Guolian Minsheng Securities: Focus on Cement Value Restoration, Pay Attention to High-end Electronic Materials and Opportunities for Enterprise Transformation.

Guolian Minsheng Securities released a research report stating that in the short term, the peak-off peak coordination strength of cement is expected to maintain a high level, supporting continuous price improvement. In the medium to long term, policies in the supply side are expected to support the continuous improvement of profit center. Meanwhile, high dividends highlight the long-term value of allocation, and it is recommended to pay attention to leading regional cement companies. In addition, it is suggested to focus on leading companies in the decoration building materials industry (top companies channel sinking/expanding product categories, etc. reforms continue to be implemented, industry consolidation background is expected to accelerate market share). Benefiting from the surge in AI computing power demand, high-end electronic cloth demand remains high, and it is recommended to focus on leading companies with first-mover advantages and strong momentum in expanding production capacity. With the optimization mechanism of the new merger and acquisition regulations gradually taking effect, it is expected to further stimulate market-oriented merger and acquisition vitality, and it is recommended to focus on the transformation prospects driven by the integration of traditional building materials assets. The main views of Guolian Minsheng Securities are as follows: Cement: Supply-side reform & high dividends, highlighting long-term investment value Recently, most regions have seen a loosening of coordination, and the cement market has shown the characteristic of "peak season not prosperous" since 2025M4, with the industry sentiment marginally declining. However, compared to the same period in 2024, the improvement in industry sentiment is more significant. The national average price per ton of cement in April-May 2025 was 390 yuan, yoy +24 yuan/+6%, compared to -17 yuan/-4% in 2025Q1. The short-term coordination strength of the cement industry may maintain a high level, and industry sentiment is expected to fluctuate upward. The dual-wheel drive of carbon trading and capacity replacement regulations in the medium to long term is conducive to promoting the elimination of backward production capacity, and the competition pattern is expected to continue to optimize. At the same time, some cement companies have announced long-term shareholder dividend repayment plans, and the high dividend nature is expected to further highlight the long-term investment value of cement companies. Traditional building materials: Industry sentiment continues to bottom out, focusing on glass fiber structural opportunities In the decoration building materials and float glass industries, downstream demand continues to be under pressure, market competition may intensify further, and industry sentiment continues to bottom out. In the photovoltaic glass sector, the recovery in industry sentiment is driven by the rush to install, but overall it remains at historically low levels; as the rush to install approaches its end, industry sentiment has generally declined in recent times, and the pace of cold repairs of production lines needs to be closely watched. Coarse yarn, benefiting from good demand in wind power and thermoplastic sectors, the structural price increase of coarse yarn in 2025Q1 is good; demand for coarse yarn in April-May is weak, and sentiment has slightly declined. The key to whether industry sentiment can improve is whether there will be positive changes in the demand for engineering/automobiles/exports, and the bank maintains an optimistic view on the rapid growth of coarse yarn demand in the medium to long term. Conventional electronic yarn is currently at historically low prices, with potential opportunities for sentiment improvement. High-end electronic cloth: High demand sentiment, industry leaders are expected to benefit first Low Dk electronic cloth, high demand sentiment driven by AI computing power is expected to drive high demand for high multi-layer CPB, high-frequency high-speed copper-clad laminates, and low Dk electronic cloth, or will continue to have relatively high sentiment. Low Dk electronic yarn/cloth production technology barriers are high, and they have high customer certification barriers. Currently, overseas leading suppliers dominate the market, and domestic companies are gradually breaking the overseas monopoly. Some companies have started production and sales of first-generation products on a small scale. Low CTE electronic cloth, benefiting from factors such as advanced packaging technology innovation, low CTE electronic cloth demand remains high. Currently, global suppliers are mainly Asahi Kasei and Grace Fabric Technology from Japan. Sinoma Science & Technology has developed several low-expansion cloths that have been verified by some customers. Domestic companies have a strong momentum in expanding production, and domestic substitution is expected to accelerate. Industry leaders in technology are expected to benefit first. Merger and restructuring: Focus on the transformation prospects driven by asset integration On May 16, 2025, the Securities Regulatory Commission issued new regulations on restructuring, establishing a simplified audit process, staged payment mechanism for the consideration of shares, and reverse linkage mechanism, relaxing the requirements for the financial condition of post-acquisition companies, industry competition, and related transaction supervision. In the traditional building materials sector, due to weak demand and a competitive environment, some companies (such as Beijing Lirr High-Temperature Materials, Keshun Waterproof Technologies, Jiangsu Canlon Building Materials, Sinostone (Guangdong), etc.) are actively promoting corporate transformation and breakthroughs through asset integration. The bank believes that as the optimization mechanism of the new restructuring regulations gradually takes effect, market-oriented merger and acquisition vitality may be further stimulated, industrial integration may accelerate, and attention should be paid to the transformation prospects driven by asset integration. Focus on cement value restoration, new electronic cloth, and enterprise transformation Traditional building materials sector: 1) In the short term, the peak-off peak coordination strength of cement is expected to maintain a high level, supporting continuous price improvement. In the medium to long term, policies in the supply side are expected to support the continuous improvement of profit center. At the same time, high dividends highlight the long-term value of allocation, and it is recommended to pay attention to leading regional cement companies; 2) It is suggested to focus on leading companies in the decoration building materials industry (top companies channel sinking/expanding product categories, etc., reforms continue to be implemented, industry consolidation background is expected to accelerate market share). In addition, focus on electronic cloth and enterprise transformation investment opportunities: 1) Benefiting from the surge in AI computing power demand, the demand for high-end electronic cloth remains high, and it is recommended to focus on leading companies with first-mover advantages and strong momentum in expanding production capacity; 2) The bank believes that as the optimization mechanism of the new merger and acquisition regulations gradually takes effect, it may further stimulate market-oriented merger and acquisition vitality, and it is recommended to focus on the transformation prospects driven by asset integration in traditional building materials. Risk warning: Real estate financing policies fall short of expectations; Real estate demand recovery is weaker than expected; Infrastructure development progress is lower than expected; Material prices fluctuate significantly; Progress of efficiency improvement in central enterprises and state-owned enterprises is lower than expected.