Shenwan Hongyuan Group Co., Ltd. has released a research report stating that the top three waterproofing material producers have successively raised prices by 5%-10%. This round of price increases occurred earlier than expected, covers a broader range, and reflects companies taking the initiative in pricing adjustments. For the first time in recent years, industry sales volume increased for two consecutive months in November and December 2025, indicating potential simultaneous growth in both volume and price. Beyond cost fluctuations, market structure is the most critical factor driving these price hikes. Within the real estate building materials chain, the waterproofing sector is the primary focus, while cement, glass, and gypsum board also present opportunities for price increases. Shenwan Hongyuan's key views are as follows:
The top three waterproofing producers have raised prices by 5%-10%. Oriental Yuhong issued a notice on March 1st, announcing a uniform 5%-10% price increase for asphalt membranes and asphalt coatings used in engineering projects, effective March 15th. Kesun issued a notice on March 2nd, increasing prices for asphalt-based membranes, asphalt-based coatings, and polymer membranes by 5-10%, effective March 15th. Beixin Waterproofing also issued a notice on March 2nd, raising prices for asphalt membranes, polymer membranes, and coatings by 5-10%, effective March 15th. According to the companies' notices, the primary reason for the price hikes is the significant rise in asphalt prices since the beginning of the year, leading them to pass these costs downstream to maintain product and service quality.
This round of price increases has distinct characteristics: 1. The timing is earlier than expected. Typically, the waterproofing sector experiences peak demand after the Lantern Festival when construction sites resume work. However, this round of industry-wide price increases occurred before the festival, indicating a sense of urgency. 2. The scope is broader. Compared to pre-holiday increases focused on waterproofing coatings, this round also includes asphalt membranes and asphalt coatings, covering a wider range of products. 3. Companies are taking the initiative. Combined with pre-holiday price adjustments, the varying timing and pace of increases by different companies, without prior coordination, suggests reduced difficulty in implementing price hikes. 4. According to Waterproofing Association data, industry sales volume grew for two consecutive months in November and December 2025, the first such occurrence in recent years, pointing towards potential simultaneous growth in volume and price.
Beyond cost fluctuations, market structure is the core reason for price increases. Over a five-year horizon, the waterproofing industry has undergone significant changes in demand structure, competitive landscape, and corporate willingness: 1. Three major shifts have occurred on the demand side: non-real estate applications have become significantly more important, the proportion of second-hand housing transactions has risen substantially, and the importance of renovation in existing buildings is expected to increase. 2. Industry consolidation appears more advanced than in other segments of the real estate chain: 1) Before and including 2021, waterproofing industry revenue was highly correlated with centralized real estate procurement, and companies faced long payment cycles; 2) From 2022, waterproofing firms engaged in sustained and intense price competition; 3) The asset intensity of the waterproofing industry is relatively light; Industry concentration continues to improve. 3. Policy support for both real estate and urban renewal remains positive, with potential for increased support in the future.
Pre-holiday price increases have been gradually implemented, and post-holiday hikes are viewed positively. In mid-December and late January, Oriental Yuhong and Kesun had already announced price increases for waterproofing coatings. The further price hikes on membranes and other products after the holiday may indirectly indicate that the earlier increases have been successfully implemented.
Beyond waterproofing, cement, glass, and gypsum board also present pricing opportunities. March typically marks the start of the peak season for building materials demand, with concentrated resumption of key infrastructure projects, the real estate "Golden March, Silver April" period, and increased individual home renovations, all contributing to a potential surge in demand. Following capacity adjustments and cold repairs, cement and glass sectors anticipate price increases due to supply contraction. Gypsum board, coatings, and artificial boards are also expected to see price hikes as demand recovers.
Investment Analysis Recommendations: The primary focus within the real estate building materials chain is the waterproofing sector. Kesun is recommended, while Oriental Yuhong is suggested for attention. High-quality individual stocks have demonstrated resilience and counter-cyclical growth capabilities. Higold is recommended, and Sanxing is suggested for attention. Weixing New Material, Beixin Building Materials, and Tu Bao Bao are recommended for their stable cash flow and outstanding earnings stability. Within the glass and cement sectors, focus on leading companies such as Xinyi Glass (H), Kibing Group, Anhui Conch Cement, and Huaxin Cement.
Risk warnings include demand recovery falling short of expectations, unsuccessful price pass-through, and persistent cost increases.