Shenwan Hongyuan Securities·2026-03-16 07:26Investment Rating - The report rates the construction materials industry as "Overweight" indicating that the industry is expected to outperform the overall market [2][9]. Core Insights - Legislative efforts to address "involution" competition are underway, which may lead to a more favorable competitive environment in the industry [4]. - Although cement demand has not significantly improved, excessive competition on the supply side is a core reason for the continuous price decline. In 2025, national cement production is projected to be 1.693 billion tons, a year-on-year decrease of 6.9% [4]. - The "anti-involution" legislation is expected to significantly improve the supply contraction situation in the cement industry, helping to curb low-price competition and overproduction [4]. - The cement industry is linked to carbon trading and energy-saving policies, which may further compress supply in the future [4]. - The report suggests that the "anti-involution" measures will help reduce competitive intensity and improve profitability in the domestic cement industry, with a focus on leading companies such as Conch Cement, Huaxin Cement, and Tianshan Cement [4]. Summary by Sections Legislative Developments - The Ministry of Justice has highlighted the importance of optimizing the business environment and addressing issues like local protectionism and "involution" competition in its legislative agenda for the year [4]. Supply and Demand Dynamics - Cement demand remains weak, with a projected decline in production and demand in 2025. The profitability of the cement industry is closely tied to competition dynamics [4]. Industry Policy Implications - The "anti-involution" legislation is anticipated to provide stronger institutional support to limit low-price competition and enhance effective supply contraction [4]. Investment Recommendations - The report emphasizes the potential for profitability recovery in the cement industry, recommending attention to leading companies such as Conch Cement (A/H), Huaxin Cement (A/H), Tianshan Cement, and others [4].