Investment Rating - Industry Rating: Outperform the market (maintained rating) [3] Core Views - Since October, domestic demand for building materials has shown weakness, with cement affected by cooling, rainfall, and funding issues, resulting in a year-on-year shipment rate still 10 percentage points lower as of last Friday. Glass prices are hindered by insufficient replenishment sentiment post-holiday, leading to increased producer inventory and price stagnation. Currently, the profitability of major building materials like cement and glass remains at relatively low levels. A previously released plan for stable growth in the building materials industry suggests potential continued policy support for supply-side optimization in the fourth quarter. As the year-end performance sprint approaches, companies may increasingly seek to optimize supply and raise prices through market mechanisms. Recent market performance indicates a relative advantage for cyclical stocks, suggesting a possible style shift in the fourth quarter. The building materials sector currently possesses both low valuation defensive attributes and valuation recovery momentum under anti-involution catalysts, continuing to recommend high-demand African cement and glass fiber with price increase expectations [2][17]. Summary by Sections Market Review - Last week (October 13-17, 2025), the CSI 300 index fell by 2.22%, while the building materials sector (CITIC) dropped by 3.48%. Among sub-sectors, ceramics and glass performed relatively well, while fiberglass saw a significant decline. Notable individual stock performances included Fashilong (up 18.1%), Huali Shares (up 14.5%), Hainan Development (up 10.9%), Saitex New Materials (up 7.7%), and Tubao (up 6.9%) [1][9]. Recommended Stocks - The report recommends the following stocks: Western Cement, Huaxin Cement, Qingsong Construction, China National Materials, Honghe Technology, China Jushi, Sankeshu, and Dongpeng Holdings. The current building materials industry is nearing a cyclical bottom, with high-demand new materials expected to continue demonstrating growth potential. Cement is anticipated to benefit from improving infrastructure and real estate demand, with long-term supply dynamics expected to optimize. Recommended stocks include Huaxin Cement, Western Cement, and Qingsong Construction, with a focus on companies like Sankeshu and Dongpeng Holdings that are likely to improve their balance sheets as real estate policies become more favorable [3][17].

Investment Rating - The report suggests a focus on the lithium hexafluorophosphate sector due to rising prices of related products [4]. Core Insights - The chemical sector experienced a decline of 3.95% in the third week of October, underperforming the Shanghai Composite Index by 2.80 percentage points [10]. - The dynamic PE for the chemical sector is 24.75 times, which is significantly higher than the average PE of 9.73 times since 2015 [10]. - The report highlights significant price increases for sulfuric acid (+6.21%) and hydrogen peroxide (+6.04%), while liquid chlorine saw a dramatic rise of +176.79% [3][17]. - The report indicates that only one sub-industry, daily chemical products, saw an increase (+0.51%), while 31 sub-industries declined, with fiberglass experiencing the largest drop (-10.12%) [2][14]. Industry Performance - The top five stocks in the chemical sector for the week included Chengxing Co. (+25.12%) and Shida Shenghua (+18.01%), while the worst performers included Hubei Yihua (-14.09%) and Guoci Materials (-13.8%) [10]. - The report notes that the chemical industry had a total of 449 listed companies with a total market value of 6710.3 billion [5]. Price and Spread Trends - The report lists the top five products with the highest weekly price increases, including liquid chlorine (+176.79%) and sulfuric acid (+6.21%) [3][17]. - The report also details the top five products with the largest price spread increases, such as PTA spread (+28.74%) and heavy soda ash spread (+18.88%) [38][40]. Inventory Changes - Significant inventory changes were noted, with the largest decrease in inventory for chlorpyrifos (-8.70%) and an increase for urea (+8.16%) [57].

Investment Rating - The report indicates a preference for low valuation and high dividend yield styles in the current market environment, with a focus on sectors such as banking and coal, which have shown positive performance [1][2]. Core Views - The report emphasizes the importance of adhering to fundamentals and resisting uncertainties as market conditions become more challenging. It suggests focusing on four key areas: overseas expansion, AI new materials, western border regions, and real estate chain leaders [2][3]. - The report highlights the potential for significant growth in companies involved in overseas expansion, AI new materials, and those operating in western regions of China. It also notes that real estate chain leaders are beginning to recover from the impacts of first-hand housing market influences [2][3]. Market Performance - The construction materials index experienced a decline of 4.11%, with various sub-sectors such as glass manufacturing and fiberglass showing significant drops [17]. - The report notes that the national average price for cement is 347 RMB/t, down 62 RMB/t year-on-year and 2 RMB/t month-on-month, with an average shipment rate of 45.2% [14][25]. - The average price for float glass is reported at 1300.97 RMB/ton, reflecting a slight increase of 11.16 RMB/ton, with inventory levels rising [14][33]. Price Changes - Cement prices have shown a downward trend, particularly in northern regions due to seasonal weather impacts, while southern regions are facing tight market conditions [25][26]. - The float glass market is experiencing increased inventory levels, leading to price adjustments, with manufacturers facing pressure to manage stock effectively [33][47]. - Fiberglass prices remain stable, with the average price for 2400tex non-alkali yarn at 3524.75 RMB/ton, unchanged from the previous week [53][54].

Core Viewpoint - The non-ferrous metals sector has shown outstanding performance in 2025, leading the market with a 75% increase year-to-date as of October 10, 2025, driven by various factors including the impact of interest rate cuts by the Federal Reserve [1][4]. Group 1: Performance Drivers - The strong performance of the non-ferrous sector is attributed to the rise in commodity prices across various sub-sectors, significantly influenced by the Federal Reserve's decision to cut interest rates by 25 basis points in September 2025, with expectations for further cuts [6]. - The anticipated continued rate cuts by the Federal Reserve are expected to further boost commodity prices in the non-ferrous sector, particularly for precious and industrial metals, which are sensitive to global interest rate environments [6]. Group 2: Investment Opportunities - There remains potential for investment in the non-ferrous sector, primarily due to the expected further rate cuts by the Federal Reserve, which could lead to additional price increases in the sector [6]. - Beyond the non-ferrous sector, other industries such as transportation (aviation, oil shipping), chemicals (pesticides, chlor-alkali), and construction materials (glass fiber, cement) are also approaching cyclical lows and turning points worth monitoring [10]. Group 3: Sector Comparisons - The non-ferrous sectors in Hong Kong and A-shares are fundamentally similar, with differences mainly in market conditions and investor types; currently, the valuation of the Hong Kong non-ferrous sector is relatively cheaper compared to A-shares [8]. Group 4: Investment Logic and Risks - The investment logic for the non-ferrous sector involves an initial phase driven by trading expectations based on macroeconomic conditions, followed by a second phase where actual commodity price increases may lead to stock price volatility [10]. - Key risks to monitor include potential price peaks, the pace of future Federal Reserve rate cuts, domestic macroeconomic conditions, and central bank gold purchasing activities [10].

Investment Rating - The report maintains a "Positive" investment rating for the building materials industry [12]. Core Insights - The report emphasizes the importance of tariff avoidance and cyclical trends, recommending a focus on African building materials due to the long-term benefits from population growth and urbanization in Africa, as well as short-term advantages from the U.S. interest rate cut cycle [6][9]. - It highlights that traditional building materials are less affected by U.S.-China tariff fluctuations, with companies like Huaxin Cement and Keda Manufacturing expected to see improved performance in Q3 [6][9]. - The report identifies specific companies with growth potential, including Sanke Tree, Hanhai Group, and Tubao, which are experiencing counter-cyclical growth, and companies like Qibin Group and Dongfang Yuhong that are leveraging operational advantages to stabilize [6][9]. Summary by Sections Cement - Cement shipments have decreased month-on-month, with the average shipment rate for major regions at approximately 44.3%, down 3.0 percentage points from the previous month and down 10.7 percentage points year-on-year [8][26]. - The report anticipates a continued oscillation in cement prices due to insufficient demand support, despite some regions pushing for price increases [8][26]. Glass - The glass market has seen an increase in inventory during the National Day holiday, with total inventory in monitored provinces rising to 57.74 million weight boxes, an increase of 13.71% from September 30 [8][42]. - The report notes that the production and consumption rates are currently at 58.78%, indicating a slowdown in market activity [8][42]. Fiberglass - The fiberglass sector remains relatively unaffected by tariffs, with a total tariff of 60% imposed on fiberglass imports from China to the U.S. since April, leading to a stagnation in trade [7]. - The report suggests that the AI electronic fabric market continues to experience strong demand, with Zhongcai Technology positioned as a leading player in this segment [7][9]. Recommendations - The report recommends focusing on the African supply chain and specialty fabrics, highlighting Huaxin Cement and Keda Manufacturing as key players in the African market [9]. - It also suggests that companies with strong business models and growth potential, such as Sanke Tree and Tubao, should be prioritized for investment [9].

Investment Rating - The report maintains a positive investment outlook on the construction materials industry, highlighting specific companies as key recommendations for investment opportunities [2][6][19]. Core Insights - The report emphasizes that both domestic demand hedging and TACO trading are merely processes of value discovery, suggesting that companies with high economic prospects and room for valuation growth will accelerate price discovery [2][3]. - It identifies a shift in focus towards companies that are expected to show resilience and growth potential, particularly in the context of domestic demand recovery and global demand expectations [4][12]. Summary by Sections Domestic Demand Hedging - Companies recommended under domestic demand hedging include Oriental Yuhong, Hanhigh Group, and Huaxin Cement, which are expected to show positive revenue trends in Q3 [2][4]. - The report highlights the importance of infrastructure projects in regions like Xinjiang, predicting a significant increase in cement demand due to major construction initiatives [7][9]. TACO Trading - The report suggests that the glass fiber and CCL industry chain will benefit from global demand expectations, with price increases observed in electronic fabrics and copper-clad laminates [3][5]. - Key companies in this segment include China Jushi and Zhongcai Technology, which are positioned to capitalize on the ongoing price increase cycle [6][15]. Cement Industry - The cement sector is noted for its potential growth driven by policy execution and governance improvements, with overseas expansion opportunities highlighted for companies like Huaxin Cement [34][38]. - The report indicates that the cement market is entering a phase of price stabilization, with a focus on limiting overproduction and enhancing governance [35][41]. Glass and Fiberglass - The glass sector is experiencing a recovery, particularly in photovoltaic glass, with companies like Fuyao Glass and Xinyi Glass expected to see improved profitability [10][12]. - The report notes that the fiberglass sector is witnessing a strong performance, with significant contributions from price increases in electronic fabrics [10][14]. Consumer Building Materials - The consumer building materials segment is showing signs of recovery, with companies like Sanke Tree and Beixin Building Materials expected to benefit from improved revenue performance in Q3 [19][25]. - The report emphasizes the importance of cost reduction and price stabilization in enhancing profitability for companies in this sector [26][27]. Key Recommendations - The report recommends focusing on companies with strong fundamentals and growth potential, such as China Jushi, Huaxin Cement, and Oriental Yuhong, as they are expected to outperform in the current market environment [6][17][19].

Group 1: Glass Fiber Industry - The leading companies in the glass fiber sector, such as Chongqing International and Linzhou Guangyuan, have raised prices for G75 electronic yarn by 150-300 CNY/ton and for 7628 electronic cloth by 0.2 CNY/meter, indicating a positive price trend due to supply-demand dynamics [4] - The inventory in the glass fiber industry decreased to 860,000 tons by the end of September, reflecting a 5% month-on-month decline, suggesting a tightening supply situation [4] - The overall supply-demand balance for coarse yarn is expected to improve in Q4 2025, as new production capacity is limited, primarily coming online in the first half of 2025 [4] Group 2: Cement Industry - Post-National Day, the cement market has seen a decline in demand due to factors such as funding shortages and adverse weather conditions, with average shipment rates for major regions falling below 45% [5] - In East China, cement prices have decreased, with prices in Nanjing dropping by 20 CNY/ton, and the current price for P.O42.5 cement in Nanjing is between 200-210 CNY/ton [5] - Despite the current weak demand, companies are still inclined to raise prices to improve profitability, although the implementation of such price increases remains to be monitored [5] Group 3: Glass Industry - As of October 9, the total inventory of glass in monitored provinces increased by 6.96 million weight boxes, a rise of 13.71% compared to September 30, indicating a significant accumulation of stock [6][7] - The production volume was recorded at 16.88 million weight boxes, with a consumption volume of 9.92 million weight boxes, resulting in a production-sales rate of 58.78% [7] - The market has experienced a slowdown in trading activity, with many companies showing a cautious approach to pricing despite plans for potential increases [7]

Investment Rating - Non-metallic building materials: Buy (Maintain) [5] - Construction and engineering: Overweight (Maintain) [5] Core Views - The report indicates that the electronic yarn and fabric prices have increased, with expectations for improved supply and demand in the fiberglass sector in Q4 [1] - The cement market is experiencing weak demand post-National Day, with prices in East China declining due to insufficient demand support [2] - The glass industry is facing low production and sales rates, with inventory levels rising significantly compared to pre-holiday levels [3] - Investment suggestions include companies in new materials and infrastructure sectors, highlighting key players such as China Jushi, Guoen Co., Puyang Huicheng, and China State Construction [3] Summary by Sections Fiberglass - Electronic yarn prices have increased by 150-300 RMB/ton, and electronic fabric prices have risen by 0.2 RMB/meter, with expectations for improved supply-demand dynamics in Q4 [1] - The overall inventory in the fiberglass industry decreased to 860,000 tons, a 5% decline month-on-month [1] Cement - Post-holiday, cement demand has weakened, with average shipment rates for key regions falling below 45% [2] - Prices in East China have decreased by 20 RMB/ton, with specific regions reverting to pre-increase levels [2] Glass - As of October 9, total inventory reached 57.74 million weight boxes, an increase of 6.96 million weight boxes (13.71%) from September 30 [3] - The production and sales rate stands at 58.78%, indicating a slowdown in market activity [3] Investment Recommendations - Suggested companies include: - China Jushi (fiberglass leader entering specialty electronic fabric market) - Guoen Co. (leader in modified plastics, strategic layout in PEEK and robotics) - Puyang Huicheng (active magnesium oxide business) - Keda Manufacturing (expansion in African building materials and lithium carbonate business) - Hongrun Construction (robotics business layout) - Jiemai Technology (release of release film business, entering PCB carrier copper foil) [3]

Core Insights - The report maintains a positive outlook on the building materials sector, highlighting a divergence in performance among companies, with demand being a central theme [2][4] - The report emphasizes that the construction materials industry is experiencing a mixed performance, with some companies benefiting from improved competitive dynamics while others face challenges due to demand and pricing pressures [7][10] Group 1: Consumer Building Materials - The consumer building materials segment shows a divergence in performance, with companies like Sanhe Tree and Oriental Yuhong expected to achieve significant growth due to improved competition and reduced pricing pressures [10][11] - The revenue for Q3 is anticipated to remain flat or decline for most building materials companies, but some may see slight year-on-year increases due to favorable competitive conditions [10][11] - Cost factors such as stable or declining prices for key materials like asphalt and PVC positively impact margins for waterproofing and coating companies [10][11] Group 2: Cement Industry - The cement industry faces weak demand from both real estate and infrastructure sectors, with production volumes declining by 5.6% and 6.2% year-on-year in July and August respectively [12][13] - The average price of cement in Q3 2025 was 343.86 RMB/ton, reflecting a decrease of 8.74% quarter-on-quarter and 10.55% year-on-year, indicating significant pricing pressure [12][13] - The report notes that the industry is currently at a low profitability level due to high inventory and rising production costs driven by coal prices [13] Group 3: Glass Industry - The glass industry is experiencing downward pressure on prices and profitability due to declining demand from the real estate sector, with the average price in Q3 2025 at 68.25 RMB/weight box, down 4.42% quarter-on-quarter [19] - High inventory levels persist in the glass sector, with 5,329 million weight boxes reported by the end of September, exacerbating the pricing challenges [19][20] - The report indicates that while raw material costs have decreased, the overall impact on profitability remains negative due to significant price declines [19] Group 4: Glass Fiber Industry - The glass fiber industry is characterized by structural demand differentiation, with high-end products performing better than low-end offerings, leading to a mixed profitability landscape [21] - The average price for non-alkali glass fiber yarn in Q3 2025 was 4,270 RMB/ton, reflecting a year-on-year decline of 44 RMB/ton, indicating pricing challenges [21] - The report highlights that the industry is facing high inventory levels, with 860,000 tons reported by the end of September, contributing to ongoing profitability pressures [21] Group 5: Company Performance Forecast - The report provides a forecast for various companies in the building materials sector, with Oriental Yuhong expected to achieve a net profit of 374-442 million RMB in Q3 2025, reflecting a year-on-year growth of 12%-32% [26] - Sanhe Tree is projected to see a significant increase in net profit, with estimates ranging from 329-366 million RMB, indicating a growth of 64%-83% year-on-year [26] - Other companies like Huaxin Cement and Conch Cement are also highlighted for their potential profitability improvements, with net profit forecasts indicating positive growth trends [26]

Investment Rating - The industry investment rating is "Outperform the Market" and is maintained [1] Core Views - The report highlights that the recent escalation in China-US trade tensions may shift market risk preferences, leading to increased attention on defensive sectors within the building materials industry that have strong domestic demand and high dividends. Segments such as cement, glass, and consumer building materials, which have lagged in performance this year, are expected to benefit if market sentiment shifts towards "high cutting low" [3][4] - Cement demand is gradually recovering but remains limited, with production in August 2025 at 148 million tons, down 6.2% year-on-year. The implementation of policies to limit overproduction is expected to enhance capacity utilization in the medium term [3][8] - The glass industry is experiencing a downward trend in demand due to real estate impacts, but recent policy catalysts have led to price increases and inventory replenishment in the midstream sector. The report anticipates that environmental regulations will not lead to a drastic reduction in capacity but will increase costs and accelerate maintenance [4][13] - The fiberglass sector is benefiting from demand driven by the AI industry, with expectations for significant growth in low-dielectric products. The report is optimistic about the continued upward trend in both volume and price [4] - The consumer building materials sector has reached a profitability bottom, with no further downward price pressure expected. The report notes a strong demand for price increases and profitability improvements, particularly among leading companies [4] Summary by Sections Cement - The cement market is entering its peak season, with overall demand showing slow recovery. The construction sector is affected by weather and demand release timing, leading to a weak recovery in housing construction [8] - The report emphasizes the importance of monitoring companies like Conch Cement and Huaxin Cement [3] Glass - The glass industry is facing a continuous decline in demand influenced by real estate, but recent policy changes have led to price increases and midstream inventory replenishment [4][13] - Companies to watch include Qibin Group [4] Fiberglass - The fiberglass sector is experiencing a boom driven by AI-related demand, with expectations for explosive growth in low-dielectric products [4] Consumer Building Materials - The sector's profitability has bottomed out, with strong calls for price increases and profitability improvements. Companies like Dongfang Yuhong and Sankeshu are highlighted for potential recovery [4]