Cement and building materials are expected to rebound in the third quarter of the industry (recommended 23 shares)

According to the 2011 performance of the SWS Group, the average annual income growth was 11%, and the average operating profit increased by 25.48%. The growth rate was significantly lower than the 2010 average. As the industry performance in 2011 was at the highest point in history, after the third quarter of 2011, the operating income of the industry declined significantly, while the profits accelerated to drop significantly.

We believe that under the steady trend of investment in fixed assets, there is no overall trend opportunity for the construction and building materials industry. Therefore, we maintain the industry's investment rating of “synchronous market”. However, in the second half of the year, there are structural opportunities for subdividing the industry and giving differentiated ratings to the sub-industries: cement, glass, decorative gardens, pipes, and additional sub-sectors of hydropower engineering that we focus on give “outperform” ratings. In the “synchronous market” of other building materials and infrastructure construction subdivision industries, the subdivided industries of ceramic manufacturing, refractory materials, and housing construction were rated “weaker than big cities”.

The cement industry is likely to have bottomed out in the traditional off-season in the third quarter, but it depends on whether the leading indicators can continue to pick up. It is recommended that the industry be gradually deployed in the third quarter with a focus on the company: Conch Cement, ST Qinling, and Qilian Mountain. Shares), Jidong Cement (shares), Huaxin Cement (shares).

Due to the bottoming out of the price, the glass industry is paying close attention to the trading opportunities launched by the glass at the end of June and early July. Focus on the company: Amaranten, AVIC Sanxin (Stock Bar), CSG A, Qibin Group.

The decorative garden industry has seen a large increase recently, rising by about 31% since May, while the Shanghai-Shenzhen 300 Index rose by only 1%. Among them, Golden Harvest, Yaxia Shares, Hongtao Shares, Hirota Shares and Ruihe Shares rose by 30% respectively. 33%, 29%, 34%, 15%. We focus on the company: Tiehan Ecology, Jinyu, Yaxia shares, and Oriental gardens, but we need to combine the valuation level to configure.

The tubing industry benefits from the investment in water conservancy. We are concerned about key companies with strong orders acquisition ability and excellent corporate governance: Guotong shares, Qinglong management, Nachuan shares and Longquan shares.

The hydropower project is in a golden period of construction. We focus on Guangdong Hydropower and Anhui Water Conservancy (shares), which have China's hydropower and theme investment opportunities with valuation advantages.

Stock Recommendations: Because of the great differences among different industry segments, we are concerned about the selection of high-quality stocks in the sub-industry that is rated as “Outperform”, but the selection of our entire industry is based on absolute growth because of the phased growth of individual stocks. Sex far beyond the industry, it is not classified according to the industry, only at the end of the year to review the recommended returns. According to the order of possible investment returns, Beixin Building Materials (Group), Tiehan Ecology, Jianyan Group, and 3D Engineering.