Shenwan Hongyuan Group: The industry is expected to see both volume and price rise. In the real estate supply chain, the waterproof board sector should be a primary focus.

Shenwan Hongyuan Group released a research report stating that the top three waterproof materials companies have successively raised prices by 5%-10%. This round of price increases came earlier than expected, with a wider scope, and companies have taken the initiative to raise prices. In November and December 2025, industry sales have increased for two consecutive months, marking the first time in recent years, and the industry is expected to see a simultaneous increase in volume and price. Apart from cost fluctuations, the main reason for the price increase is the market landscape. In the real estate supply chain, the waterproofing sector is of primary concern, and there are also opportunities for price increases in cement, glass, and gypsum board. Key points from Shenwan Hongyuan Group: Top three waterproof companies raise prices by 5%-10% Beijing Oriental Yuhong Waterproof Technology sent a letter on March 1 stating that prices for asphalt rolls and coatings for engineering projects will increase by 5%-10% starting from March 15; Keshun Waterproof Technologies sent a letter on March 2 announcing that prices for asphalt rolls, coatings, and polymer rolls will increase by 5-10% starting from March 15; and Beixin Waterproof sent a letter on March 2, stating that prices for asphalt rolls, polymer rolls, and coatings will increase by 5-10% starting from March 15. According to the price increase letters from these companies, the main reason for the price increase is the significant rise in asphalt prices since the beginning of the year, in order to maintain product and service quality, and to pass on the increased costs to downstream customers. Characteristics of this round of price increases 1. The timing of the price increase is earlier than expected, as the demand peak season for the waterproofing sector usually comes after the resumption of work at construction sites after the Chinese New Year and Lantern Festival, yet this round of price increases occurred before the Lantern Festival, reflecting the urgency of the price increase; 2. The price increase has a wider scope, compared to the price increase for waterproof coatings before the festival, this round of price increase includes asphalt rolls, asphalt coatings, etc., with a broader scope; 3. Companies have taken the initiative to raise prices, combined with the price increases before the festival, the timing and pace of price increases by various companies in this round are different, without negotiation, indicating a reduced difficulty in raising prices; 4. According to data from the Waterproofing Association, industry sales have increased for two consecutive months in November and December 2025, marking the first time in recent years, and the industry is expected to see a simultaneous increase in volume and price. In addition to cost fluctuations, the market landscape is the core reason for the price increase Over a span of 5 years, the waterproofing industry has undergone significant changes in demand structure, industry landscape, and corporate intentions. 1. There are three major changes on the demand side: the importance of non-real estate scenarios has greatly increased, the proportion of second-hand housing transactions has increased significantly, and the importance of existing renovation is expected to increase. 2. The degree of industry consolidation may be ahead of other sectors in the real estate supply chain: 1) Prior to 2021, waterproofing industry revenues were highly correlated with real estate centralized procurement and waterproofing companies had long payment terms; 2) Starting from 2022, waterproofing companies have engaged in continuous and intense price wars; 3) The asset attributes of the waterproofing industry are relatively light; and industry concentration continues to improve. 3. Policies towards real estate and urban renewal are positive, and subsequent support may increase. Pre-festival price increases have gradually taken effect, and post-festival price increases are optimistic In mid-December and late January, Beijing Oriental Yuhong Waterproof Technology and Keshun Waterproof Technologies respectively announced price increases for waterproof coatings. After the festival, they will further increase the prices of waterproof rolls and other products, indirectly indicating that the previous price increases have gradually taken effect. In addition to waterproofing, there are also opportunities for price increases in cement, glass, gypsum board, etc. March is the beginning of the peak season for building materials demand, with a concentration of key infrastructure projects starting or resuming, coupled with an increase in personal home renovation, the demand for building materials sector is expected to increase. Cement and glass have experienced capacity disposals and cooling repairs, so price increases can be expected after the supply contracts. Gypsum boards, coatings, and engineered boards are also likely to increase prices as demand recovers. Investment analysis opinion In the real estate supply chain, the focus should be on the waterproofing sector, with a recommendation for Keshun Waterproof Technologies, and attention to Beijing Oriental Yuhong Waterproof Technology; outstanding stocks have demonstrated their ability for counter-cyclical growth, with a recommendation for Higold Group, and attention to SKSHU Paint; recommendations for Zhejiang Weixing New Building Materials, Beijing New Building Materials Public, Dehua TB New Decoration Material, as they have stable cash flows and outstanding performance; the glass and cement sectors should focus on leading companies such as XINYI GLASS(H), Zhuzhou Kibing Group, Anhui Conch Cement, and Huaxin Building Materials Group. Risk warning: Demand recovery is lower than expected, price transmission is lower than expected, and costs continue to rise.