Investment Rating - The report maintains an "Accumulate" rating for the construction materials industry [1] Core Viewpoints - The construction materials industry is experiencing a downturn in demand, with revenue continuing to face pressure in Q4 2024 and Q1 2025, indicating that profitability remains at historical lows [1][17] - Despite the ongoing challenges, there are signs of easing competition within the industry as supply-side adjustments take place, leading to a stabilization of overall gross margins [1][18] - The cash flow situation has shown improvement, with operating cash flow for the sample companies in the infrastructure and real estate chain reaching 616.28 billion yuan in Q4 2024, a year-on-year increase of 33.8% [19] Summary by Sections 1. Overview - The construction materials industry is at the bottom of the economic cycle, with continued pressure on demand and profitability [1][17] 2. Profit and Loss Analysis - Revenue continues to decline, but the rate of decline has slightly narrowed compared to Q3 2024, primarily due to insufficient new construction projects in infrastructure and real estate [2][17] - The overall gross margin is stabilizing, reflecting a reduction in competitive pressures, particularly in the cement sector where supply-side discipline has improved [2][18] - Return on Equity (ROE) remains at historical lows, but there are signs of improvement in certain sub-sectors like cement and glass fiber [2][18] 3. Cash Flow and Balance Sheet - Operating cash flow for the sample companies improved significantly, with a net cash flow of 616.28 billion yuan in Q4 2024, indicating effective cash flow management [19] - The asset-liability ratio remained stable in Q1 2025, reflecting improvements in cash flow and capital expenditure control [19] - Accounts receivable turnover days have increased, indicating that outstanding receivables still need to be addressed [19] 4. Economic Outlook - The demand for bulk construction materials like cement and glass remains under pressure, but there are signs of demand stabilization due to improved pricing strategies [20][21] - The consumer building materials sector continues to face challenges from real estate demand pressures, but some leading companies may see revenue improvements due to low base effects [21] - Infrastructure investment growth is expected to stabilize, supported by fiscal policy measures and increased funding for key projects [21]