As urbanization nears its end, new housing starts remain sluggish, and the growth potential of incremental sectors like civil engineering has peaked. However, the demand for renovation of existing housing stock is poised for a concentrated surge. In core cities like Shanghai, properties built during the real estate development boom of 2004-2012 are generally entering their second renovation cycle. Coupled with the nationwide trillion-yuan urban renewal policy and the trend of consumption upgrading, the home furnishing and building materials industry is undergoing structural restructuring. The industry logic has shifted from “incremental expansion” to “deep cultivation of existing housing stock.” Data from the Ministry of Housing and Urban-Rural Development shows that my country has over 300 million existing urban housing units, of which over 40% are old residential communities built before 2000. During the 14th Five-Year Plan period, over 240,000 old urban residential communities were renovated, benefiting 110 million people. Beike Research Institute predicts that the existing home renovation market will reach 3.34 trillion yuan in 2025, accounting for 65% of the overall renovation market, marking the industry’s official entry into the era of competition for existing homes. On the policy front, continued policy support is expected. In 2026, the consumer goods trade-in policy will for the first time include smart home and age-friendly home products in the central government’s subsidy program. At the local level, Shanghai, Beijing, and other cities have introduced 10%-15% consumer voucher subsidies, further stimulating renovation demand and providing a vast market space for home furnishing and building materials companies. Looking at specific sectors, leading companies in the five major areas of waterproofing, pipes, boards, coatings, and home furnishings each possess core competitiveness, forming an investment portfolio covering the entire renovation chain and accurately seizing the opportunities presented by existing home renovations. Oriental Yuhong (002271), a leading waterproofing company and the absolute leader in the industry, deeply benefits from the demand for existing home renovations and old building redevelopment projects. Waterproofing is a fundamental aspect of renovation, and leakage problems are prominent in older houses, with waterproofing renovation rates approaching 100% in secondary renovations. Leveraging its comprehensive product line, nationwide production bases, and well-established distribution network, the company holds a first-mover advantage in the existing market. As of January 20, 2026, the company’s stock price was 15.28 yuan, a 6.41% increase on that day, with a total market capitalization of 36.499 billion yuan. The stock price rose 22.62% throughout 2025. At the industry level, the waterproofing membrane market is projected to grow at a CAGR of 9.7% from 2025 to 2030. The concentration of leading companies continues to increase. Oriental Yuhong, as a core member of the CR5 (top 5 companies in China), will further seize market share by leveraging its technological barriers and production capacity advantages. Meanwhile, new businesses such as integrated waterproofing for photovoltaic roofs are expected to unlock new growth potential.
Weixing New Materials (002372), a leading pipe manufacturer, has cultivated a strong reputation in the plastic pipe industry for many years, establishing a powerful brand image based on high quality and excellent service, especially in the retail sector where it possesses strong bargaining power. In the renovation of existing housing stock, pipe replacement is a necessity, and consumers have higher requirements for the environmental friendliness and durability of products, preferring branded products. The company relies on its “Star Butler” service system to achieve a closed-loop service from sales to installation, continuously increasing its penetration rate in first- and second-tier existing housing markets. With the upgrading of environmental standards and construction quality requirements for pipes in urban renewal projects, Weixing New Materials is expected to continue to gain market share. Simultaneously, its expansion into municipal pipelines and home decoration sectors provides support for long-term growth, and its stock price trend is stable with room for valuation recovery.
TBB (002043), a leading manufacturer of wood-based panels, focuses on the environmentally friendly wood-based panel sector, precisely catering to the health-conscious consumer demand in existing home renovations. In secondary renovations, consumers are increasingly concerned about indoor air quality, making formaldehyde-free panels and environmentally friendly substrates the preferred choice. The company’s accumulated expertise in the R&D and production of environmentally friendly panels forms its core competitiveness. Simultaneously, the company rapidly expands its channels through a “brand authorization + production capacity cooperation” model, covering most of the home decoration market nationwide and deeply binding resources with decoration companies and designers, achieving high reach in existing home renovation scenarios. With the surge in demand for environmentally friendly materials driven by the home furnishing trade-in policy, TBB is expected to continue to benefit from product structure upgrades and channel expansion. Its stock price has already reflected the industry’s prosperity, indicating a clear trend opportunity.
Three Trees (603737), a leading paint manufacturer in China, possesses strong competitiveness in both architectural and home decoration paint sectors. In existing home renovations, wall renovation is one of the most common steps, and consumers are increasingly demanding higher levels of environmental friendliness and decorative appeal in their paints.
The company leverages its high-end product portfolio, including water-based coatings and artistic coatings, to meet the needs of different consumer levels. Simultaneously, it actively participates in government-led renovation projects for old residential communities, taking advantage of urban renewal policies to increase the proportion of revenue from engineering projects. In 2025, the company’s stock price rose 55.34%, reaching a total market capitalization of 34.353 billion yuan. Benefiting from green building materials policy support and the growth in demand from niche markets, the company’s growth potential will further expand as the demand for functional coatings is released for age-friendly renovations. KUKA Home (603816), a leading home furnishing company, directly caters to the furniture renovation needs of existing homes. With consumption upgrades, homeowners are paying more attention to the comfort, intelligence, and personalization of home furnishing products during second renovations. Soft furniture, due to its high replacement frequency and strong experiential aspect, has become a core category for renovations. The company covers the mid-to-high-end market through a multi-brand strategy, while also developing smart home and age-friendly home furnishing products, aligning with the subsidy direction of the 2026 trade-in policy. On the distribution channel side, the company’s integrated online and offline strategy allows for rapid response to the fragmented demand for existing home renovations. Its stock price has already shown an upward trend, becoming a core indicator of the home furnishing sector’s prosperity. In summary, the end of the era of incremental growth in the real estate market is forcing the industry to shift towards a stock market. The arrival of the second renovation cycle from 2004 to 2012, coupled with policy dividends and consumption upgrades, has jointly created structural opportunities in the home furnishing and building materials industry. Oriental Yuhong, Weixing New Materials, TBB, SKSHU Paint, and KUKA Home occupy core segments of the entire renovation chain, leveraging their brand, channel, and product advantages to become certain targets in the existing home renovation wave. In the short term, policy stimulus and demand release will drive the stock price trend to continue; in the long term, increased industry concentration and product upgrades will continue to support the valuation recovery of leading companies. It is recommended to focus on the allocation opportunities in this core investment portfolio. If you are concerned about stock price fluctuations, then an ETF (516750) encompassing a portfolio of building materials companies is worth considering. It has just broken out of its consolidation phase and is recommended for medium- to long-term investment.
