CHINA PROPERTY: BUILDING MATERIALS: Stabilizing TAM and strategic pivots to seize renovation demand key to support growth/valuation recovery; Buy Yuhong and Skshu

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CHINA PROPERTY: BUILDING MATERIALS: Stabilizing TAM and strategic pivots to seize renovation demand key to support growth/valuation recovery; Buy Yuhong and Skshu

Equity Research

13 July 2026 | 6:41PM CST

CHINA PROPERTY: BUILDING MATERIALS

Stabilizing TAM and strategic pivots to seize renovation demand key to

support growth/valuation recovery; Buy Yuhong and Skshu

We believe building materials stocks’ medium to long-term earnings outlook are Yi Wang, CFA

+86(21)2401-8930 |

mainly driven by industry TAM, channel penetration and price-to-raw material cost yi.wang@goldmansachs.cn

Goldman Sachs (China) Securities

ratio (price-raw). TAM: following a 20% contraction in industry TAM between 2021 Company Limited

and 2025, the four leading building material companies (Yuhong, Skshu, Beijing Shi Xu

New Building Materials and Vasen) saw an average market cap erosion of 70% from +86(21)2401-8929shi.x.xu@goldmansachs.cn|

their peaks—a decline that far outpaced the actual impact on earnings. The GoldmanCompany SachsLimited(China) Securities

replacement cycle typically buffers renovation demand against new-build cyclicality, Kaiyan Jing

but consumer headwinds have stalled this trend. Our analysis now suggests a +86(21)2411-8092kaiyan.jing@goldmansachs.cn|

near-term pivot; record pent-up demand and increasing secondary home sales are GoldmanCompany SachsLimited(China) Securities

expected to unlock significant market momentum. This supports a stabilizing TAM

outlook, which we view as a critical catalyst for valuation multiples to bottom out. In

the long run, we anticipate a return to peak TAM levels, providing a structural

tailwind for both earnings growth and multiple expansion. Channel: to navigate the

structural shift to renovation demand, the four companies are adopting three