Gelonghui December 19 | CICC released a report stating that the implementation of market capitalization management policies for state-owned enterprises in mainland China is gradually revealing the value of sector allocation. In terms of construction state-owned enterprises, the effects of market cap management are already evident, with new regulations promoting the restoration of net asset value. The report believes that construction state-owned enterprises are still generally in a state of net asset discount, and the 'Opinions' further clarify the importance of market cap management, incorporating the resolution of long-term net asset discount issues into annual key work, and including market cap management in the performance assessment of state-owned enterprise leaders, which is expected to further drive the valuation recovery of construction state-owned enterprises. The report anticipates that the debt repayment policy is likely to be fully implemented next year, especially with special government bonds and other fiscal tools expected to be accelerated in issuance, which may lead to a significant improvement in actual infrastructure workload and project repayment quality, benefiting the profit and cash flow statements of construction state-owned enterprises; this also allows for greater flexibility in enhancing dividend and buyback policies for construction state-owned enterprises, with a bullish outlook on CHINA STATE CON, Metallurgical Corporation of China, and others. Regarding construction material state-owned enterprises, the report indicates that profit improvement is expected, with room for market cap management and mergers and acquisitions to exert more effort. In recent years, construction material state-owned enterprises have also boosted their market value through substantial shareholder shareholding, large buybacks, increased dividend ratios, and improved investor communication quality, while actively seeking potential merger and acquisition opportunities. The introduction of the 'Opinions' is expected to promote construction material state-owned enterprises to more effectively use tools such as dividends, buybacks, and shareholding to manage their market value, and it will also help accelerate the improvement of industry concentration, suggesting attention to CR BLDG MAT TEC and others.