Zhitong Finance APP learned that China Post Securities released a research report stating that expectations for domestic demand are strengthening, focusing on industries such as waterproofing and cement: With the intensification of debt reduction policies and the backdrop of overseas interest rate cuts, expectations for domestic demand are continuously strengthening. Attention should be paid to industries that significantly benefit from improved cash flow logic and are still at the bottom of the economic cycle, such as waterproofing, cement, and float glass.

The main points of China Post Securities are as follows:

Event: This week, Finance Minister Lan Fo'an stated at a press conference held by the State Council Information Office that during the 14th Five-Year Plan, efforts will continue to coordinate development and security, accelerate the establishment of a government debt management mechanism that aligns with high-quality development, and provide strong support for stable and long-term economic growth through debt reduction in development and development in debt reduction. Among them, in terms of existing debt, efforts will continue to implement a package of debt reduction measures, advance the issuance of part of the new local government debt limit for 2026, utilize the debt reduction quota in advance, and adopt multiple measures to resolve existing hidden debts.

Cement: On July 1, the Cement Association released a document in response to the anti-involution policy, and the bank judges that this will promote better implementation of policies to limit overproduction. In the short term, as September gradually enters the peak season, overall demand shows some recovery but limited growth. On the infrastructure side, due to weather disruptions and the pace of demand release, its impact on demand has not fully manifested. On the housing construction side, demand remains in a weak recovery state. From a medium-term perspective, the cement industry’s capacity is expected to continue to decline under the policy to limit overproduction, significantly improving capacity utilization. Currently, the cement industry is at a low point in both demand and prices during the off-season. Attention: Conch Cement, Huaxin Cement.

Glass: The fundamentals currently lack support, and the demand side has not yet shown the characteristics of a traditional peak season. The industry still faces supply-demand contradictions, with limited improvement in downstream terminal demand. It is expected that spot prices will continue to fluctuate at the bottom. The demand side of the industry has shown a continuous downward trend under the influence of real estate, with demand performing reasonably well during the off-season from June to August, but supply and demand still have contradictions. On the supply side, considering that most companies in the float glass industry can now meet environmental protection requirements, it is judged that the anti-involution policy will not lead to a one-size-fits-all capacity clearance, but will still raise environmental protection requirements and costs, accelerating the industry's cold repair progress. Attention: KIBING.

Fiberglass: The demand for traditional alkali-free coarse sand is performing flat, while the segmented fields are showing prosperity. This year, the industry is driven by the demand boom in the AI industry chain, with low dielectric products experiencing simultaneous increases in both volume and price. Currently, the structure upgrade of first, second, and third generation (Q fabric) products is clear, and industry demand is expected to show explosive growth alongside AI, with a positive outlook for the sustained trend of increasing volume and price in the industry. Attention: China Jushi, China National Building Material.

Consumer Building Materials: The industry’s profitability has currently bottomed out, and prices have no downward space after years of competition. This time, leveraging the anti-involution policy, the industry has a strong demand for price increases and profit improvement. Since the beginning of this year, multiple categories such as waterproofing, coatings, and gypsum boards have continuously issued price increase letters, and industry profitability is expected to improve from the bottom. In the second half of the year, improvements in profitability for leading enterprises can be anticipated. Attention: Dongfang Yuhong, Sankeshu, Beixin Building Materials, Tubao.

Risk Warning: The implementation of the anti-involution policy may fall short of expectations, the risk of real estate demand declining beyond expectations, and the risk of infrastructure demand being lower than expected