CICC published a report stating that the market cap management policies of mainland state-owned enterprises have been implemented, and the value of Sector allocation is gradually becoming apparent. In the construction state-owned enterprises sector, the effects of market cap management have begun to show, and new regulations are promoting the restoration of net asset values. The bank believes that construction state-owned enterprises are still generally in a state of undervaluation, and the 'Opinions' further clarify the importance of market cap management, incorporating the resolution of long-term undervaluation issues into annual key tasks, and including market cap management in the performance assessments of the leaders of state-owned enterprises, which is expected to further drive the recovery of valuations in construction state-owned enterprises.

The bank anticipates that the bond policy will be fully implemented next year, particularly with national bonds and special bonds expected to accelerate issuance, which may lead to an increase in actual workload in Infrastructure and a significant improvement in project payment quality. The profit and cash flow statements of construction state-owned enterprises are expected to benefit from this; it also leaves greater room for these enterprises to improve their dividend and buyback policies, maintaining a bullish outlook on CHINA STATE CON (03311.HK), Metallurgical Corporation of China (01618.HK), and others.

Regarding building materials state-owned enterprises, the bank indicates that profit improvement is expected, and there is still room for market cap management and mergers and acquisitions to make an impact. In recent years, state-owned enterprises in the building materials sector have also boosted their market cap through shareholder shareholding, large-scale buybacks, increased dividend ratios, and improving the quality of investor communications, actively seeking potential merger and acquisition opportunities. The introduction of the 'Opinions' is expected to promote building materials state-owned enterprises to use dividend, buyback, and shareholding tools for market cap management more effectively, and help accelerate the increase in industry concentration, recommending attention to CR BLDG MAT TEC (01313.HK) and others.