Zhong You Securities: Bond conversion policy continues to increase, pay attention to waterproof, cement and other industries with strengthened expectations for domestic demand.

Zhongyou Securities released a research report stating that domestic demand expectations are strengthening, with a focus on industries such as waterproofing and cement: With the intensification of debt-to-equity policies and overseas interest rate cuts, the expectation of domestic demand strengthening is continuing to increase. Focus on industries such as waterproofing, cement, and float glass that are significantly benefiting from the logic of improved returns, as well as industries that are still at the bottom of the business cycle. Main points of Zhongyou Securities: Event: This week, Minister of Finance Lian Fuoan stated at a press conference at the State Council Information Office that during the "14th Five-Year Plan", efforts will continue to be made to coordinate development and security, accelerate the establishment of a government debt management mechanism that is compatible with high-quality development, and provide strong support for the stable and long-term development of the economy. This includes reducing existing debt amounts, implementing a package of debt-to-equity measures, and taking multiple measures to resolve hidden debt issues. Cement: On July 1st, the Cement Association released a document in response to anti-"internal competition" policies, which the bank believes will lead to better implementation of policies to restrict overproduction. In the short term, as we enter the peak season in September, overall demand is showing signs of recovery but with limited growth. Infrastructure projects are still affected by factors such as weather disruptions and the pace of demand releases. Demand in the real estate sector remains in a weak recovery trend. Looking at the medium term, cement industry capacity is expected to continue to decline under policies to restrict overproduction, leading to a significant increase in capacity utilization. The cement industry is currently at a low point in demand and prices. Focus on: Anhui Conch Cement, Huaxin Cement. Glass: The fundamentals currently lack support, with demand not showing traditional peak season characteristics yet. The industry still faces supply-demand contradictions, with limited improvement in downstream demand. It is expected that spot prices will continue to fluctuate near the bottom. Demand in the industry has been in a continuous downward trend under the influence of the real estate sector, with demand in the off-season from June to August still reasonable but with conflicting supply and demand. Considering that most companies in the float glass industry currently meet environmental requirements, it is believed that anti-"internal competition" policies will not lead to a sudden clearing of capacity, but will increase environmental requirements and costs, accelerating the industry's cold repair progress. Focus on: Zhuzhou Kibing Group. Fiberglass: Traditional alkali-free silica sand demand is flat, with strong performance in specific areas. This year, the industry has been driven by demand from the AI industry chain, with demand for low dielectric products increasing in volume and price. The industry is seeing clear upgrades in the structure of first, second, and third generation (Q fabric) products. Demand in the industry is expected to continue to rise explosively with the growth of AI. Focus on: China Jushi Co., Ltd, Sinoma Science & Technology. Consumer Building Materials: Industry profits have bottomed out, prices have experienced years of competition with no downward space. Leveraging anti-"internal competition" policies, the industry has a strong demand for price increases and profit improvement. Since this year, multiple categories such as waterproofing, coatings, and gypsum boards have continued to issue price increase notices. Industry profits are expected to bottom out and improve, and profits for leading enterprises can be expected in the second half of the year. Focus on: Beijing Oriental Yuhong Waterproof Technology, SKSHU Paint, Beijing New Building Materials Public, Dehua TB New Decoration Material. Risk warnings: Policies to counter "internal competition" are implemented slower than expected, risks of real estate demand falling below expectations, risks of infrastructure demand being lower than expected.