating - The report maintains a rating of "Buy" for Beixin Building Materials and "Overweight" for Weixing New Materials [5][9]. Core Views - The Yarlung Tsangpo River downstream hydropower project has officially commenced, with a total investment of approximately 1.2 trillion yuan, expected to boost infrastructure in Tibet [2]. - The cement industry is currently experiencing a demand downturn, but supply-side adjustments, such as staggered production halts, are anticipated to improve the situation [2][3]. - The glass manufacturing sector is facing supply-demand contradictions, but the recent self-discipline production cuts in photovoltaic glass may alleviate some of these issues [2][6]. - The consumption building materials sector is benefiting from favorable second-hand housing transactions and consumption stimulus policies, with significant potential for market share growth [2][6]. - The fiberglass market shows signs of recovery, particularly in wind power demand, while electronic fiberglass prices remain stable amid supply-demand differentiation [2][7]. Summary by Sections Cement Industry Tracking - As of July 18, 2025, the national cement price index is 343.37 yuan/ton, down 0.69% week-on-week, with a total cement output of 2.7828 million tons, up 2.09% [3][16]. - Infrastructure remains the only positive demand driver for cement, but local government funding pressures persist [3][16]. - The cement industry is expected to see structural opportunities in key regions like Sichuan-Chongqing and the Yangtze River Delta [3][16]. Glass Industry Tracking - The average price of float glass is 1211.96 yuan/ton, with a week-on-week increase of 0.58% [6][31]. - Inventory levels for sample enterprises have decreased, indicating a potential for short-term replenishment demand [6][31]. - The market remains cautious, with limited order improvements expected in the near term [6][31]. Fiberglass Industry Tracking - The price of non-alkali fiberglass has shown slight weakness, while demand from wind power and thermoplastics remains relatively strong [7]. - The electronic fiberglass market is experiencing stable pricing, with high-end products seeing a notable supply-demand gap [7]. Consumption Building Materials - The consumption building materials sector is experiencing a weak recovery, supported by declining prices of upstream raw materials [6][7]. - Companies like Beixin Building Materials and Weixing New Materials are highlighted for their growth potential in this sector [5][9]. Carbon Fiber Industry Tracking - The carbon fiber market remains stable, with production costs at 106,400 yuan/ton and a negative profit margin [8]. - Demand is expected to grow in sectors like wind power and hydrogen storage, although recovery is gradual [8].

Investment Rating - The report maintains a recommendation for the construction materials sector, indicating a positive outlook for performance recovery in categories such as cement and fiberglass [2]. Core Insights - The ongoing "anti-involution" campaign is expected to improve the profitability of leading companies in the construction materials sector, particularly in the consumer segment [6][13]. - Cement prices are experiencing a slight downward trend due to high temperatures and rainy seasons affecting demand, with a recent average price drop of 0.4% [10][21]. - The fiberglass market shows stable pricing for non-alkali roving, while electronic yarn prices are expected to rise for high-end products [12][14]. Summary by Sections Industry Scale - The construction materials sector comprises 96 listed companies with a total market capitalization of 817.2 billion [2]. Industry Dynamics - Cement: The national average cement price has decreased by 0.4%, with significant drops in regions like Anhui and Hubei [10][21]. - Float Glass: The average price is 1173 yuan/ton, reflecting a slight decrease of 0.24% [11]. - Fiberglass: The market for non-alkali roving remains stable, while electronic yarn prices are expected to increase [12]. Consumer Construction Materials - The consumer market is showing signs of recovery, with a 3.0% year-on-year increase in retail sales of construction and decoration materials from January to May 2025 [13]. - The report highlights the importance of leading companies with strong distribution channels and healthy cash flow [13]. Recommended Stocks - The report recommends several companies, including Weixing New Materials, Keda Manufacturing, and Mona Lisa, for their strong market positions and growth strategies [14][15][16].