CMSC: The government will continue to implement policies such as national subsidies and urban renewal, focusing on the restoration of the consumer building materials sector.

CMSC released a research report saying that the intensity of replacing old with new is expected to increase, and there is still support for the inventory demand for old renovation, etc. Continue to focus on the leading companies in the consumption of building materials to repair the bottom line of profits. This week (2025/01/06-2025/01/12), the market demand in the cement industry continues to decline, and cement prices continue to weaken; the transaction center of the float glass market continues to decline, with flexible price operations in most regions; in fiberglass, the market price of alkali-free coarse yarn remains stable and slightly fluctuating, and the market price of electronic yarn is overall temporarily stable. CMSC's main points are as follows: Cement industry: Market demand continues to decline, cement prices continue to weaken This week, the national cement market price fell by 0.6% on a weekly basis. The areas where prices were lowered mainly include Shanghai, Jiangsu, Zhejiang, and Shandong, with a range of 10-30 yuan/ton. In early January, domestic cement market demand continued to decline, with the shipment rate of key enterprises in key regions across the country at 38%, and the shipment rate in East China, Central South, and Southwest regions generally dropping to around 50%, while in a few areas where construction is still ongoing in North China and Northwest China, the shipment rate of enterprises is only 20-30%. In terms of prices, as the year-end approaches and demand continues to decline, cement prices continue to weaken. Overall, influenced by factors such as weakened market demand, tight funding, and the approach of the Spring Festival, the national cement market prices are showing a downward trend. It is expected that market demand will continue to decline in the coming period, and prices may continue to decline. Float glass industry: The transaction center continues to decline, with flexible price operations in most regions As of January 9, 20250109, the average price of float glass in China was 1323 yuan/ton, a decrease of 3 yuan/ton from the 2nd; the national weekly average price of float glass this week is 1323 yuan/ton, a decrease of 6.73 yuan/ton compared to last week. This week, the transaction center of the domestic float glass spot market continued to decline. There are differences in performance in various regions, with price increases in the Northwest market and basically stable prices in Central China, but transaction centers in other regions have declined. Although most downstream sectors are still in a rush work period, as scattered small processing plants gradually take holidays, enterprises are adjusting their inventory further, and market transactions are relatively flexible. As of January 9, 2025, the daily production of float glass in China was 157,800 tons, a decrease of 0.43% compared to the 2nd. The total weekly production of float glass in China this week (20250103-20250109) was 1.1057 million tons, down by 0.53% compared to the previous week and by 8.72% year-on-year. As of January 9, 20250109, the total inventory of sample enterprises in the national float glass industry was 43.702 million heavy boxes, a decrease of 0.491 million heavy boxes on a weekly basis, a decrease of 1.11% on a weekly basis, and an increase of 42.8% year-on-year. The inventory turnover days were 20.3 days, a decrease of 0.1 days from the previous period. Fiberglass industry: The market price of alkali-free coarse yarn remains stable, with minor fluctuations, and the market price of electronic yarn is generally stable 1) This week, the overall market price of alkali-free pool kiln coarse yarn remained stable, with minor price adjustments made for individual products, with price increases ranging from 100 to 200 yuan/ton. The overall operation of the middle and lower reaches of the industry has slowed down further, with some deep processing gradually entering the repayment stage. Although some downstream sectors made slight stocking earlier, there is not much intention for further purchases in the short term, especially with the approach of the year's end and significant financial pressure, leading to limited on-demand restocking in the short term. Most pool kiln factories have a high probability of reducing shipments. However, some production lines reduced water cooling maintenance during the week, resulting in a temporary reduction in total supply, and manufacturers have a strong intention to support prices. It is expected that prices of various factories will remain stable in the short term, with some price adjustments expected to be implemented following recent price increases. 2) This week, the mainstream market price of electronic yarn remained stable, but most factories have flexible transaction terms. As the Spring Festival approaches, pool kiln factories have little intention to adjust prices, and downstream demand for pickups is moderate. In addition, there are still low inventories of processed electronic fabrics, so there are no expectations of price improvements in the short term. Looking ahead, supply and demand will remain weak, and with the ignition of some individual low-dielectric production lines, the total production capacity of electronic yarn is expected to increase slightly, leading to a weak and stable operation of electronic yarn and electronic fabric prices. Consumption of building materials industry: The intensity of replacing old with new is expected to increase, and existing demand such as old renovation still provides support The State Council is vigorously implementing the two new policy, with an expected allocation of 81 billion yuan to support the replacement of consumer goods with new ones, helping to expand domestic demand. Urban renewal has become an important means of promoting domestic demand, with accelerated renovation of old communities such as old neighborhoods, and the Ministry of Housing and Urban-Rural Development is expected to implement the transformation of urban villages and dilapidated buildings by 2025, promoting monetization resettlement. Following the plans to renovate an additional 1 million sets of urban villages and dilapidated houses, the scale of renovations is expected to expand further. The Ministry of Finance and other departments are expanding government procurement to support the implementation of policies for green building materials, promoting the improvement of building quality. Continue to focus on the profitability recovery of leading companies in the consumption of building materials in various tracks, with reduced burden on receivables leading to potential performance recovery. Investment suggestions: Zhejiang Weixing New Building Materials (002372.SZ), Keda Industrial Group (600499.SH), Monalisa Group (002918.SZ), Asia Cuanon Technology (603378.SH), Beijing New Building Materials Public (000786.SZ), Keshun Waterproof Technologies (300737.SZ), Beijing Oriental Yuhong Waterproof Technology (002271.SZ), Guangdong Dongpeng Holdings (003012.SZ); Pay attention to China Jushi Co., Ltd (600176.SH). Risk warning: Infrastructure investment growth does not meet expectations, a significant decline in new real estate construction, a sharp increase in prices of raw materials and fuel, and intensified market competition.