According to the research report released by Changjiang, since May, the strategy of cement-dominant enterprises has changed, and the continuous losses of small enterprises in the first half of the year have strengthened their self-rescue mentality, and the willingness to cooperate has significantly increased. Judging from the price performance of the past two months, staggered price increases are still useful, and the bottom signals are gradually clear. At present, the overall cash flow of cement enterprises is relatively abundant, and dividends have bottom-level support. The sector has value from the perspective of dividends. On the basic side, glass inventory continues to rise, glass fiber yarn prices have slightly weakened, and electronic yarns continue to rise. We continue to recommend retail building materials and glass fiber, and we are bullish on the sub-sectors of overseas and medicinal glass.

Cement continues to push up in a coordinated manner, and the bottom dividend value is showing.

The willingness to cooperate has increased, and cement prices continue to rise. At the beginning of July, the rainy weather gradually weakened, and cement demand was in a state of recovery. The average shipment rate of key cement enterprises in the country was about 47%, up 1.5 percentage points from the previous month, and down 7.9 percentage points year-on-year. In terms of prices, although prices in some areas have fallen slightly this week, most areas have arranged staggered production in the third quarter. Beijing, Tianjin, Inner Mongolia, Liaoning, and Guizhou continue to push up, with a range of 30-60 yuan/ton, while the cement clinker price in the Yangtze River Delta region has also risen again. Since May, the strategy of dominant enterprises has changed in combination with continuous losses in the first half of the year and the strengthening of corporate self-help mindset, the willingness to cooperate has significantly increased, and judging from the price performance of the past two months, staggered price increases are still useful, and the bottom signals are gradually clear.

At present, the overall cash flow of cement enterprises is relatively abundant, and dividends have bottom-level support. 1) The spot cash flow is good, generally cash sales, and there are basically no accounts receivable; 2) Capital expenditures are converging, and profits are declining. The expansion of gravel is gradually coming to an end, and the investment in technological transformation is slowing down; 3) Cash reserves are more sufficient, and the last round of prosperity cycle lasted for a long time. The profit level has been maintained well from 2016 to 2021; 4) SOEs mainly distribute dividends, and the incentives for dividends are increasing under the background of overall fiscal pressure and the increase in the assessment of SOEs on listed companies. Taking into account the current prosperity cycle, we estimate that the main stocks with high dividend yields corresponding to bottom-line profits are: Huaxin Cement H, WestChinaCement, Gansu Shangfeng Cement, Guangdong Tapai Group, Conch Cement H, etc. Considering the marginal downside of the industry in the next two years, the current bottom dividend yield has strong support attributes, and there may be unexpected space in the future.

On the basic side, glass inventory continues to rise, glass fiber yarn prices have slightly weakened, and electronic yarns continue to rise.

Real estate high-frequency sales: In the past week, the rolling transaction area of ​​commodity houses in the top 30 cities in China compared with the same period last year was -1% (2% last week), and the rolling transaction area of ​​second-hand houses in 12 cities compared with the same period last year increased by 24% (54% last week). Since July, the high-frequency sales of real estate maintain a relatively good relative performance.

Glass: The domestic glass prices have mainly decreased this week. After the price reduction in North China, the enthusiasm of traders for replenishment has increased, and the daily production and sales of sample companies under monitoring have improved. In some areas of Central China, East China, and South China, affected by rainy weather and capital pressure factors, the majority of downstream areas are mainly for rigid demand replenishment, and market sentiment is overall bearish. The production capacity remained stable this week. There are a total of 301 float glass production lines in the country, 249 of which are in production, and the daily melting amount totals 169,565 tons. There are no changes in production lines this week. The total inventory of production companies in key monitoring provinces this week was 55.49 million weight boxes, an increase of 0.7 million weight boxes month-on-month, an increase of 1.28%, and the number of days of inventory is about 27.11 days, an increase of 0.34 days month-on-month. The production in key monitoring provinces this week was 13.1246 million weight boxes, the consumption was 12.4246 million weight boxes, and the production-sales ratio was 94.67%.

Glass fiber: 1) Non-alkali yarn: The market price of non-alkali yarn is stable and slightly weak. The prices of some factories have adjusted to some extent compared to the previous period, but the prices of major factories are basically stable. The short-term market has a strong willingness to push prices up. At present, the continuous orders of deep processing factories are limited. In addition, multiple factors such as temperature and rainfall have affected the weak performance of the off-season demand. We pay attention to the recovery of demand after the peak season in the second half of the year. 2) Electronic yarn: The market price of electronic yarn has increased slightly this week, with a total increase of 100-300 yuan/ton, and the mainstream quotation of 7628 electronic cloth has increased slightly by 0.1 yuan/meter. The downstream CCL manufacturers have stable orders and tight supply. It is expected that there will be upward elasticity in the future.

Investment point of view: We continue to recommend retail building materials and glass fiber, and we are bullish on sub-sectors such as overseas and medicinal glass.

1) There are opportunities at the bottom of the real estate chain, and back-end consumer building materials are allocated. New and old houses in the real estate industry are at the bottom, and the industry is gradually entering a stock period.

Retail companies have gradually emerged from the bottom of their operation due to good cash flow, less downward pressure in the industry, and relatively stable profitability. Among them, Beijing New Building Materials Public has achieved accelerated operation through a high strategic level, Dehua TB New Decoration Material benefits from rational consumption, and SKSHU Paint has performance elasticity. 2) Pay attention to the turning point of fiberglass. The basic fundamentals of the fiberglass industry have turned, and the supply and demand of fiberglass are expected to reverse in 2024. Focus on the elasticity of electronic cloth and emerging demands (such as photovoltaic frames). Recommend China Jushi Co., Ltd, Jiangsu Changhai Composite Materials, Sinoma Science & Technology, etc. 3) Bullish on segmented prosperous tracks. Recommend Keda Industrial Group and Huaxin Cement, pharmaceutical glass (Shandong Pharmaceutical Glass + Linuo Te Glass) with increased borosilicate penetration rate, Zhejiang Xiantong Rubber&Plastic, etc.

Risk warning

1. Real estate demand recovery is lower than expected; 2. Raw material prices have risen sharply.