The Zhitong Finance app learned that China Galaxy Securities released a research report saying that cement prices have changed from rising to falling this week, the market has gradually entered a low season, and demand has fluctuated. It is expected that prices will rise and fall in different regions in the future, and overall prices will fluctuate. Recommended regional cement companies Huaxin Cement (600801.SH) and Shangfeng Cement (000672.SZ). In terms of consumer building materials, leading enterprises are continuously adjusting sales strategies and product structures according to market demand to accelerate the decline in channels and the market size of retail business. The market share of enterprises is expected to continue to increase. Recommend Dongfang Yuhong (002271.SZ), Gongyuan Co., Ltd. (002641.SZ), Weixing New Materials (002372.SZ), etc.

The main views of China Galaxy Securities are as follows:

Cement: Prices have changed from rising to falling, and inventories have declined. On the demand side, demand in the northern region has declined further due to lower temperatures, and the southern market has a certain demand to catch up with work. This week, the average starting load of cement mills nationwide increased 1.62 percentage points from last week. On the supply side, most regions in the north have already entered the heating season, and some regions in the south, such as Sichuan, Chongqing, and Fujian, have announced production plans for 2024. It is expected that the number of cement enterprises entering the wrong peak production will gradually increase, and the supply volume of the industry will decrease, reducing the pressure on enterprise inventories. In terms of prices, cement prices have changed from rising to falling this week. The market has gradually entered a low season, and demand has fluctuated somewhat. It is expected that prices will rise and fall in different regions in the future, and overall prices will fluctuate. It is recommended to pay attention to the demand situation for pre-holiday work in the southern region and the shutdown of clinker production lines.

Float glass: The company made concessions to the treasury, and the price dropped further. The price of float glass continued to fall this week. On the demand side, overall demand in the float glass market is weak. As the weather gets colder, demand in the northern region is gradually declining. Demand for rushing work in the southern market supports shipment volume, and glass companies are more willing to make concessions to ship, so it is expected that demand for subsequent shipments will continue. On the supply side, the supply of float glass increased slightly this week. Two new production lines were set up during the week, and production was changed to 1. Glass companies made concessions on shipping, market prices moved downward, and float glass companies' inventories were further reduced. Float glass companies' inventories fell 2.14% month-on-month this week. Looking at the short term, there is still demand for rushing to work in the southern region, which has some support for regional market demand; the high growth rate of real estate completion in the medium to long term is expected to continue, and demand for float glass is expected to rise. It is recommended to focus on leading glass companies that benefit from improvements at the finished end.

Glass fiber: The prices of thick yarn and electronic yarn are running smoothly. Prices for thick yarn from some mainstream glass fiber manufacturers have been stable for the time being this week. Overall demand for thick yarn is weak, and the performance of middle and downstream orders is average. Electronic yarn prices have been running smoothly this week. Market demand is mainly based on on-demand procurement, and most manufacturers have average shipments. Currently, the cost level is high, and there is some support for prices. Heavy yarn inventories are high, and the pressure on enterprises to remove stocks is high. In the short term, weak demand is compounded by pressure on manufacturers to remove stocks, and prices maintain weak operation. In the medium to long term, the downstream glass fiber industry continues to expand, and the industry still has a lot of room for development. It is recommended to pay attention to leading enterprises in the glass fiber industry.

Consumer building materials: Monthly sales have further improved. From January to October 2023, retail sales of construction and decoration materials fell 7.5% year on year, and the decline was 0.4 percentage points narrower than in January-September. Among them, the monthly decline in October fell 4.8% year on year, the monthly decline was 3.4 percentage points narrower than in September, increased 2.8% month over month, and the monthly retail sales of consumer building materials continued to improve. Favorable real estate policies continue to increase, driving up demand in the real estate chain, and demand for consumer building materials is expected to increase further. Leading consumer building materials companies are continuously adjusting their sales strategies and product structures according to market demand to accelerate the decline in channels and the market size of retail business. The market share of enterprises is expected to continue to increase. It is recommended to focus on leading consumer building materials companies.

Investment advice:

Consumer building materials: Dongfang Yuhong (002271.SZ), Gongyuan Co., Ltd. (002641.SZ), Weixing New Materials (002372.SZ), Beixin Materials (000786.SZ), and Baby Bunny (002043.SZ) are recommended, which have advantages in scale and product quality. Glass fiber: We recommend China Jushi (600176.SH), a leading glass fiber company with further expansion of production capacity.

Cement: Recommended regional cement companies Huaxin Cement (600801.SH) and Shangfeng Cement (000672.SZ).

Glass: It is recommended to focus on Kibing Group (601636.SH) and Kaisheng Xinneng (600876.SH), which have increased their share of high-end products.

New materials: It is recommended to focus on SiBao Technology (300019.SZ), where demand for industrial adhesives is growing.

Risk warning:

The risk of large fluctuations in raw material prices; the risk that downstream demand falls short of expectations; the risk that the industry's new production capacity exceeds expectations; and the risk that real estate policies do not advance as expected.