According to the Zhitong Finance APP, Tianfeng Securities has released a research report stating that the current prosperity of the building materials sector is still on the left side, but with the improvement of front-end data and the continuous promotion of policies such as debt reduction and stockpiling, bottom signals may be gradually approaching. For consumer building materials: the sales turning point is imminent, and it is optimistic about the new round of growth brought by the release of stock demand. Cement: The supply-side reform in 2025 is expected to gain momentum, and profit growth elasticity may be optimal. Glass fiber: The peak period of phased ignition has passed, and demand in the new energy sector is expected to increase. Glass: The industry's cold repair is expected to accelerate, and attention should be paid to the dynamic balance of supply and demand.

The main views of Tianfeng Securities are as follows:

The institution believes that the current prosperity of the building materials sector is still on the left side, but with the improvement of front-end data and the continuous promotion of policies such as debt reduction and stockpiling, bottom signals may be gradually approaching. In 2024, cement and glass fiber will begin to recover prices, and the supply side in 2025 is expected to continue to gain momentum, supporting prices to continue to recover. Considering the low base and differences in industry attributes, the performance elasticity of cement may be optimal. The medium to long-term growth potential of consumer building materials is the best, and after the stabilization of new construction, the effect of stock demand on performance is expected to become more prominent. Some C-end companies are expected to show strong alpha with revenue growth against the trend in 2024, and continue to be optimistic about the long-term improvement of the profitability and operational quality of high-quality leading companies.

Consumer Building Materials: The Sales Turning Point is Imminent, Optimistic About the New Round of Growth Brought by the Release of Stock Demand

Since the end of September, the intensity of real estate policies in China has increased, and the fundamentals of the real estate market have shown marginal recovery. In November, the monthly sales area is expected to achieve positive growth year-on-year, and the fundamentals of new construction may gradually stabilize at the bottom. Meanwhile, the cumulative sales of second-hand houses have achieved positive growth, with the proportion rising to 65%. It is expected that there is still a 15-25% improvement space in the medium to long term, and the effect of stock demand will become increasingly significant. Comparing with the experience in the United States, real estate sales began an upward cycle in the second half of 2011 and continued to grow for nearly ten years, with a CAGR of about 7%. Leading consumer building materials companies have welcomed a new round of growth through horizontal and vertical expansion, leveraging their cash flow and leveraging advantages. For example, Sherwin-Williams achieved a profit CAGR of 13% from 2009 to 2023, realizing excess profits. In comparison with domestic companies, as funding conditions improve and customer structures adjust, cash flow has begun to improve, and the performance of C-end products has shown strong resilience, achieving year-on-year revenue growth even during the beta downturn period. As the new construction in real estate reaches the bottom, the growth brought by channel expansion and product expansion will further become apparent. Recommended companies include SanKeShu, Beixin Building Materials, Weixing New Materials, and TuBaoBao.

Cement: The Supply-Side Reform in 2025 is Expected to Gain Momentum, and Profit Growth Elasticity May Be Optimal

In 2025, benefiting from the advancement of physical work volume in infrastructure and the stabilization of new construction in real estate, the decline in demand is expected to narrow. The supply side will gradually gain momentum. In the short term, staggered production remains the most effective means to adjust the supply-demand balance. In 2025, as policies to restrict overproduction become increasingly stringent, companies that have closed down will exit small and medium-sized capacities by making up for overproduction indicators, and the industry is expected to begin to achieve a true capacity clearance. Starting in 2027, the industry will enter a stage of deepening and improving carbon trading, and the optimization effects of industry capacity are expected to become more apparent. In October, significant price increases began in the East China Yangtze River Delta region and gradually spread to Central and South China. Profits are expected to begin to emerge from the bottom in the fourth quarter, laying a good foundation for prices at the beginning of 2025. Under the dual promotion of policy-driven supply-side and the growing profit demands of enterprises, self-restraint is strengthened. Continue to be optimistic about the upward elasticity of profits for domestic cement companies in 2025, and recommend Conch Cement Huaxin Cement, Shangfeng Cement, and China Resources Cement Technology, focusing on growth potential, recommend the leading company in Africa's overseas expansion, West Cement.

Fiberglass: The peak period of phased ignition has passed, expecting demand in the new energy sector to ramp up

In 2025, driven by domestic macroeconomic growth, the demand growth outlook remains relatively positive, with wind power and photovoltaics as the main growth points. The automotive and electronics sectors are further recovering, while the export side may face pressure from increased tariffs, which is relatively favorable for leading companies with overseas layouts. On the supply side, it is expected that in 2024, the industry's new ignition/cold repair production capacity will total 1.17 million tons, a year-on-year increase of 121%. The pressure for new ignition in 2025 is expected to begin to decline, but considering that the capacity release in 2024 will mainly be concentrated in the second half of the year, the supply side may still face certain short-term shocks in the first half of 2025. However, it may gradually weaken in the second half of the year, and with the increase in cold repair demand, it is also expected to offset some of the pressure from the new production capacity. In 2024, fiberglass prices experienced two rounds of concentrated price recovery, and the bottom has basically been solidified. In 2025, the advantages of leading companies in product structure and capacity layout may further stand out. Pay attention to structural opportunities under differentiated competition, recommending China Jushi and CHANGHAI, and suggesting to focus on Honghe Technology.

Glass: The industry's cold repair is expected to accelerate, pay attention to the dynamic balance of supply and demand

We expect that there will still be downward pressure on the completion side in the future, but the stock renovation and the increase in deep processing penetration will provide some support for glass demand. On the supply side, the current potential cold repair capacity in the industry accounts for about 28%. The current profit environment helps accelerate the cold repair pace of glass companies, and future supply and demand are expected to achieve dynamic balance. Affected by price declines, the current average profit in the industry may be in a loss state. In 2025, the cost side's soda ash price may still have a downward expectation. We expect limited further downward space for profits, focusing on opportunities for phased price rebounds, while the diversified layout of float glass companies is expected to achieve new profit growth points. Recommended companies include Qibin Group and Jinjing Technology.

Risk warning: Downstream infrastructure and real estate demand may be less than expected, raw material and coal price increases may exceed expectations, capacity release may exceed expectations, and the calculations in this article have a certain subjectivity, etc