As the absolute leader in the construction waterproofing industry, Oriental Yuhong has achieved an upward operating turning point during the period of deep adjustment in the industry.
In 2025, the core waterproofing business will recover quarter by quarter, and emerging businesses will increase in volume to form a second growth curve.
Against the background of relaxed real estate policies, release of infrastructure demand and optimization of the industry structure, the company is transforming from a cyclical stock in the real estate chain to a value growth stock with “main waterproofing business + diversified building materials”.
In 2026, as waterproof business revenue returns to positive growth, emerging businesses increase in scale, combined with overseas market breakthroughs and cost-end improvements, the certainty of the company’s performance growth continues to be consolidated.
As the company’s basic business, the main business of waterproofing will show a recovery trend of improving quarter by quarter in 2025 and fully turning positive in Q3.
In the first half of 2025, affected by pressure on industry demand and early price competition, the overall waterproofing business is still in a period of adjustment: waterproofing membranes achieved revenue of 5.513 billion yuan, a year-on-year decrease of 8.84%; waterproof coatings achieved revenue of 3.946 billion yuan, a year-on-year decrease of 17.11%, and the revenue of the two core categories both experienced periodic declines.
However, in the third quarter, with the release of demand for the renovation of Baojiao buildings and urban villages and the implementation of product price increases, the waterproofing business has reached a clear turning point: waterproofing membrane Q3 sales increased by more than 12% year-on-year, revenue increased by more than 5% year-on-year, volume growth was better than price growth, annual shipments exceeded 800 million square meters, and production capacity was fully released; waterproof coating Q3 sales achieved single-digit growth, revenue increased by 15% year-on-year, price growth was better than volume growth, and simultaneous price increases at the retail and engineering ends drove revenue performance ahead.
Judging from the quarterly trend, the waterproof business fell by more than 16% year-on-year in Q1, the decline in Q2 narrowed to 5.64%, and Q3 bucked the trend and grew by 8.51%, ending seven consecutive quarters of year-on-year decline and officially bottoming out.
In 2026, with the dual support of the improvement in the margin of new real estate construction and the increase in demand for infrastructure waterproofing, waterproofing business revenue is expected to achieve a positive growth of more than 8% and return to the track of steady development.
Emerging businesses have blossomed in many areas, with sand powder business, industrial coatings and overseas business becoming the three major growth poles.
The sand powder business has grown into the company’s second largest business segment. The total annual output in 2025 will exceed 12 million tons, a significant increase of 50% from 2024. The revenue in the first three quarters exceeded 3 billion yuan, and the revenue in the first half of the year was 1.996 billion yuan, accounting for 14.71% of the total revenue. The average annual compound growth rate since 2020 is close to 100%, relying on the closed-loop scale effect of the entire industry chain to continue to be released.
Industrial coatings (Deaiwei)’s revenue in the first three quarters of 2025 was 440-450 million yuan, achieving double-digit growth year-on-year, successfully turning losses into profits, and becoming an important increase in the civil building materials sector.
Overseas business’s overseas revenue in the first half of 2025 was 576 million yuan, a year-on-year increase of 42.16%. Production bases in Malaysia, Saudi Arabia, and the United States have gradually come into operation, and overseas has become a new growth curve.
In addition, building repair, energy-saving insulation, photovoltaic roofing and other businesses are being promoted simultaneously, which is highly consistent with new urbanization and new energy strategies, and a diversified emerging business matrix has basically taken shape.
The continuous optimization of the industry structure and the support of policy dividends provide dual guarantees for the growth of the main waterproofing industry restoration and emerging businesses.
After the waterproofing industry experienced capacity clearance and vicious competition, the “New Regulations on Construction Waterproofing Membranes” raised the industry’s entry threshold and accelerated the elimination of backward production capacity. Oriental Yuhong’s market share increased from 15.8% in 2019 to 22.0% in 2025, and the leading bargaining power was further enhanced.
On the demand side, the market size of the waterproofing industry is expected to reach 210 billion yuan in 2026. Guaranteed housing, urban village renovation, and urban renewal will bring existing demand. “East and West” data centers and new energy photovoltaic roofs will bring incremental demand. The proportion of demand in non-housing fields continues to increase, effectively hedging against fluctuations in new real estate construction starts.
In terms of emerging businesses, the downstream sand powder business covers construction decoration, papermaking, steel, automobile manufacturing and other fields. The sales target in 2026 is aimed at 20 million tons, ranking first in the country. Industrial coatings and building repairs benefit from the demand for home decoration renovation and renovation of old communities, and the market space continues to open up.
On the policy side, loose real estate policies continue to be implemented, especially the investment of government bonds in infrastructure and affordable housing construction, which directly drives the demand for waterproofing materials and infrastructure building materials, and the industry policy environment continues to improve.
The layout of the entire industry chain and channel structure optimization have further strengthened the company’s competitive barriers and significantly improved the quality of its operations.
For the waterproofing business, the company has built a full industry chain system covering R&D, production, sales and services. Nearly 70 production, R&D and logistics bases across the country have achieved “200-kilometer transportation radius, half-day delivery” delivery capabilities. For the sand powder business, the company has expanded its own mines from one to four, forming a multi-category raw material supply system such as marble, calcite, and silica sand. The cost is 15-20% lower than the industry average.
On the channel side, the company has completed the transformation from direct sales to “retail + engineering”. In the first half of 2025, engineering and retail channel revenue accounted for 84.06%, of which retail channel accounted for 37.3%. Q3 retail channel revenue was 2.3 billion yuan, a year-on-year increase of 6%, and engineering channel revenue was 3.4 billion yuan, growing against the trend. The channel has sunk to the county, township and village market, and its anti-cyclical ability has been significantly enhanced.
At the financial level, the company’s operating quality continues to improve. The net cash flow from operating activities in the first three quarters of 2025 was 416 million yuan, a significant improvement year-on-year. Accounts receivable continued to decline, providing solid support for performance growth and stock price performance.
Of course, the company’s development still faces uncertainties. The lack of substantial recovery in real estate sales may affect the demand side. Fluctuations in asphalt prices will impact the cost side. Industry price competition and overseas market expansion that does not meet expectations will also bring risks.
However, from the perspective of core logic, the cleanup of the waterproof industry is coming to an end, the trend of leading companies is irreversible, the company’s transformation results are gradually emerging, the logic of diversified growth is clear, and the industry’s prosperity and the company’s operating quality have improved simultaneously.
Oriental Yuhong is in a critical stage of profit restoration, share increase, and growth realization. Its main waterproofing business is recovering quarter by quarter, Q3 growth rate has turned positive, emerging businesses such as sand powder are increasing rapidly, and overseas expansion is accelerating, which together constitute the core logic of the company’s value revaluation.
As the absolute leader in the industry, the company will continue to enjoy industry clearing and policy dividends by relying on multiple barriers in technology, channels, and brands. With the realization of high performance growth in 2026 and the formation of a new growth curve, the company’s growth momentum will be further enhanced, and long-term value is expected to continue to be highlighted.
