Cement prices continued to outperform last week given a supply cut and recovery of demand

■ The average cement price outperformed other sectors last week, increasing 11.0%

wow. Plastic pipe prices increased 4.52% wow, and the futures glass price was down

7.8% wow last week.

■ Building materials stocks under our coverage decreased by 6.33% wow, on average,

underperforming the Hang Seng Index (HSI) increase of 4.9%. Conch Cement-A’s

[600585.CH.HK; ADD] share price was best performer last week, while China Lesso

[2128.HK; ADD] was a laggard.

■ The underperformance of the building materials sector was due to concerns about

downstream segments, triggered by news flow on the China property sector. We

believe that the cement sector will continue to outperform, given the supply cuts due

to stringent implementation of dual energy consumption controls in some provinces

and the recovery of downstream demand during the peak season.