Dongfang Securities: Domestic building materials market demand remains sluggish, and companies going abroad deserve close attention

According to the Zhitong Finance APP, Dongfang Securities released a research report stating that under the overall suppression of demand in the real estate sector, the demand for building materials is relatively sluggish, and domestic building material companies are still facing operational pressure. In contrast, in terms of companies going overseas, both Huaxin Cement and Keda Group have delivered impressive operational results in the first three quarters. Some market views believe that under the influence of the real estate market, building material companies are unlikely to see significant improvements in either performance or expectations. However, it is an objective fact that building material companies are facing development pressures, but some companies, through forward-looking layouts and effective resource integration, continue to deepen their efforts in overseas markets, with promising development prospects. The main points of Dongfang Securities are as follows: Domestic building material market demand remains sluggish According to data from the National Bureau of Statistics, from January to September 2025, the construction area of houses in China was 6.49 billion square meters, a year-on-year decrease of 9.4%; the area of newly started construction was 450 million square meters, a year-on-year decrease of 18.9%; and the area of completed houses was 310 million square meters, a year-on-year decrease of 15.3%. From the relevant data, it can be seen that the demand for building materials in the real estate sector is still declining. Correspondingly, according to data from the Cement Network, during the same period, China's cement production was 1.26 billion tons, a year-on-year decrease of 5.2%. It is evident that under the overall suppression of demand, the demand for building materials is relatively sluggish, and domestic building material companies are still facing operational pressure. Outstanding performance of overseas building material companies in the third quarter As a model for going overseas in the building materials sector, Huaxin Cement and Keda Group both delivered impressive operational results in the first three quarters of 2025. Huaxin Cement achieved a net profit attributable to shareholders of 2 billion yuan, a year-on-year increase of 76.0%. According to the company's 2025 semi-annual report disclosure, the company has established production bases in 12 overseas countries, with overseas cement grinding capacity reaching 24.7 million tons per year, achieving operating revenue of 4.13 billion yuan (accounting for 45.1% of total revenue), a year-on-year increase of 15.4%. Keda Group achieved a net profit attributable to shareholders of 1.15 billion yuan, a year-on-year increase of 63.5%. The company's overseas building materials business mainly covers the building material needs of the population in sub-Saharan Africa, with a production capacity of approximately 100 million square meters of ceramic products, a year-on-year increase of about 17.0%, and float glass production exceeding 170,000 tons. Driven by both volume and price, the company's overseas building materials business achieved overall revenue of 3.77 billion yuan, a year-on-year increase of 90.1%. Deepening overseas enterprises deserve special attention Against the backdrop of continued sluggishness in the domestic market, most listed building material companies have faced significant operational challenges, and the breakthrough for corporate development may lie in going overseas. Whether it is laying out along the "Belt and Road" countries or expanding markets to developed countries in Europe and America, Chinese companies have been continuously trying in recent years. Currently, the relatively successful cement leader—Huaxin Cement, and the overseas tile leader—Keda Group, may have become models in this regard. Chinese building material companies that are on the path of going overseas, with the continuous deepening of their layouts, will become effective supplements to domestic businesses and write a new chapter in development. Target aspects It is recommended to pay attention to the relevant targets Huaxin Cement (600801.SH) and Keda Group (600499.SH) Risk Warning Further decline in domestic demand for building materials, building material companies' overseas business layout not meeting expectations, exchange rate fluctuation risk