Zhong You Securities: Leading consumer building materials companies have undergone sufficient adjustments, highlighting the cost-effectiveness of sector allocation.

China Post Securities released a research report stating that after experiencing a price hike at the beginning of the year, the consumer building materials industry has seen a significant price fall, partly due to the increase in raw material prices caused by the US-Iran war, which has disrupted the profitability of consumer building materials. On the other hand, industry demand has remained stable after the Spring Festival and has not shown an unexpected recovery. The industry is believed to have bottomed out in terms of prices after 25 years and is now entering a recovery phase. With the improvement in real estate expectations and the logic of supply clearance, the industry has entered a phase of recovery. Currently, the valuation and expectations of leading companies are relatively low, and it is recommended to pay attention to opportunities for valuation recovery in leading companies in waterproofing, paints, and other sectors. Main points of China Post Securities: Cement Recent cement demand performance has been flat, with lower output compared to the same period last year and moderate demand recovery. Infrastructure funding is relatively secure, but there is still pressure on residential construction demand. In the medium term, the cement industry's capacity is expected to continue to decline under policies restricting overcapacity, leading to significantly increased capacity utilization and profit elasticity. Focus on: Anhui Conch Cement, Huaxin Building Materials Group, Gansu Shangfeng Cement. Glass Recent shutdowns and cold repair of production lines have increased, but terminal demand remains dull. Slow orders from terminals, low factory operation rates, and weak downstream demand in the short term, combined with speculation of excess supply being released earlier, have led to weak price performance. Attention should be paid to possible unexpected production cuts due to rising costs. Focus on: Zhuzhou Kibing Group. Fiberglass Coarse sand demand remains good, with support from structural rigid demand and cost increases, leading to a mainly upward price trend in the short term. In the electronics yarn segment, the industry is thriving, driven by AI industry chain demand. The industry is experiencing a surge in demand for low dielectric products along with the clear upgrade of first, second, and third generation (Q square) products. The industry is expected to see explosive growth along with AI, with a trend of continuous increase in demand and prices. Focus on: China Jushi Co., Ltd, Sinoma Science & Technology. Consumer Building Materials The industry's profitability has bottomed out, and prices have no further downward space after years of competition. Leveraging anti-"involution" policies, the industry is strongly pushing for price increases and improved profitability. In 2025, various product categories such as waterproofing, paints, and plasterboard have continued to release price increase letters, and industry profitability is expected to bottom out, with the expectation of profit improvement for leading companies in 2026. Focus on: Beijing Oriental Yuhong Waterproof Technology, Keshun Waterproof Technologies, SKSHU Paint, Beijing New Building Materials Public, Dehua TB New Decoration Material. Risk warning: Risk of unexpected delay in the implementation of anti-"involution" policies, and the risk of real estate and infrastructure demand falling beyond expectations.