Huatai Securities: the fundamentals of the construction and building materials sector are stabilizing and recovering, transitioning to cross-border and segmented prosperity in configuration.

Huatai Securities research report stated that looking back on the first 5 months of this year, the construction/building materials index showed a W-shaped oscillating trend, with building materials outperforming (the Shanghai and Shenzhen 300 index) due to improvements in the first quarter of 2025. Looking ahead to the second half of 2025, Huatai Securities believes that: 1) on the demand side, influenced by domestic investment policies and a turning point in the real estate market stabilization, attention should be paid to three domestic renewal demands, overseas expansion, etc.; 2) on the supply side, there is a significant increase in cross-border transformation among companies, the cement/glass industry's self-discipline behaviors have been fluctuating, and debt restructuring is expected to extend from small and medium-sized private enterprises to central state-owned enterprises. In the absence of clear short-term catalysis from policy and fundamentals, it is recommended to focus on cross-border transformation, regional segmentation, and the main industry trends for allocation.