The Zhitong Finance app learned that Guolian Securities released a research report saying that the overall performance of building materials companies in 23Q3 reflects that macro-infrastructure/real estate demand is still weak during the phase. Against the backdrop of a low base for the same period in '22, enterprises showed an overall restorative growth trend. Profitability continued to improve month-on-month, partly benefiting from lower raw material prices, etc., and overall performance differentiation at the enterprise level was significant. The proposal focuses on two aspects: 1) new materials/new application fields, combining company valuation and company growth prospects, etc., and it is recommended to focus on “bottom-up” logic/solid fundamentals, and pro-cyclical undervaluation targets; 2) the real estate/infrastructure chain, data catalytics/policies catalyze short-term or sustainable expectations, and the positive significance of “trillion treasury bonds”.

Relevant targets:1) New materials/new application areas suggest focusing on Shandong Pharmaceutical Glass (600529.SH), Jianghe Group (601886.SH), Luyang Energy Saving (002088.SZ), 3D Chemistry (002469.SZ), etc. 2) The real estate/infrastructure chain suggests focusing on pro-cyclical undervaluation targets such as China's Jushi (600176.SH) and Honglu Steel (002541.SZ). It is also recommended to focus on Dongfang Yuhong (002271.SZ), Beixin Building Materials (000786.SZ), China Liansu (02128), etc., and conch cement (600585.SH) and Huaxin Cement (), which are leaders in the cement region. 600801.SH

The main views of Guolian Securities are as follows:

Consumer building materials: profitability restoration, cash flow from operating activities is the main tone

The overall revenue and profit recovery growth in the consumer building materials sector in 23Q3 is still the main trend. Fundamental differentiation is large, and the profitability of some outstanding enterprises (such as Yuhong, Weixing, Beixin, Dongpeng, Bunny, etc.) continued to improve relatively well from month to month. The overall cash flow from the sector's operating activities continued to improve year on year, and the net operating cycle changed and diverged year over year.

Glass: The float boom improved month-on-month, photovoltaic differentiation increased, focus on Shandong Pharmaceutical Glass

The profitability of float glass companies continued to improve month-on-month. 23Q3 leading Kibing Group and CSG A had net interest rates exceeding 10%, and Yaopi Glass reversed losses. The balance between supply and demand for photovoltaic glass 23q1-3 is weak, corporate income has increased rapidly, the profit level of photovoltaic glass companies has increased, and Follett's leading edge has increased. The pharmaceutical glass company Shandong Pharmaceutical Glass excels. Revenue growth is strong, and profitability continues to improve. Cash flow from the sector's overall operating activities continues to be at a good level, and accelerated inventory turnover is the main theme.

Glass fiber and cement: the 23Q3 boom continues to solidify, differentiation is increasing

In terms of glass fiber, the profitability of enterprises continued to solidify in 23Q3, overall inventory turnover continued to slow, and the profit margin lead of leading China Jushi expanded. In terms of cement, demand for real estate/infrastructure is weak. Overall, corporate revenue/profit growth is under some pressure, and differentiation among enterprises is also increasing. The overall accounts receivable period for cement and glass fiber companies has been lengthened to a certain extent.

Other new materials: more diversified, focusing on characteristics with positive changes

The carbon fiber boom is under pressure. The profitability of VIP board leader Saite New Materials and ceramic fiber leader Luyang Energy Saving 23Q3 continued to improve month-on-month. The performance of enterprises such as refractory materials/steel structural components reflects weak macro-level demand at the macro stage, and the cash flow of BIPV companies improved relatively well. The net operating cycle of the sector has been lengthened to a certain extent.

Risk warning:The effect of the policy fell short of expectations, the improvement in real estate demand was weaker than expected, infrastructure investment fell short of expectations, and raw material prices fluctuated sharply