Group 1: Cement Industry - National cement prices continue to decline due to high temperatures and rainfall affecting construction activities, leading to reduced demand [1][2] - Approximately half of the clinker production lines nationwide have halted operations, but supply regulation remains limited, resulting in high clinker inventory levels among cement companies [1][2] - Short-term demand is expected to remain weak, but rising costs may provide some support for cement prices, which are anticipated to fluctuate at low levels with limited decline [2] Group 2: Construction Materials - Retail sales of building and decoration materials increased by 2.6% year-on-year from January to June, with a 1.0% year-on-year growth in June alone, and a 14.76% month-on-month increase [3] - The demand for renovation and urban renewal is expected to stabilize the market, driven by policies promoting housing sales and home decoration subsidies [3] - The central urban work conference emphasized urban renewal as a key focus, which is likely to boost demand for construction materials such as pipes, waterproof materials, and building coatings [3] Group 3: Fiberglass - The price of fiberglass yarn remains stable but is trending weakly, with demand appearing lackluster; however, high-end products like wind power yarn are supporting market demand [3] - Electronic yarn prices are stable, with steady demand from CCL manufacturers and a tight supply of high-end products, leading to potential price increases [3] Group 4: Float Glass - Float glass prices have risen due to speculation driven by futures market changes, leading to increased purchasing activity and a slight decrease in inventory levels [4] - The market is heavily influenced by futures prices, but the fundamental demand remains weak, with stable supply expected in the short term [4][5] - Long-term, the industry supply-demand structure is expected to improve as policies to reduce capacity are implemented [5] Group 5: Investment Recommendations - For construction materials, companies with strong channel layouts and product quality such as Beixin Building Materials, Weixing New Materials, and Dongfang Yuhong are recommended [5] - In the cement sector, regional leaders like Shangfeng Cement are expected to recover profitability, with attention on Huaxin Cement and Conch Cement [5] - For fiberglass, China Jushi is highlighted as a beneficiary of demand recovery in emerging markets, with price increases expected for mid-to-high-end products [5] - In the glass sector, companies like Qibin Group are recommended as the supply-demand structure is expected to gradually optimize [5]

Industry Investment Rating - The investment rating for the construction materials industry is "Outperform the Market" and is maintained [1] Core Views - The sentiment of "anti-involution" is rising, leading to significant price increases in cement, glass, and fiberglass commodities. The industry is expected to see a long-term trend improvement in fundamentals due to policy catalysts, as both prices and profitability are currently at the bottom [4] - Cement production capacity is anticipated to continue declining under the implementation of policies to limit overproduction, which will significantly enhance capacity utilization. A recovery in demand is expected in August, leading to gradual price increases [4] - The glass industry is experiencing price increases driven by environmental regulations, which will enhance standards and costs, accelerating the industry's cold repair progress [5] - The fiberglass sector is benefiting from demand driven by the AI industry, with a clear trend of volume and price increases expected [5] - The consumer building materials sector has reached a profitability bottom, with strong demands for price increases due to the "anti-involution" policies [5] Summary by Sections Industry Basic Situation - Closing point: 5007.18 - 52-week high: 5128.73 - 52-week low: 3435.69 [1] Recent Market Performance - The construction materials sector index increased by 8.20% in the past week, outperforming major indices such as the Shanghai Composite Index (1.67%) and the Shenzhen Component Index (2.33%) [6] Cement Market Insights - Cement prices are currently in a downtrend due to seasonal factors, with a 2.13% decrease in bagged P.O 42.5 ordinary cement prices week-on-week. The monthly production in June 2025 saw a year-on-year decline of 5.3% [8] Glass Market Insights - Glass prices increased by 0.76% this week, with futures closing at 1362 yuan/ton, primarily driven by "anti-involution" policies [12] Key Announcements - Tower Group reported a revenue of 2.056 billion yuan for the first half of 2025, a year-on-year increase of 4.05%, with a net profit of 435 million yuan, up 92.47% [16] - Puyang Co. signed a strategic cooperation framework agreement for 500,000 tons of active magnesium oxide orders from 2026 to 2028 [17]

Group 1 - The report indicates that the real estate chain is showing signs of stabilization, with policies since 2025 continuing a loose tone that has been in place since 2024, suggesting a gradual bottoming out of the real estate fundamentals [1][34] - Cement demand is expected to decline at a slower rate in 2025, with industry awareness of price stability and profit protection increasing, indicating a potential profit turning point [1][34] - The consumption building materials sector is seeing an increase in the proportion of existing stock, with improved second-hand housing transactions and consumption stimulus expected to accelerate demand for renovations [1][3] Group 2 - Non-traditional building materials are experiencing higher overall demand, particularly in fiberglass, where downstream demand from wind power and thermoplastics remains strong, and competition is expected to ease [2][3] - The civil explosives sector is benefiting from increased investment in mining and water conservancy, leading to sustained demand growth, with major companies accelerating mergers and acquisitions [2][3] - Traditional refractory materials are facing weak downstream demand, but leading companies are expanding into new markets, such as magnesium salt chemicals and wet metallurgy, which are expected to contribute significantly to profits [2][3] Group 3 - The investment focus for traditional chains is on structural and supply aspects, while non-traditional chains are centered on downstream growth opportunities [3][4] - In the cement sector, supply-side reforms are accelerating, with a potential reduction in actual capacity to below 180 million tons in the medium to long term [3][4] - The consumption building materials sector is witnessing a price competition trend easing, with a focus on leading companies in the consumer market [3][4] Group 4 - The fiberglass segment is highlighted as a market focus, with significant demand expected for low dielectric and low expansion electronic fabrics, particularly in communication infrastructure and semiconductor packaging [4][3] - The civil explosives market in Xinjiang is projected to grow significantly, with existing demand estimated at 67.6 million tons, potentially reaching close to one million tons by the end of the 14th Five-Year Plan [4][3] - The report emphasizes the importance of policy-driven demand in the photovoltaic glass sector, awaiting improvements in market conditions [4][3]

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]

Investment Rating - The report maintains a "Positive" investment rating for the construction materials industry [5]. Core Insights - The report emphasizes the importance of anti-involution policies in the construction materials sector, highlighting three main paths: limiting capital expenditure, clearing existing capacity, and constraining current output [23][24]. - The report identifies that the anti-involution policies aim to alleviate deflation and stabilize employment, addressing the long-standing issue of overcapacity in various industries [19][23]. Summary by Sections Anti-Involution Paths - The report outlines three paths for anti-involution in the construction materials industry: 1. Limiting capital expenditure, which benefits demand-driven sectors like photovoltaic glass and carbon fiber [23]. 2. Clearing existing capacity, particularly in sectors like cement and glass where demand has peaked [23]. 3. Constraining current output, which may lead to short-term profit recovery but complicates long-term capacity reduction [23][24]. Cement Industry - The cement industry is currently facing overcapacity issues, with an estimated 40% excess capacity and a utilization rate projected at 60% for 2024 [70]. - The report forecasts a continued decline in cement demand over the next three years, with a projected decrease of 5% in 2025 [73]. Glass Industry - The float glass sector is experiencing a significant downturn, with prices and profits at historical lows. The average price for float glass is around 70 yuan per heavy box, indicating a return to low profitability [28][49]. - The report notes that the industry is currently operating at a capacity utilization rate of approximately 74.7% [31]. Photovoltaic Glass - The photovoltaic glass sector is also in a challenging position, with prices at historical lows and the entire industry facing losses. The average price for 3.2mm photovoltaic glass is about 18.5 yuan per square meter [49]. - The report highlights the need for controlling new capacity and suggests that the industry may benefit from policies aimed at reducing overcapacity [55]. Investment Recommendations - The report suggests focusing on demand-driven sectors like photovoltaic glass and fiberglass, which are expected to benefit from anti-involution policies [23]. - It also recommends monitoring industries with strong self-discipline foundations, such as cement, which may see more stable profits [23].

Core Viewpoint - The construction materials industry is experiencing a "de-involution" policy direction since July, with different segments showing distinct rhythms and strategies. The market is increasingly focused on the demand side's recovery after supply expectations have been sufficiently addressed. The industry maintains an "overweight" rating [1]. Group 1: Cement Industry - The cement industry is focusing on limiting overproduction as a key policy measure, aiming to improve off-peak production. The actual capacity has exceeded designed capacity due to capacity replacement and technological upgrades from 2016 to 2022. The expected policy to limit overproduction could raise the national average capacity utilization from 50% to 70% if fully implemented [2]. - The recent initiation of hydropower projects is expected to catalyze demand recovery in the industry, creating a resonance between supply and demand expectations [2]. Group 2: Glass Industry - In the photovoltaic glass sector, leading companies are proactively reducing production to improve supply-demand balance, with a reduction of around 30% needed for equilibrium. The pace of implementation by leading firms is crucial for monitoring [3]. - For float glass, there are currently no mandatory policies, but the focus is on optimizing energy consumption structures. Some regions may see increased production costs, and cold repairs are expected to accelerate, benefiting overall supply-demand improvement [3]. Group 3: Consumer Building Materials - The consumer building materials sector is witnessing a stabilization in its structure, with proactive measures to improve profitability already underway. Some sub-sectors, such as waterproofing, piping, and coatings, have begun to raise prices, indicating a rational growth expectation [3]. - After a prolonged adjustment period in the real estate market, the long-term certainty of consumer building materials is solid, with leading companies expected to continue outperforming through structural optimization and expansion into new categories and markets [3].

Investment Rating - The report rates the building materials industry as "Overweight" indicating an expectation for the industry to outperform the overall market [2][11]. Core Insights - The cement industry is showing a clear trend of recovery, with the average net profit per ton for A-share listed companies in 2024 expected to be 13.7 CNY, nearing historical lows from 2015. The willingness of cement companies to maintain profit margins is increasing, and with the gradual decline in coal costs, there is significant potential for profit recovery [3]. - The glass fiber sector is experiencing product structure differentiation, with higher price elasticity in mid-to-high-end products. Despite a slight decline in prices for some products, leading companies are benefiting from their product mix, leading to improved profitability [3]. - The consumer building materials sector is seeing a divergence in performance, with strong results expected in segments like coatings, which have a high retail value and renovation ratio. Companies like Sanke Tree and Keda Manufacturing are projected to show significant year-on-year profit growth [3]. - The glass sector is facing mixed results, with photovoltaic glass prices initially rising but then falling as installation policies change. The flat glass market continues to face pressure, with many small to medium enterprises entering negative profit margins [3]. Summary by Sections Cement Industry - The cement industry is in its third quarter of recovery, with a significant reduction in excess clinker capacity expected by the end of 2025. Current measures have already led to the exit of 45.09 million tons of clinker capacity [3]. - Key companies to watch include Conch Cement, Huaxin Cement, and Tianshan Cement, which are expected to perform well in the upcoming quarters [3]. Glass Fiber Industry - The price of direct yarn has shown a slight decline, but leading companies like China Jushi and Zhongcai Technology are expected to report significant improvements in profitability due to their focus on high-end products [3]. - The demand for specialty glass fiber products remains strong, benefiting companies with a higher proportion of these products in their portfolios [3]. Consumer Building Materials - The coatings segment is expected to perform well, with companies like Sanke Tree and Keda Manufacturing showing impressive profit growth. The overall market is shifting towards price recovery strategies [3]. - The renovation market in regions like Africa and South America is also expected to contribute positively to the performance of consumer building materials [3]. Glass Sector - Photovoltaic glass prices have fluctuated, and while there was a recovery, the market needs to be monitored closely as installation policies evolve. The flat glass market continues to face challenges, with many companies struggling to maintain profitability [3]. - Companies with cost advantages, such as Qibin Group and Xinyi Glass, are recommended for observation due to their potential resilience in the current market [3].

Summary of Conference Call Records Industry Overview - The conference call primarily discusses the **consumption building materials industry** and its performance in 2024, highlighting a **7.2% year-on-year decline** in revenue for the sector [1] - The **real estate demand** remains weak, impacting the consumption building materials sector, which has seen continuous revenue pressure over the past few quarters [1] Key Points and Arguments - **Revenue Trends**: The revenue growth for the consumption building materials sector is expected to decline in 2024, with quarterly comparisons showing fluctuations: **0.2% growth**, **5.3% decline**, **10.7% decline**, **10.9% decline**, and **5.7% decline** from Q1 2024 to Q1 2025 [1] - **Profitability Issues**: The industry faces challenges such as **declining gross margins** due to reduced demand and increased expense ratios. Some companies have reported increased impairments on goodwill and assets [2] - **Improvement in Profitability**: In Q1 2024, some companies managed to stabilize and improve profitability through better gross margins and expense control, with half of the consumption building materials companies reporting year-on-year gross margin increases [2] - **Net Profit Performance**: Among 26 analyzed companies, **10 reported year-on-year net profit increases**, and **9 showed improvements in net profit margins** both year-on-year and quarter-on-quarter, particularly in waterproofing and coating sectors [3] - **Market Resilience**: Despite the downturn in new housing demand, the sector shows resilience supported by the high demand for second-hand housing, which could lead to revenue growth if new housing demand stabilizes [4] Additional Insights - **Future Growth Potential**: Companies with strong brand and channel capabilities are expected to have significant growth potential. Key players mentioned include **Sanhe Tree, Tubaobao, Beixing Building Materials, and others** [5] - **Cement Industry Outlook**: The cement sector is projected to see a bottoming out in Q1 2024, with expectations of gradual improvement in profitability throughout the year. The industry experienced a **35% year-on-year decline** in scale in 2024 [5] - **Price Trends**: Cement prices are expected to rise after a period of decline, with a **1.4% year-on-year drop** in demand noted in Q1 2024, but a recovery is anticipated post-Chinese New Year [6] - **Cost Management**: The decline in coal prices is expected to stabilize industry profitability, with a projected **6% year-on-year decline** in cement demand for 2025 [7] - **Investment and Dividends**: Companies with low cash flow and stable investment returns, such as **Tapai Group and Ningxia Building Materials**, are highlighted for their significant profit contributions [8] Conclusion - The consumption building materials and cement industries are navigating through challenging market conditions, with signs of potential recovery in profitability and demand stabilization. Key players are expected to leverage their market positions for future growth opportunities.

Investment Rating - The investment rating for the construction materials industry is "Positive" (maintained) [1] Core Views - The Ministry of Housing and Urban-Rural Development emphasizes the importance of stabilizing the real estate market, which is expected to lead to significant improvements in the fundamentals of the real estate chain. Recommended stocks in the consumer building materials sector include Sankeshu, Dongfang Yuhong, Weixing New Materials, and Jianlang Hardware. Beneficiary stocks include Beixin Building Materials [3] - The National Development and Reform Commission has issued a special action plan for energy conservation and carbon reduction in the cement industry, aiming to control cement clinker capacity at around 1.8 billion tons by the end of 2025, with a target of reducing comprehensive energy consumption per unit product by 3.7% compared to 2020 [3] - The "equal tariff" policy is expected to benefit fiberglass leaders with overseas production bases, allowing them to raise prices and consolidate profitability [3] Market Performance - The construction materials index rose by 3.34% in the week from July 7 to July 11, 2025, outperforming the CSI 300 index by 2.52 percentage points. Over the past three months, the CSI 300 index increased by 6.41%, while the construction materials index rose by 6.60%, indicating a slight outperformance of 0.18 percentage points [4][13] - In the past year, the CSI 300 index increased by 15.62%, and the construction materials index rose by 15.80%, also showing a slight outperformance of 0.18 percentage points [4][13] Cement Sector - As of July 11, 2025, the average price of P.O42.5 bulk cement nationwide was 282.89 CNY/ton, a decrease of 3.48% month-on-month. The clinker inventory ratio was 65.89%, down 2.29 percentage points [6][23][24] - The price of cement varied by region, with notable declines in Northeast (-4.76%), North China (-2.33%), East China (-2.98%), South China (-5.74%), Central China (-3.41%), and Southwest (-4.93%) regions [23][29] Glass Sector - The average price of float glass as of July 11, 2025, was 1205.63 CNY/ton, with a slight increase of 0.17%. The average price of photovoltaic glass remained stable at 116.02 CNY/weight box [6][71][78] - The inventory of float glass decreased by 970,000 weight boxes nationwide, a decline of 1.66% [73][74] Fiberglass Sector - The price of non-alkali 2400tex direct yarn ranged from 3400 to 4100 CNY/ton, with flexible pricing based on regional differences [6] Consumer Building Materials - As of July 11, 2025, the price of crude oil was 70.63 USD/barrel, down 0.39% week-on-week. The price of asphalt was 4570 CNY/ton, up 1.11% week-on-week [6]

Investment Rating - The report maintains a recommendation for the building materials sector, indicating a positive outlook for profitability recovery in the industry [2]. Core Insights - The building materials industry is experiencing a "de-involution" campaign aimed at improving overall profitability, particularly in the cement sector, where demand is currently suppressed due to high temperatures and rainy weather [1][10]. - The report highlights a significant increase in land acquisition by the top 100 real estate companies, with a year-on-year growth of 33.3%, reflecting a recovery in investment confidence among real estate enterprises [6][13]. - Price adjustments in the waterproofing materials sector are noted, with leading companies implementing price increases of 1% to 13% across various product categories, indicating a shift towards healthier competition in the consumer building materials market [6][13]. Summary by Sections Cement Industry - The national average cement price has continued to decline, with a drop of 10-15 CNY/ton in certain regions, while some areas like Jilin and Chongqing have seen price increases of 30-50 CNY/ton [10][22]. - The cement market is under pressure with a current inventory ratio of 76.00%, indicating a continued accumulation of stock [10][22]. - The China Cement Association has initiated measures to address supply-demand imbalances, which are expected to enhance overall industry profitability [10][11]. Float Glass Industry - The float glass market is experiencing weak price performance, with a national average price of 1174 CNY/ton, down 3.27 CNY/ton from the previous period [11]. - Inventory levels have decreased slightly, with a total of 6.9085 million heavy boxes reported, and production has increased to 110.34 million tons [11][12]. - Despite some replenishment activities in the downstream market, overall demand remains limited, leading to expectations of continued price weakness [11][12]. Fiberglass Industry - The market for non-alkali fiberglass remains stable, with prices around 3700 CNY/ton for high-end products, while electronic fiberglass prices are expected to rise due to tight supply [12]. - The main product G75 in the electronic fiberglass market is priced between 8800-9200 CNY/ton, showing stability compared to the previous week [12]. Consumer Building Materials - The report emphasizes the trend of price increases among leading companies in the waterproofing sector, which is seen as a positive sign for the industry's competitive landscape [6][13]. - Recommendations for investment include companies like Weixing New Materials, Keda Manufacturing, and Mona Lisa, which are positioned well for growth in the current market environment [14][15][16].