Looking ahead to 2025, the product sales area is expected to drop 6.5% year on year in 2025, and the market is still bottoming out, but the central government's clear policy support in the direction of “stopping the decline and stabilizing” can still be expected.
The Zhitong Finance App learned that Ping An Securities released a research report saying that since 2024, the building materials sector has outperformed the market. Judging from the fundamentals of building materials, various segments of the building materials industry will continue to be under pressure in 2024, and performance has generally declined sharply. Judging from stock price trends, the building materials sector is highly correlated with trends in the real estate sector, and there was a rebound brought about by the introduction of two policies throughout the year. Looking ahead to 2025, the product sales area is expected to drop 6.5% year on year in 2025, and the market is still bottoming out, but the central government's clear policy support in the direction of “stopping the decline and stabilizing” can still be expected. In industry segments, infrastructure demand is expected to improve. The overall pressure on cement may be less than 2024, and the supply-side industry's erratic peak is expected to be maintained. Judging that cement prices and profit centers will increase by a certain margin compared to 2024.
Ping An Securities's main views are as follows:
Market recovery: weak reality and strong policy catalysis, the core still depends on real estate.
Since 2024, the building materials sector has outperformed the market. Judging from the fundamentals of building materials, various segments of the building materials industry continued to be under pressure in 2024, and performance generally declined sharply. Judging from stock price trends, the building materials sector is highly correlated with trends in the real estate sector, and there was a rebound brought about by the introduction of two policies throughout the year. Looking ahead to 2025, the product sales area is expected to drop 6.5% year on year in 2025, and the market is still bottoming out, but the central government's clear policy support in the direction of “stopping the decline and stabilizing” can still be expected.
Referring to 2014-2016, which benefited from real estate policy incentives in the second half of 2014, the building materials sector and real estate both achieved good absolute returns and excess returns; the 2015-2016 H1 building materials sector performed poorly; despite absolute returns, the excess earnings were not obvious; the 2016 H2 performance improved dramatically, and the sector's excess revenue was obvious; the performance of various segments was divided, and the overall performance of consumer building materials was the best.
Consumer building materials: Depreciation pressure is gradually easing, and there is still growth in the long run.
Dragged down by the downturn in real estate, the fundamentals of consumer building materials continued to be under pressure in 2024. Performance generally declined a lot, and demand in 2025 is still hard to say optimistic. The optimistic factor is that the industry's impairment calculation is relatively sufficient, future pressure is gradually easing, and at the same time, improvements in downstream real estate sales or policy increases are expected to restore sentiment in the industrial chain. Looking at the pattern, waterproofing and other industries continue to clear up, leading companies are more resilient in their performance by expanding categories and channels, and will show strength in the future. Compared to European and American countries, there is more room for increasing the concentration of domestic consumption of building materials. At the same time, leading overseas experience shows that excellent companies still have good growth performance after experiencing a crisis.
Cement industry: Focus on positive changes on the supply side, and the profit center is expected to move upward.
In 2024, cement companies began multiple rounds of price increases. The national average price in the second half of the year was higher than the same period last year. Among them, Northeast China, Yangtze River Delta, South China and other places all experienced price increases to varying degrees. Looking at the driving factors, the demand side is a drag. Localized debt constrains infrastructure investment, and new real estate starts to decline; as leading companies focus on profit rather than share, the supply-side synergy between the industry is unprecedented, driving up prices. Looking ahead to 2025, infrastructure demand is expected to improve, and the overall pressure on cement may be less than 2024. The supply-side industry's erroneous peak is expected to be maintained. Judging that cement prices and profit centers will increase by a certain margin compared to 2024. At the same time, pay attention to supply-side changes, especially the implementation of cement overproduction control (effective or directly effective for the industry to clear production capacity) and progress in incorporating cement into carbon trading.
Glass industry: PV glass profits are expected to recover, and the cost curve is still steep.
The price of photovoltaic glass plummeted in 2024, and the industry generally lost money. Mainly due to the decline in PV module production schedules after April, and module companies suffered serious losses, suppressing prices in the industrial chain; in addition, the scale of glass production line ignition exceeded expectations for half a year. Looking ahead to 2025, global PV installations are expected to continue to grow by about double digits. At the same time, in the context of overall losses in the photovoltaic glass industry, cold repair production cuts will continue. In the future, as inventories fall, prices will rise again, and the center may be higher than in 2023.
From an investment perspective, the current focus of the industrial chain is still on the demand side, focusing on changes in the industrial chain such as installation and profit; secondly, the cost curve of photovoltaic glass companies is still steep, and the advantages of leading companies are still prominent. In terms of float glass, the sharp drop in prices in the first three quarters stemmed from the contradiction between continued weakening demand and high production capacity. The current sign that float prices are bottoming out is relatively clear, but there may be limited room for further upward movement. Compared to float glass, considering the overall increase in PV demand, the supply and demand pattern is expected to reverse in the future. The cash flow pressure on superimposed photovoltaic glass companies is greater, and photovoltaic glass may be more interesting.
It is recommended to focus on the target
In terms of consumer building materials, it is recommended to focus on Beixin Building Materials (000786.SZ), Rabbit Baby (002043.SZ), three trees with high elasticity (603737.SH), Dongfang Yuhong (002271.SZ), Keshun (300737.SZ), and Wrigley Home (001322.SZ), which have outstanding retail brands and channel advantages, and Weixing New Materials (002372.SZ); on the cement side, there are positive changes on the supply side, and the profit center is expected to move upward, and the profit center is expected to move upward. Of the logic of taking a break and going out to sea Conch Cement (600585.SH) and Huaxin Cement (600801.SH); in terms of glass, focus on Kibing Group (601636.SH) and Follett (), which are expected to recover profits and continue to expand production capacity. 601865.SH
Risk warning:
1) Risk of real estate sales repair or infrastructure demand falling short of expectations: Under the continued strength of real estate policies, if subsequent sales repairs fall short of expectations, it will affect future demand performance for building materials; similar to infrastructure investment, if physical demand falls short of expectations, it may also cause demand for building materials such as cement to continue to weaken, leading to pressure on volume and price.
2) The building materials industry pattern clears up faster than expected risk: the problem of overcapacity in cement and glass is serious. If subsequent cement production and float glass cold repair progress falls short of expectations, superimposed real estate demand continues to shrink, which will cause the profit of the cyclical building materials industry to continue to decline.
3) Risk of rising raw materials and fuel prices: If the cost of coal, petroleum, asphalt, etc. rises later, it will limit the recovery of profit margins of building materials companies.
4) Untimely collection of accounts receivable and risk of asset impairment: If there is no significant improvement in the real estate capital environment and the default situation of housing enterprises in the subsequent period, it will lead to the risk that accounts receivable will not be collected in a timely manner, pressure to collect bad debts will increase, and even the tight capital flow will worsen.
