GF Securities: Expectation of a revival in real estate policies, focus on opportunities in bottom-up allocation of building materials.

GF SEC released a research report stating that currently the profitability, valuation, and holdings of the building materials sector are at a low point, but some high-quality leading companies have already begun to emerge from the bottom. With policy expectations, leading consumer building materials companies are expected to recover. Although the fundamentals of the building materials sector are still on the left side, after experiencing a four-year industry downturn period, benefiting from industry supply clearance and the transformation and upgrading of company revenue structure (region, channel, product), some excellent leading companies have gradually stabilized on the operational level (revenue growth trend is improving, profit margins are increasing year-on-year), the model of "survival of the fittest" is becoming clearer, and considering new growth curves, there is still great potential for high-quality leading companies in the future. At the same time, sector holdings and valuations are still at historical lows, and pessimistic expectations for real estate prosperity and short-term fundamentals may have already been digested. The main points of GF SEC are as follows: Consumer building materials: With high prosperity in the second-hand housing market combined with subsidy policies, retail building materials prosperity is the first to recover, and leading companies have strong operational resilience. The long-term stability of consumer building materials demand, continuous increase in industry concentration, and a good competitive landscape among high-quality leading companies still have great long-term growth space. The downstream real estate market is still bottoming out, waiting for stable sales to improve; core leading companies have strong operational resilience. Attention should be paid to SKSHU Paint, Dehua TB New Decoration Material, Higold Group, Beijing Oriental Yuhong Waterproof Technology, CHINA LESSO, Beijing New Building Materials Public, Zhejiang Weixing New Building Materials, Guangdong Dongpeng Holdings, Guangdong KinLong Hardware Products, Arrow Home Group, Monalisa Group, Keshun Waterproof Technologies, Jiangxi GETO New Materials Corporation, Wangli Security & Surveillance Product. Cement: This week, the national cement market price fell slightly by 0.4% compared to the previous week. According to China Cement Network, as of November 21, 2025, the national cement average price was 351 yuan/ton, down 1.50 yuan/ton compared to the previous week and down 77.67 yuan/ton year-on-year; the national cement shipment rate was 45.73%, down 0.47% compared to the previous week and down 4.40% year-on-year. As some regional cement prices continue to decline to the bottom range, it is expected that cement prices will continue to maintain a slight fluctuation adjustment trend in the later period. The industry valuation is currently in the historical bottom range, focus on HUAXIN CEMENT (A, H), Anhui Conch Cement (A, H), Gansu Shangfeng Cement, CR BLDG MAT TEC, Guangdong Tapai Group. Glass: Float glass prices weaken; partial transaction centers for photovoltaic glass are loosening. According to Sublime China Information, as of November 20, 2025, the domestic float glass average price was 1154 yuan/ton, down 2.8% compared to the previous period and down 20.6% year-on-year. Inventory days were 30.36 days, an increase of 0.48 day from the previous week. The mainstream order price for 2.0mm coated panels was around 13 yuan/square meter, unchanged from the previous week, and the sample inventory days were approximately 28.13 days, an increase of 9.76% compared to the previous period. Currently, the valuation of glass leading companies is relatively low, focusing on Zhuzhou Kibing Group, XINYI SOLAR, Flat Glass Group (A), FLAT GLASS (H), XINYI GLASS, CSG Holding Co., Ltd., Shandong Pharmaceutical Glass. Glass fiber / carbon-based composites: Prices in the coarse yarn market are stable with minor fluctuations, and short-term stable prices for electronic yarns. According to Sublime China Information, as of November 20, 2025, the mainstream transaction prices for domestic 2400tex direct wrap yarn range from 3250-3700 yuan/ton, with a slight increase of 0.2% compared to the average price of the previous week (3524.75) and an increase of 0.19% year-on-year; and the mainstream price for G75 electronic yarn is around 8800-9300 yuan/ton, basically unchanged from the previous week, with high-end products E, D series, and low dielectric products maintaining high market transaction prices. Leading companies in glass fiber / carbon-based composite materials are significantly ahead, focus on China Jushi Co., Ltd, Sinoma Science & Technology, Grace Fabric Technology, Jiangsu Changhai Composite Materials, etc. Risk warning: Risks of continuing macroeconomic downturns, significant fluctuations in monetary and real estate policies, risks of industry new production capacity exceeding expectations, risks of rapid increases in raw material costs, etc.