CMSC building materials industry mid-term strategy: waiting at the traditional cycle bottom, mining the new cornerstone of computing power.

CMSC released a research report stating that the building materials industry is expected to run on parallel tracks, with one end being the incremental blue ocean generated by AI computing power semiconductors, and the other end being the emerging markets opened up by going global. Currently, the AI new materials track is in the phase of industrial prosperity, and industry trend investment remains the preferred strategy, with a focus on leading companies deeply positioned in emerging tracks. In the medium to long term, continuous attention should be paid to the evolution of new technologies/new materials, certification progress, capacity deployment rhythm, and profit realization. For the traditional building materials sub-sector, it is currently at the bottom of the cycle, with an emphasis on future value recovery. CMSC's main points are as follows: Fiberglass: High-end demand explosion, welcoming the Davis double hit The usage and value of high-end AI server PCBs have significantly increased, driving demand for special electronic fabrics like Low-DK and Low-CTE to explode. The core barrier of the high-end fiberglass track is focused on large capital expenditures and long-term technology research and development accumulation, with long customer certification cycles and very high industry entry thresholds limiting production expansion pace. Leading companies with leading capacity, technology, and certification advantages have a prominent competitive advantage by accurately positioning themselves in the high-prosperity computing power track. At this stage, the high-end special electronic fabrics industry has not yet entered the stage of large-scale production, and short-term industry profit recovery mainly depends on leading companies flexibly shifting production lines, driving continual price increases of 7628 ordinary electronic fabrics and G75 electronic yarns. Optimistic about the simultaneous increase in quality and price of mid-to high-end product categories, the fiberglass sector is initiating a dual rise in profit and valuation center, the Davis double hit. Glass: Float glass at the bottom, glass substrates usher in new opportunities for optoelectronics Traditional float glass is currently stuck at the bottom of the cycle, with terminal demand from real estate continuously weak, industry inventories running high, and all product lines generally operating at a loss. In contrast, optoelectronic displays and advanced semiconductor packaging tracks are in an industrial upswing cycle, with new product categories such as glass intermediate layers, glass substrates, glass bridges, and glass carrier plates expected to become core supporting materials of the optoelectronic industry, with vast long-term increment space. Consumer building materials: Stock restructuring, overseas gold mining, heads of the pack breaking through The consumer building materials industry has officially entered the competition period for existing real estate, with channel structure reshaping opening up long-term profit improvement space for leading companies. Small and medium-sized companies in the waterproofing and coatings industries are accelerating their exit, industry concentration is rising rapidly, and market share of the leading companies continues to expand. Leading companies in the areas of tiles, pipes, and boards are simultaneously advancing by sinking end distribution stores and deepening the renovation of old houses, leveraging channel barriers and economies of scale to widen the gap with small and medium-sized manufacturers, making profits more resilient. It is expected that the total volume of new real estate in the "15th Five-Year Plan" will continue to shrink, and the demand for existing stock renovation and home improvement will become the core growth engine of the industry. Focus on the main theme of optimizing channel structures, selecting leading companies with continuously increasing retail share, benefiting from the renovation demand of existing stocks, and benefiting from the increasing industry concentration. In addition, it is recommended to pay attention to high-quality leading companies actively exploring overseas markets. Cement: Domestic cycle weakening, overseas + high dividend support value Currently, the domestic cement industry is clearly in the bottom range of the cycle, with terminal real estate and infrastructure demand remaining weak and overall demand recovery insufficient; although the supply side is controlling the addition of new capacity, the slow pace of cold repair and elimination of inefficient capacity on existing production lines, the weak supply-demand balance situation is difficult to change in the short term, and the overall profitability and prices of the sector are under pressure. In this bottom environment, the industry believes that the core focus of the cement sector should be on two types of targets: defensive targets with high dividends, selecting leading companies with solid cash flow and stable dividend policies, and targets that open up long-term performance growth space through overseas increments and transformation business, with valuation recovery and performance elasticity. Risk warning: Real estate and infrastructure investment growth rate declines, sales volume and prices fall short of expectations, significant increase in raw material and fuel prices, slow collection of accounts receivable, slower-than-expected growth in demand in downstream emerging areas, delayed progress in cutting-edge technology research and development, overseas market expansion falling short of expectations.