As the absolute leader in China’s waterproofing industry, Oriental Yuhong is entering a critical stage of transformation from “cyclical predicament” to “structural growth.” An in-depth tracking report systematically reveals the company’s strategic breakthroughs in four dimensions: industry consolidation, channel reshaping, category expansion, and globalization, showcasing a clear path for medium- and long-term development.
First, the domestic waterproofing industry is at an inflection point of accelerated consolidation and optimized structure. Affected by the continued pressure on real estate demand, stricter environmental policies, and significantly higher regulatory standards, the overall industry size has declined continuously since 2021. Small and medium-sized enterprises have been forced to exit due to cost pressures and compliance thresholds, resulting in a significant increase in market concentration. Data shows that from 2019 to 2024, the CR5 (market share of the top five companies) of the waterproofing materials industry jumped from 21.7% to 32.2%, while Oriental Yuhong, with its comprehensive advantages in brand, channels, capital, and technology, increased its market share from 15.8% to 22.0%, demonstrating an increasingly obvious trend of the strong getting stronger.
Regarding pricing, after the fierce price war of 2023-2024, leading companies collectively raised prices in June and July 2025, marking the end of the era of low-price competition and a potential recovery period for industry profitability.
Secondly, the company’s operational quality has undergone a historic improvement, and risks have been significantly mitigated. In the past few years, the high proportion of direct real estate sales led to high accounts receivable, becoming a core concern for the market. However, the report points out that the company has achieved significant results by proactively shrinking its high-risk direct real estate sales business and vigorously promoting a channel reform of “retail priority, partner priority”.
</ … In the first half of 2025, the company's revenue from retail and engineering channels accounted for 84.1%, while the proportion of direct sales revenue dropped significantly from 41.3% in 2022 to 15.0%, effectively cutting off excessive reliance on the real estate sector. In terms of financial performance, net operating cash flow in the first three quarters of 2025 reached RMB 416 million, an increase of RMB 909 million year-on-year, marking the first positive year-on-year growth in nearly ten years. Accounts receivable also saw a significant reduction, and the balance sheet continued to clear. Meanwhile, the pledge ratio of the actual controller, Li Weiguo, and his concerted parties decreased from 77.98% at the end of 2024 to 42.86% in October 2025, significantly reducing governance risks. Third, the diversified strategy and the creation of a second growth curve have yielded significant results. The company is no longer limited to its traditional waterproofing business but is actively building a "waterproofing+" ecosystem. Firstly, retail channels have become a crucial foundation, accounting for 37.3% of revenue in the first half of 2025. The subsidiary, Minjian Group, contributed the vast majority of retail revenue and provides repair and renovation services through its C-end service platform, "Yuhong," transitioning to a "product + service" model. Secondly, the sand and powder business has become a clear "second growth curve." The company's production capacity has jumped to the tens of millions of tons level, with a compound annual growth rate of 48.7% in revenue from 2020 to 2024. By investing in upstream sand mining resources and building production bases nationwide, the company has constructed an integrated industrial chain of "mining—high-quality sand production—mortar manufacturing," effectively controlling costs and improving gross profit margins. In the future, specialty mortars (such as tile adhesive and waterproof mortar), as high value-added products, will become the core growth driver. Thirdly, the company is actively expanding its product categories around its core waterproofing business, extending into coatings, grout sealants, pipes, and other basic and auxiliary materials. In the first half of 2025, revenue from other main businesses increased by 47% year-on-year, indicating a huge potential market space.
Finally, overseas markets have become the “third growth curve” to break through the long-term ceiling. The company has listed overseas expansion as a strategic priority, promoting it through the coordinated development of “trade, investment, and mergers and acquisitions”. In terms of trade, it relies on international engineering projects to export its advantageous products such as polymer waterproof membranes; in terms of investment, it has built production, R&D, and logistics bases in Houston, USA, Malaysia, Mexico, and other places to achieve localized supply; in terms of mergers and acquisitions, it has successively acquired equity in Hong Kong Wanchang Hardware, Chilean Construmart, and Brazilian Novakem, quickly acquiring mature channels and customer resources. The compound annual growth rate of overseas revenue reached 37.0% from 2020 to 2024, and continued to grow by 42.2% year-on-year in the first half of 2025. With the commissioning of overseas production bases and the completion of mergers and acquisitions, the profitability of overseas business is expected to continue to improve, becoming a new lever for the company’s profit and valuation restructuring. In summary, Oriental Yuhong has transformed from a traditional building materials company deeply affected by the real estate cycle into a comprehensive building materials system service provider that mitigates risks through internal reforms, creates incremental growth through diversified layouts, and opens up space through global expansion. In the short term, industry restructuring and price recovery will bring performance elasticity; in the medium to long term, the deepening of retail channels, the growth of new businesses such as sand and powder, and the comprehensive development of overseas markets together constitute the company’s sustainable growth momentum. Although it still faces risks such as the macro environment, raw material fluctuations, and overseas operations, its substantial improvement in fundamentals and clear strategic path make it a highly valuable investment at the current juncture.
