Core Viewpoint - The construction materials industry is experiencing a narrowing revenue decline and profit improvement in the first three quarters of 2025, with notable performances in the cement and fiberglass sectors [1][2]. Group 1: Industry Overview - The construction materials industry sample companies achieved a total revenue of 432.25 billion yuan, a year-on-year decline of 3.1%, which is an improvement of 11.7 percentage points compared to the full year of 2024 [2]. - The net profit attributable to shareholders reached 24.44 billion yuan, a year-on-year increase of 27.8%, contrasting with a 49.1% decline in 2024 [2]. Group 2: Cement Industry - Cement sample companies reported a total revenue of 432.25 billion yuan, with a year-on-year decline of 3.1%, while net profit increased by 27.8% [2]. - Huaxin Cement showed the most significant growth, with strong performance in overseas cement and domestic aggregate businesses [2]. - Anhui Conch Cement contributed over half of the industry's profit due to its cost and scale advantages [2]. Group 3: Fiberglass Industry - The fiberglass sector saw a total revenue of 49.21 billion yuan, a year-on-year increase of 23.5%, and a net profit of 4.87 billion yuan, up 121.4% [3]. - The price recovery effects began to manifest in the first half of 2025, with a slight decline in Q3 profits compared to the previous quarter, but still showing year-on-year improvement [3]. - Companies like China National Materials, International Composites, and Honghe Technology are gradually contributing to revenue and profit through their special fabric layouts [3]. Group 4: Consumer Building Materials - The consumer building materials segment reported a revenue of 110.75 billion yuan, a year-on-year decline of 0.9%, and a net profit of 8.21 billion yuan, down 6.9% [4]. - Keda Manufacturing benefited from its long-term overseas layout and improved pricing in the overseas tile market, leading to significant revenue growth [4]. - Sanhe Tree is accelerating its unique channel advantages and new business layouts, responding to the demand from old residential areas and rural self-built houses [4]. Group 5: Glass Industry - The glass industry achieved a revenue of 38.09 billion yuan, a year-on-year decline of 11.0%, with a net profit of 0.94 billion yuan, down 63.2% [5]. - The photovoltaic glass sector experienced a phase of recovery, but profitability began to decline after May due to high base effects from the previous year [5]. - The construction glass sector remains under pressure due to weak real estate completions, necessitating attention to supply contraction and pricing effects [5]. Group 6: Early Cycle Industries - Early cycle sectors are still under pressure, with profitability constrained by cement price recovery [6]. - Leading companies like Subote have achieved both revenue and profit growth by expanding into major projects in the western regions [6]. Group 7: Investment Analysis - Investment opportunities are suggested in the fiberglass and cement sectors due to improving profitability [7]. - Recommended stocks include leading companies in the cement sector such as Huaxin Cement, Anhui Conch Cement, and Shangfeng Cement [7]. - In the fiberglass sector, companies like China Jushi, China National Materials, and Honghe Technology are highlighted for their performance recovery and growth expectations in special fabric businesses [7]. - Companies with alpha attributes in consumer building materials and early cycle sectors include Sanhe Tree, Keda Manufacturing, Dongpeng Holdings, and Subote [8].

Summary of Key Points from Conference Call Records Industry Overview Tungsten Industry - The tungsten industry has shown outstanding performance, with tungsten concentrate prices increasing by 30% year-on-year in the first three quarters and a quarterly increase of 40% in Q3, reaching a historical high [1][5] - Integrated tungsten companies such as Xiamen Tungsten and China Tungsten High-tech, along with downstream tool companies like Dingtai High-tech and Oko Yi, have seen improvements in gross margins and profitability [1][4] - Integrated tungsten companies reported a gross margin of 19.2% in Q3, up 0.5 percentage points quarter-on-quarter, while downstream tool companies had a gross margin of 37.7%, an increase of 3.8 percentage points [1][4] Nonferrous Metals Industry - The overall performance of the nonferrous metals industry in Q3 2025 was below expectations, with gold prices rising by only about 3% and aluminum and copper showing marginal increases of 3% and 2% respectively [3] - Despite the underperformance, the tungsten sector stood out, with significant price increases and strong demand [3][5] Petrochemical and Chemical Industry - The petrochemical sector experienced a 1.2% year-on-year decline in revenue in Q3, but net profit attributable to shareholders grew by 29% [11] - Sub-sectors such as fluorochemicals and private refining saw significant profit increases, with fluorochemicals' net profit rising by 320% [11] - The chemical industry has been in a decline for over three years, but profitability is expected to bottom out in 2025 and gradually increase from 2026 [13] Future Outlook Nonferrous Metals - The supply elasticity of nonferrous metals is expected to weaken over the next 3 to 5 years due to constrained supply and increasing demand from sectors like electric power, AI, military, and high-end manufacturing [1][7] - The market outlook for nonferrous metals remains optimistic, with expectations of good performance from metals like gold, copper, aluminum, tungsten, and cobalt from current adjustments until spring 2026 [7] Petrochemical and Chemical - A decline in capital expenditure among petrochemical companies since the end of 2023 suggests a potential turning point in the capacity cycle [12] - The chemical industry is expected to see a rebound in profitability starting in 2026, driven by significant changes in supply dynamics and reduced capital expenditures [13] Construction Materials - The construction materials sector showed signs of recovery, with revenue and profit declines narrowing significantly in Q3 [19] - The cement sector remains weak domestically but has significant growth potential in overseas markets, particularly in Africa [19][20] Express Delivery Industry - The express delivery sector has made notable progress in reducing competition, with significant performance disparities among companies [23] - The upcoming peak seasons are expected to improve the performance of express delivery companies significantly [23] Cross-Border Logistics - The cross-border logistics sector faced challenges due to changes in tariff policies, leading to a decline in performance [24] - However, stable tariff policies and upcoming demand peaks in North America and Europe may provide rebound opportunities [24] Additional Insights - The chemical sector is experiencing a significant shift with a focus on reducing capital expenditures and improving profitability through technological upgrades and new project launches [15] - The phosphoric acid market is expected to benefit from strong demand driven by energy storage applications, with high profitability likely to persist due to long construction cycles for new capacity [16] - Companies with relatively low valuations in the chemical sector, such as Wanhua and Hualu, are recommended for potential growth even in a weak demand environment [15]

Investment Rating - The report suggests investment opportunities in the glass fiber and cement industries, with a focus on selecting stocks in the consumer building materials and early-cycle sectors [3][4]. Core Insights - The construction materials industry saw a narrowing revenue decline of 3.1% year-on-year in the first three quarters of 2025, with total revenue reaching 4,322.5 billion yuan. Net profit attributable to shareholders increased by 27.8% to 244.4 billion yuan, marking a shift from profit decline to growth [2][9]. - The cement industry demonstrated significant profit elasticity, with sample companies achieving a total revenue of 1,812.3 billion yuan, a year-on-year decline of 8.4%, but a net profit increase of 148.8% to 91.3 billion yuan [20][27]. - The glass fiber sector reported robust growth, with total revenue of 492.1 billion yuan, up 23.5% year-on-year, and net profit soaring by 121.4% to 48.7 billion yuan [4][35]. - The consumer building materials segment faced pressure, with a revenue decline of 0.9% to 1,107.5 billion yuan and a net profit decrease of 6.9% to 82.1 billion yuan, although some companies showed strong performance [4][5]. - The early-cycle sector remains under pressure, but leading companies like Subote have achieved revenue and profit growth through strategic project expansions [5][9]. Summary by Sections Cement Industry - The cement industry is experiencing a gradual recovery, with a total revenue of 1,812.3 billion yuan in the first three quarters of 2025, down 8.4% year-on-year, but net profit increased by 148.8% to 91.3 billion yuan. Major players like Huaxin Cement and Conch Cement continue to dominate profit contributions [20][27]. - The overall profit margin for the cement sector improved, with a gross margin of 22.4%, up 2.76 percentage points from the previous year [27][29]. Glass Fiber Industry - The glass fiber sector has shown strong performance, with total revenue of 492.1 billion yuan, a 23.5% increase year-on-year, and net profit rising by 121.4% to 48.7 billion yuan. The recovery in pricing and the growth of specialty fabrics are key drivers of this improvement [4][35]. Consumer Building Materials - The consumer building materials segment reported a revenue of 1,107.5 billion yuan, down 0.9% year-on-year, with net profit decreasing by 6.9% to 82.1 billion yuan. Companies like Keda Manufacturing and Sankeshu are leveraging unique channel advantages to drive growth [4][5]. Early-Cycle Sector - The early-cycle sector remains challenged, but companies like Subote have successfully increased both revenue and profit by focusing on major engineering projects in the western regions [5][9].

Investment Rating - The report maintains an "Outperform" rating for the construction materials sector [2] Core Views - The construction materials sector continues to show a trend of profit improvement in Q3 2025, with a year-on-year increase in net profit despite a decline in revenue [5][39] - The overall revenue for the construction materials sector in the first three quarters of 2025 was CNY 463.64 billion, a decrease of 4.98% year-on-year, while net profit attributable to shareholders was CNY 18.79 billion, an increase of 28.19% year-on-year [5][39] - The report identifies key factors for profit improvement, including a decrease in raw material costs and an improved supply-demand balance for certain construction materials [5][39] Summary by Sections 1. Construction Materials Sector Overview - The construction materials sector's revenue in Q3 2025 was CNY 162.16 billion, down 6.0% year-on-year, with a net profit of CNY 6.99 billion, up 9.2% year-on-year [5][39] - The sector's overall gross margin improved to 19.64%, up 1.58 percentage points year-on-year, and the net margin was 4.18%, up 1.19 percentage points year-on-year [44] 2. Cement Sector - The cement sector's revenue for the first three quarters of 2025 was CNY 269.04 billion, down 7.79% year-on-year, while net profit was CNY 7.82 billion, up 158.8% year-on-year [46][52] - Despite a decrease in cement prices, profit margins improved due to lower costs of coal and other key inputs [46] 3. Glass Sector - The glass sector faced price pressures, with revenue for the first three quarters of 2025 at CNY 34.41 billion, down 11.28% year-on-year, and a net profit of CNY 0.27 billion, down 84.22% year-on-year [55][59] - The average price of float glass continued to decline, impacting profitability [55] 4. Fiberglass Sector - The fiberglass sector saw a revenue increase of 23.54% year-on-year in the first three quarters of 2025, totaling CNY 49.21 billion, with a net profit of CNY 4.87 billion, up 121.37% year-on-year [5][39] - Price increases initiated in September contributed to the sector's profit recovery [5] 5. Consumer Building Materials Sector - The consumer building materials sector reported a revenue of CNY 110.76 billion in the first three quarters of 2025, down 5.56% year-on-year, with a net profit of CNY 5.84 billion, down 24.01% year-on-year [5][39] - The sector's cash collection ratio improved to 97.38%, indicating better cash flow management [5][39] 6. Investment Recommendations - The report recommends focusing on leading companies in the consumer building materials sector, such as "Three Trees" and "Oriental Yuhong," which have shown resilience and growth potential [9] - It also suggests looking at companies with strong dividend yields and those actively expanding overseas, such as "China National Building Material" and "Conch Cement" [9]

Investment Rating - The report maintains a "Positive" outlook on the building materials industry for 2025, highlighting the potential for profit recovery and growth in specific sectors such as cement and fiberglass [1]. Core Insights - Revenue decline for the first three quarters of 2025 narrowed to 3.1% year-on-year, with total revenue reaching CNY 432.25 billion, while net profit attributable to shareholders increased by 27.8% to CNY 24.44 billion, indicating a shift from profit decline to growth [2][13]. - The cement industry showed significant profit elasticity, with a total revenue of CNY 181.23 billion for the first three quarters, down 8.4% year-on-year, but net profit surged by 148.8% to CNY 9.13 billion [26][27]. - The fiberglass sector experienced robust growth, with total revenue of CNY 49.21 billion, up 23.5%, and net profit soaring by 121.4% to CNY 4.87 billion [4][14]. - The consumer building materials segment faced pressure, with revenue declining by 0.9% to CNY 110.75 billion and net profit down 6.9% to CNY 8.21 billion, although some companies like Keda Manufacturing and Sanke Tree showed strong performance [4][5]. - The glass industry remains under pressure, with revenue dropping 11.0% to CNY 38.09 billion and net profit declining 63.2% to CNY 0.94 billion, necessitating attention to supply adjustments and pricing strategies [4][5]. - Early-cycle sectors are still under pressure, but leading companies like Subote have reported revenue and profit growth, driven by significant project developments in key infrastructure areas [5][6]. Summary by Sections Cement Industry - The cement sector's revenue for the first three quarters was CNY 181.23 billion, with a year-on-year decline of 8.4%, while net profit increased by 148.8% to CNY 9.13 billion, indicating a recovery trend [26][27]. - Major players like Huaxin Cement and Conch Cement continue to dominate, contributing significantly to industry profits [3][26]. Fiberglass Industry - The fiberglass industry reported a total revenue of CNY 49.21 billion, reflecting a 23.5% increase, and net profit rose by 121.4% to CNY 4.87 billion, showcasing strong recovery and growth potential [4][14]. - Companies such as China Jushi and Zhongcai Technology are expected to benefit from the ongoing price recovery and expansion into specialty fabrics [4][5]. Consumer Building Materials - The consumer building materials segment saw a slight revenue decline of 0.9% to CNY 110.75 billion, with net profit decreasing by 6.9% to CNY 8.21 billion, although some firms like Keda Manufacturing reported significant growth due to strategic overseas expansions [4][5]. Glass Industry - The glass sector faced challenges, with revenue down 11.0% to CNY 38.09 billion and net profit down 63.2% to CNY 0.94 billion, highlighting the need for strategic adjustments in response to market pressures [4][5]. Early-Cycle Industry - Early-cycle sectors remain under pressure, but companies like Subote have achieved revenue and profit growth through strategic project developments in infrastructure [5][6].

Core Insights - The report emphasizes the importance of positioning for the end of the year, suggesting that bank dividends are a preferred observation strategy if the market experiences a pause in volatility [4] - It highlights the need to wait for a renewed confidence in high-growth sectors over the next 2-3 years, particularly in technology and services [5][10] - The report reviews the market's performance, noting a significant increase in the Shanghai Composite Index, which has risen over 10% to above 3800 points since the mid-year strategy [6][9] Market Overview - The report indicates that the market may experience a phase of consolidation due to external factors such as weakening U.S. economic indicators and concerns over employment, which could lead to a risk-off sentiment affecting A-shares [6][9] - It notes that the market is currently in a wait-and-see mode, with trading volumes not yet activated and sectors undergoing accelerated rotation [9][10] Investment Strategy - The report suggests a proactive approach to market conditions, focusing on sectors with favorable risk-reward ratios, particularly in real estate, resource commodities, and consumer sentiment [11][12] - It recommends monitoring high-growth sectors that are difficult to disprove, such as storage, domestic computing, and innovative pharmaceuticals, while waiting for a consensus on performance [12] Fund Flow Analysis - The report discusses the potential for fund managers to reduce positions as the year-end approaches, indicating a trend towards profit-taking [13] - It highlights that leverage funds are still flowing in but at a slower pace, suggesting a need to watch for a potential slowdown in inflows [13][28] Calendar Effect Insights - The report analyzes the calendar effect, noting that the market generally trends upward in early November but may weaken following economic meetings [14][31] - It provides insights into market performance across different styles and sectors, indicating a shift towards dividend and quality stocks post-meeting [15][16]

Group 1: Cement Industry - The cement industry experienced a year-on-year production decline of 7% in Q3 2025, with average prices also decreasing. However, the drop in raw material prices supported the gross profit per ton to remain stable year-on-year [1] - In Q4, coal prices rebounded, increasing by 8% in October compared to September, which may lead to marginal cost increases for cement [1] - If the industry strictly limits overproduction in 2026, capacity utilization rates could recover to over 60%, which, along with staggered production execution, may support industry profitability recovery [1] Group 2: Consumer Building Materials - Key consumer building materials companies reported a combined revenue decline of 3% year-on-year in Q3 2025, with a gross margin decrease of 1.2 percentage points, although the decline rate has narrowed [2] - The sector has implemented strict cost control measures, leading to a slight improvement in cash flow [2] - It is recommended to consider undervalued stocks in segments where supply and price competition are easing, such as home decoration coatings and waterproof materials, as well as in stable demand sectors like coatings and gypsum boards [2] Group 3: Glass Fiber - The glass fiber sector saw improvements in both revenue and gross margin year-on-year in Q3 2025, with stable prices for wind power yarn and thermoplastic short-cut products [3] - There is potential for price increases in both roving and electronic fabrics, indicating a balanced industry outlook for 2026 [3] - Special glass fiber fabrics are expected to maintain rapid growth driven by AI advancements [3] Group 4: Glass Industry - The glass industry continues to face pressure from construction, with float glass profitability at a low point [4] - Looking ahead to 2026, after price declines in the off-season, some cash flow-negative capacities may undergo cold repairs, which could gradually improve supply-demand relationships [4]

Industry Investment Rating - The investment rating for the construction materials industry is "Outperform the Market" and is maintained [1] Core Views - The construction materials industry is currently at a cyclical bottom in terms of profitability, with leading companies in various segments performing in line with expectations. For instance, China Jushi in the fiberglass sector has seen a significant year-on-year improvement in profitability, while companies like Rabbit Baby have also reported substantial profit improvements due to investment income. Other leading companies such as Oriental Yuhong, Beixin Building Materials, Qibin Group, and Jianlang Hardware are also showing signs of bottoming out in their fundamentals. It is anticipated that stock prices may break out of the bottom range under the influence of policy catalysts and market style shifts [4][5] Summary by Relevant Sections Cement - Demand for cement has shown a slight month-on-month improvement, primarily due to infrastructure projects and better weather conditions, although year-on-year demand remains down. The overall demand is still in a weak recovery phase, influenced by weather disruptions and the pace of demand release. In September 2025, the monthly cement production was 154 million tons, down 8.6% year-on-year [5][10] Glass - The glass industry is experiencing a continuous decline in demand due to the impact of real estate. Short-term demand during the traditional peak season has shown limited improvement, and inventory levels among intermediaries remain relatively high. The supply-demand imbalance persists, with limited improvement in downstream terminal demand. The industry is expected to face increased environmental requirements and costs, accelerating the pace of cold repairs [5][17] Fiberglass - The fiberglass sector is witnessing a price recovery, with price increases of 5%-10% reported. The demand for electronic yarns is driven by the AI industry, leading to a significant increase in both volume and price. The demand is expected to continue growing alongside AI developments [6] Consumer Building Materials - The profitability of the consumer building materials sector has reached a bottom, with prices having no further downward space after years of competition. The sector is strongly advocating for price increases and profitability improvements, with several categories like waterproofing, coatings, and gypsum boards issuing price increase notices this year. A recovery in profitability is anticipated for leading companies in the second half of the year [6] Recent Company Announcements - Conch Cement reported Q3 revenue of 20 billion yuan, down 11.4% year-on-year, but net profit increased by 3.4% year-on-year to 1.94 billion yuan, benefiting from cost reductions and improved gross margins. Q3 revenue for Qibin Group was 4.39 billion yuan, up 18.9% year-on-year, with a net profit of 20 million yuan, marking a return to profitability [19][20][22]

Investment Rating - The report maintains an "Accumulate" rating for the construction materials sector [3]. Core Views - The construction materials sector is experiencing a mixed performance, with cement prices under pressure while glass and fiberglass manufacturing show positive trends. The overall sector has outperformed the CSI 300 index by 1.75% during the week [1][12]. - Government policies aimed at alleviating financial pressures on local governments are expected to improve the fiscal environment, potentially accelerating municipal engineering projects [1]. - The glass market is facing supply-demand imbalances, but self-regulation among photovoltaic glass manufacturers may help ease these tensions [1]. - Consumer building materials are recommended due to their potential benefits from second-hand housing transactions and consumption stimulus policies [1]. - The cement industry is still in a demand bottoming phase, with production adjustments being made to stabilize prices [1][17]. Summary by Sections Cement Industry Tracking - As of October 31, 2025, the national cement price index is 347.34 CNY/ton, up 1.07% week-on-week. Cement output reached 2.8265 million tons, an increase of 8.05% from the previous week [17]. - The cement market is characterized by stable growth in infrastructure, while residential construction lags behind [17]. Glass Industry Tracking - The average price of float glass is 1202.68 CNY/ton, down 3.30% from the previous week. Inventory levels have decreased, indicating some recovery in demand [2][5]. Fiberglass Industry Tracking - Fiberglass prices have stabilized, with demand for high-end products remaining strong. The market is expected to see price increases in the medium to long term [5]. Consumer Building Materials - The demand for consumer building materials is showing signs of weak recovery, influenced by fluctuations in upstream raw material prices [6]. Carbon Fiber Industry Tracking - The carbon fiber market remains stable, with production costs reported at 106,100 CNY/ton, leading to negative margins for many producers [6]. Key Stocks - Recommended stocks include: - North New Building Materials (Buy) - Weixing New Materials (Accumulate) - Sankeshu (Buy) - China Jushi (Buy) - Yinlong Co. (Buy) - Puyang Refractories (Buy) [7].

Investment Rating - The report maintains a "Neutral" rating for both the real estate and building materials sectors [1][3]. Core Insights - Real estate sales remain sluggish, with a cumulative year-on-year decline of 5.5% in sales area and 7.9% in sales revenue for the first three quarters of 2025. The decline has widened compared to the end of August [3][26]. - The report highlights a shift in the real estate sector towards "quality, service, and sustainability," moving away from high leverage and high turnover models. It emphasizes the importance of urban renewal to unlock potential in existing stock [3][27]. - The building materials sector is expected to see a steady recovery in profitability, with a target of exceeding 300 billion yuan in revenue from green building materials by 2026 [3][51]. Summary by Sections Real Estate Sector Overview - As of October 30, 2025, the Shenwan Real Estate Index has increased by 0.31% over the past two weeks, underperforming the CSI 300 Index by 4.03 percentage points [13]. - In September 2025, new residential prices in first-tier cities fell by 0.3% month-on-month, while second-tier cities saw a 0.4% decline [24][26]. - The report identifies key companies to watch, including Poly Developments, Binjiang Group, and China Merchants Shekou, which are expected to perform well in the current market environment [3][27]. Building Materials Sector Overview - The Shenwan Building Materials Index rose by 2.19% over the past two weeks, ranking 16th among 31 sectors [28]. - The report notes a significant decline in national cement production, down 5.2% year-on-year to 1.259 billion tons, marking the lowest level since 2010 [48][52]. - Companies such as Conch Cement, Taipai Group, and Huaxin Cement are highlighted for their strong fundamentals and high dividend yields [52]. Specific Material Insights - The glass and fiberglass sectors are facing pressure with low prices, but the report anticipates a long-term improvement in competition due to supply constraints [5][52]. - The report suggests that the photovoltaic glass industry is transitioning towards a model driven by technology and sustainability, which is expected to enhance profitability [5][52]. - Consumer building materials are seeing improved margins due to price increases and demand from urban renewal projects, with companies like North New Materials and Rabbit Baby recommended for attention [53].