Last week's section review

The building materials index increased by about -2.3% last week, compared toA shareThe index revenue was about +0.4%; among them, the cement and glass indices of the secondary industry increased by about -1.1% and -4.9%, respectively, and the pipe index of the tertiary industry increased by about -3.5%. Top 5 sector gains:Kaier New Materials(+12.0%),Yaopi glass(+8.7%),Oriental Yuhong(+7.9%),Weixing New Materials(+6.7%),Changhai Co., Ltd.(+6.3%); Top 5 after increase:Dow's Technology(-18.5%),Shangmine cement(-15.5%), Deep Earth A (-11.1%),Jiuding New Materials(-10.5%),King Kong glass(-9.3%)

cement industry

Last week's news: Prices in the national cement market rose 1% month-on-month last week. The increase in prices was mainly driven by price increases in Beijing-Tianjin-Hebei and Guanzhong regions of Shaanxi. Prices in Beijing-Tianjin-Hebei increased by 30-40 yuan/ton, and in Guanzhong, Shaanxi, increased by 20 yuan/ton. At the end of July, although demand in the domestic cement market was still in the low season, the national cement price trend picked up ahead of schedule, driven by restorative price increases in some regions. Judging from the tracking situation, most of the regions where prices have risen is due to contraction in supply, and the markets in the Beijing-Tianjin-Hebei and Guanzhong regions are relatively closed. Even if prices are restorative, the impact of external cement is limited. Coupled with fixed demand in the off-season, price increases will increase corporate profits, and enterprises are more willing to raise prices. Entering August, provinces such as Henan, Hubei, Heijiliao, and Ganqing will also push prices up one after another; the Yangtze River Delta region is affected by hot weather, downstream demand for cement is still weak. It is expected that clinker prices may continue to rise in a restorative manner, and cement prices will remain stable in the short term.

The glass industry

Last week's news: The average price of float glass nationwide was 1,253 yuan/ton last week, up 11 yuan/ton from the previous month. The national float glass inventory was 33.17 million weight boxes (1.67 million tons), down about 0.8% from the previous month. The market trend in July was rising steadily, and the sales situation of manufacturing enterprises was better than expected, showing a situation where price increases increased, and inventories of manufacturers decreased. The characteristic of this month's industry trend is that after mid-July in the southern region, market prices rose rapidly due to factors such as excessive differences between North and South and the impending end of the flood season. Market prices in central China also rebounded by a certain margin after the Yangtze River shipping returned to normal, changing the previous stalemate situation. Prices rose slightly in the northern region, and market demand was relatively good. During this period, torrential rain affected kilometer transportation for a period of time. Overall, the market trend in July was better than expected. Against the backdrop of off-season market demand, prices rose significantly.

Glass fiber industry

Last week's news: The domestic fiberglass market is running weakly, just in the off-season, and the market is running weak.

Investment logic

The top-down cycle logic of the building materials sector is not smooth. First, demand-side recovery is difficult to sustain. After an earlier “authoritative person” People's Daily article set the tone for supply-side reform policies, the logic of a strong demand-side recovery for cyclical products has been proven false. Subsequent infrastructure investment growth may remain stable in the short term, but real estate investment is expected to return to the medium- to long-term downward trend average; secondly, the supply-side reform logic in the building materials sector is weak. “Document No. 34,” a top-level design document for supply-side reforms in the building materials industry was published, but both the author of the paper and the goal of removing production capacity were clearly weaker than the steel industry. Furthermore, industry attributes (regional monopoly, collaborative discontinuation of production) are not conducive to rapid removal of production capacity.

Demand for cement has been curtailed for a short period of time this year due to floods, but it will be released centrally after the rain has passed, plusG20 summitDue to environmental production restrictions in East China, the peak season, which was supposed to begin in early September, may arrive early. Recently, there are signs of price increases in places such as Suxi. Currently, the level of institutional holdings in the cement sector is low, so it is recommended to focus on gaming opportunities caused by seasonal price increases. However, due to poor top-down logic in the cement sector, and the current valuation level is not at the bottom (they all have a certain premium over net assets), the rebound or is relatively short. Recommended to followHuaxin cement,Conch cement,Jidong cementetc

At present, we continue to recommend selecting industry segments and high-quality leading companies from the bottom up: first, new materials that are less relevant to the real estate industry chain: Changhai Co., Ltd., a leader in the glass fiber industry; second, equipmentconsumptionProperties of decorative building materials: waterproof material Dongfang Yuhong, board faucetBunnies, PPR pipe faucet for home decoration, Weixing New Material.

Risk warning: Investments declined more than expected,estatesContinued slump.