SKSHU Paint Co., Ltd. (603737)

Equity Research Report　|　Industry: Architectural Coatings and Comprehensive Building Materials　|　Report Date: September 13, 2026　|　As of the September 11, 2026 close; there was no A-share trading from September 12 to September 13, 2026, so the latest closing data remains that of September 11, 2026.

This report was automatically compiled by AI based on publicly available information and is for reference only. It does not constitute investment advice.

1. Executive Summary

SKSHU Paint’s first half of 2026 showed “revenue growth but significant pressure on profit and cash flow”: operating revenue was RMB 6.039 billion, up 3.83% year on year; net profit attributable to shareholders was RMB 301 million, down 30.92%; and net cash flow from operating activities was only RMB 9 million, down 97.50%. During the same period, the company recognized approximately RMB 109 million in various impairment provisions, including approximately RMB 89 million in impairment losses on accounts receivable. The company’s current operating quality has weakened from the period of high profit growth in 2025, and the resilience on the revenue side has yet to translate into synchronized improvement in profit and cash flow.

The company’s business structure is shifting from a single coatings manufacturer toward an integrated home-renovation service model combining “products + services + construction.” In the first half of 2026, revenue from home-decoration wall paint was RMB 1.756 billion, up 11.53%, while revenue from engineering wall paint was RMB 1.518 billion, down 15.44%. This indicates that retail and home-decoration businesses retain growth momentum, whereas the engineering business is more affected by weak demand, payment terms and customer credit risks. In 2025, the company generated operating revenue of RMB 12.527 billion, up 3.49%, and net profit attributable to shareholders of RMB 775 million, up 133.45%. Overall gross margin rose to 33.79%, mainly driven by lower raw-material prices, an improved product mix and lower credit impairment losses.

Profitability is relatively sensitive to raw-material prices and the product mix. In the first half of 2026, overall gross margin was 30.27%, down 2.08 percentage points year on year, mainly due to increases in the prices of certain raw materials, slower pass-through of product price increases, and higher management personnel compensation and depreciation and amortization expenses. The gross margin of home-decoration wall paint was 50.79% in 2025, significantly higher than that of engineering wall paint, base and auxiliary materials, and waterproof membranes. An increase in the share of retail products and expansion of high-margin businesses will be important variables for subsequent profit recovery.

As of September 11, 2026, the company’s share price was RMB 20.83, below the MA5, MA10, MA20 and the lower band of the 20-day Bollinger Bands. The MA5, MA10 and MA20 were in a bearish alignment. Cumulative net outflows of major funds over the latest five trading days were approximately RMB 53.44 million, indicating weak short-term technical conditions. An RSI of approximately 26 suggests the possibility of a technical rebound, but is not sufficient to confirm a bottom. Based on the consensus of institutional forecasts, average net profit attributable to shareholders is approximately RMB 904 million for 2026 and RMB 1.169 billion for 2027. However, the forecast ranges differ considerably among institutions, and the current valuation still requires some expectation of subsequent profit recovery.

2. Company Overview

2.1 Basic Information

2.2 Core Businesses and Product Portfolio

• Architectural wall coatings: home-decoration wall paint, engineering wall paint, latex paint, artistic paint, imitation-stone paint and others
• Base and auxiliary materials: putty powder, interface agents, tile adhesive, sealant and others
• Waterproof materials: waterproof coatings, waterproof membranes and related construction services
• Insulation materials: integrated insulation panels, rock wool, EPS panels and others
• Wood coatings and flooring materials
• Adhesives: silicone sealant, white glue, expanding foam, sealant, epoxy adhesive, polyurethane adhesive and others
• Industrial coatings: covering industrial equipment, steel structures, port machinery, petroleum and petrochemicals, new energy, wind power and other applications
• Decoration construction and “Ma Shang Zhu” services: covering wall coating, artistic paint, whole-home sealant, exterior-wall coating, wood paint, waterproofing, tile installation, balcony renovation and others
• 2025 revenue from major products: RMB 3.403 billion from home-decoration wall paint, with a gross margin of 50.79%; RMB 3.890 billion from engineering wall paint, with a gross margin of 37.55%; RMB 3.663 billion from base and auxiliary materials, with a gross margin of 22.16%; and RMB 996 million from waterproof membranes, with a gross margin of 14.57%
• Waterproof-coating sales revenue was approximately RMB 1.219 billion in 2025, recorded respectively under home-decoration wall paint at RMB 92 million, engineering wall paint at RMB 380 million, and base and auxiliary materials at RMB 746 million. Accordingly, the above product revenue figures should not be simply understood as a complete breakdown of all products
• The company is transitioning from a single coatings manufacturer to an integrated home-renovation service provider combining “products + services + construction”

2.3 Position in the Upstream and Downstream Value Chain and Cost-Profit Structure

SKSHU operates between chemical raw-material procurement and the manufacture of architectural consumer building materials, positioning itself as a “midstream manufacturer + branded channel service” company. Through formulation R&D, product certification, brand building, green manufacturing, nationwide factory deployment and supply-chain management, the company processes basic chemical raw materials into architectural coatings, waterproofing, insulation, adhesives and auxiliary-material products, reaching downstream customers through engineering, retail and construction services.

• The company mainly procures coating-system raw materials, including emulsions, resins, titanium dioxide, pigments, fillers, additives and solvents. Base and auxiliary materials involve powders, resins, polymers and chemical additives. Waterproof materials involve asphalt-based materials, polymer materials, polymer emulsions, waterproof-membrane substrates and related additives.
• Packaging and supporting materials include packaging cans, plastic buckets, laminated steel and corner protectors. The company adopts a make-to-order and self-production model, with production bases in Fujian, Anhui, Hebei, Hubei, Sichuan, Tianjin, Henan, Jiangxi and other locations.
• In 2025, the procurement volume of raw materials for home-decoration and engineering wall paint was approximately 1.373 million tonnes, with procurement prices down 10.04% year on year; the procurement volume of raw materials for base and auxiliary materials was approximately 493,200 tonnes, with procurement prices down 21.15%; and the procurement volume of raw materials for waterproof membranes was approximately 187,300 tonnes, with procurement prices up 6.33%.
• Materials accounted for approximately 86.77% of costs in the fine-chemicals business. Falling raw-material prices reduced operating costs by approximately RMB 428 million in 2025. Profitability is relatively sensitive to the prices of bulk chemical raw materials such as emulsions, titanium dioxide, resins, fillers and additives.
• The number of upstream suppliers is relatively large and overall supply is sufficient. The company has certain procurement-scale and centralized-purchasing advantages over individual suppliers, but does not possess absolute pricing power over all key raw materials. Its cost advantage is driven more by “large-scale procurement, formulation optimization and improved supply-chain management” than by upstream resource endowments.
• When raw-material prices rise, the company generally cannot fully and immediately pass costs on to downstream customers. When raw-material prices fall but terminal selling prices decline with a lag, gross-margin improvement is relatively significant. The increase in overall gross margin in 2025 was mainly related to lower raw-material prices, an improved product mix, and the decline in selling prices being smaller than the decline in unit costs.
• As of December 31, 2025, the company’s disclosed major designed production capacity was based on equipment design capacity in environmental-impact assessment reports and calculated on a single-shift basis. It does not equal actual output or effective capacity, and certain newly built production lines were still ramping up.
• Engineering customers include property developers, construction companies, public-building projects, infrastructure projects, general contractors and decoration companies. Their main purchases include engineering wall paint, waterproofing, insulation, flooring, industrial coatings and supporting products.
• Household consumers and retail customers include home-decoration consumers, distributors, e-commerce-platform customers, home-decoration companies, and retail channels in counties and townships. Home-decoration wall paint, artistic paint, imitation-stone paint, adhesives, base and auxiliary materials and other products are more oriented toward retail and home-decoration applications.
• Engineering channels typically feature long payment terms, bidding competition, centralized procurement, price negotiations and customer credit risk. Real-estate and engineering customers can generate significant accounts receivable and contract assets, affecting cash flow and credit-impairment provisions.
• Retail dependence on individual customers is generally lower than in large-scale engineering projects, but requires continued investment in branding, advertising, channels and service systems. “Ma Shang Zhu” services increase the linkage between products and construction services, helping reduce pure price competition.
• Engineering wall paint and waterproof membranes have been pressured by weak new housing starts, completions and engineering demand. Home-decoration wall paint and base and auxiliary materials have benefited from retail-channel expansion, channel penetration into lower-tier markets and demand for existing-home renovations.
• The 2025 annual report text reviewed for this report did not clearly disclose the combined sales proportion of the top five customers. Accordingly, overall customer concentration cannot be accurately assessed on this basis. The data should be verified against the “Sales to the Top Five Customers” section and accounts-receivable notes in the company’s latest annual report. Judgments regarding the structure of engineering customers, retail customers and distributors are primarily based on business-model disclosures and cannot replace top-five-customer concentration data.
• Engineering customers have relatively strong bargaining power regarding payment terms and prices. The company does not fully control downstream pricing or cash settlement rights. Retail channels are relatively fragmented, but customer stickiness must be enhanced through brand strength, channel coverage, product differentiation and construction services.
• As of December 31, 2025, the carrying value of accounts receivable was RMB 2.797 billion, accounting for approximately 22.3% of annual operating revenue and approximately 3.6x 2025 net profit attributable to shareholders of RMB 775 million. Accounts payable were approximately RMB 3.395 billion, accounting for approximately 27.1% of operating revenue; notes payable were approximately RMB 1.985 billion, bringing accounts payable and notes payable to approximately RMB 5.380 billion in total. Accounts receivable exceeding 20% of revenue, together with bad-debt provisions being identified by the accounting firm as a key audit matter, indicates significant capital occupation and credit risk in the engineering business. Accounts payable and notes payable exceeded accounts receivable, indicating that the company can utilize a certain level of supplier credit, notes settlement and commercial credit, but this alone does not establish strong bargaining power across the industrial chain.
• Customer concentration: The 2025 annual report text did not contain specific data on the combined sales proportion of the top five customers, so the company’s overall customer concentration cannot be quantified. The above conclusion is based only on the research memorandum’s compilation of the business model, and the limitations of the data source and year are explicit. Specific figures should be confirmed against the company’s latest annual report and accounts-receivable notes.

SKSHU occupies the midstream of the architectural coatings and green building-materials value chain. It combines midstream processing and manufacturing with branding, channels and construction services. It is neither a high-margin upstream company with mineral or petrochemical resources nor a pure consumer-goods company relying entirely on terminal brand premiums. Further improvements in gross margin and profitability will depend mainly on growth in retail and existing-home renovation, a higher proportion of high-margin products, raw-material cost control and lower accounts-receivable risks from engineering customers, rather than simply on additional capacity.

3. Financial Data and Valuation Analysis

3.1 Recent Operating Performance

The 2026 interim report is unaudited. In the first half of 2026, non-GAAP net profit attributable to shareholders was RMB 209 million, down 28.41% year on year; net cash flow from operating activities was RMB 9 million, down 97.50%; and basic EPS was RMB 0.34, down 30.61%. In 2025, non-GAAP net profit attributable to shareholders was RMB 557 million, up 278.22% year on year.

The first half of 2026 was characterized by relatively stable revenue but temporary pressure on profit, mainly due to lower overall gross margin, higher prices for certain raw materials, slower pass-through of product price increases, and higher management personnel compensation and depreciation and amortization expenses. Overall gross margin was 30.27% in the first half, down 2.08 percentage points year on year. Overall gross margin rose from approximately 29.60% in 2024 to 33.79% in 2025. The sharp profit growth was also affected by a low base, lower raw-material costs and reduced credit impairment losses, and its sustainability remains to be observed.

3.2 Earnings Forecasts

As of September 12, 2026, Tonghuashun F10 had compiled forecasts from 18 institutions for 2026 performance and from 16 institutions for 2028 performance. These figures are market forecasts compiled from institutional research reports, not company earnings commitments or official guidance. Forecast ranges for net profit attributable to shareholders in 2026–2028 are approximately RMB 731 million–RMB 1.315 billion, RMB 936 million–RMB 1.776 billion and RMB 1.073 billion–RMB 2.151 billion, respectively, reflecting considerable divergence among institutions.

3.3 Valuation and Institutional Ratings

As of the September 11, 2026 close, the company’s share price was RMB 20.83, down 5.40% from the previous trading day. Total shares outstanding were approximately 885 million, implying a total market capitalization of approximately RMB 18.4–18.5 billion. On the Zhongcai.com basis, the trailing dynamic PE was approximately 28.81x, the non-GAAP PE approximately 38.92x, and PB approximately 5.31x, with EPS of RMB 0.72. Nanyang Commercial Bank’s market-data page showed a PE of approximately 23.81x. Differences reflect variations in earnings definitions, use of TTM data and data-update timing. Based on Tonghuashun’s 2026 consensus EPS of RMB 1.03, the share price of RMB 20.83 implies a 2026 forecast PE of approximately 20.2x; based on Huatai Securities’ EPS of RMB 0.88, approximately 23.7x; and based on Huayuan Securities’ EPS of RMB 0.93, approximately 22.4x. Accordingly, forward valuation based on institutional forecasts is broadly 20–24x PE, while valuation based on market websites’ TTM or dynamic measures is approximately 24–29x, with the non-GAAP measure higher. Approximately 15 institutions have given 2026 target-price ranges of approximately RMB 29.00–RMB 60.00 over the past six months, with an average target price of approximately RMB 40.87; Huatai Securities’ latest target price is RMB 33.61. Overall, the company’s current valuation is below the 25–30x-plus range previously used by some institutions, but it is not clearly undervalued. A PB of approximately 5.3x still reflects premiums for brand, channels and profit recovery. The current valuation assumes profit recovery in the second half of 2026. If raw-material prices remain elevated or price increases fall short of expectations, actual PE could be higher than consensus expectations. If retail channels, Ma Shang Zhu community stores and base and auxiliary-material businesses scale up and gross margin recovers, the current 2026 forecast PE of approximately 20x may have some room for valuation digestion. Institutional ratings are concentrated in Buy and Outperform, but earnings forecasts and target prices vary widely. These forecasts and valuation data do not constitute company earnings commitments.

4. Recent News and Announcements

4.1 First-Half 2026 Results: Revenue Growth, Year-on-Year Decline in Net Profit Attributable to Shareholders

SKSHU disclosed its 2026 interim report and key operating data for January–June 2026 on August 29, 2026. Operating revenue for January–June 2026 was RMB 6,038.9994 million, comprising principal operating revenue of RMB 5,886.6291 million and other operating revenue of RMB 152.3703 million. Net profit attributable to shareholders was approximately RMB 301 million, down 30.92% year on year, and basic EPS was RMB 0.34. The company’s interim profit-distribution plan was to make no distribution and issue no bonus shares or capitalizations.

4.2 Product Operations: Home-Decoration Wall Paint Growth, Engineering Wall Paint Revenue Decline

In the first half of 2026, sales revenue from home-decoration wall paint was RMB 1,755.8583 million, up 11.53% year on year, while sales revenue from engineering wall paint was RMB 1,517.9837 million, down 15.44% year on year. Operating revenue grew approximately 3.8% year on year, but profitability came under pressure.

4.3 Approximately RMB 109 Million in Asset and Credit Impairment Provisions

The company disclosed an announcement on impairment provisions on August 29, 2026. As of June 30, 2026, the company and its consolidated subsidiaries recognized total impairment provisions of RMB 108,563,452.07 for January–June 2026, including credit impairment losses of RMB 89,099,935.09 and asset impairment losses of RMB 19,463,516.98. These comprised accounts-receivable impairment losses of RMB 89,422,424.32, inventory write-downs of RMB 8,026,033.35, contract-asset impairment losses of RMB 403,974.36 and impairment losses on other non-current assets of RMB 11,033,509.27. The impact of the above amount on total profit in the consolidated statements for January–June 2026 was RMB 108,563,452.07. The figures are unaudited and the final amount will be subject to the annual audit.

4.4 Controlling Shareholder Hong Jie Pledges an Additional 24.85 Million Shares

The company disclosed on August 14, 2026 that actual controller and controlling shareholder Hong Jie pledged 24.85 million unrestricted tradable shares to Lujiazui International Trust Co., Ltd., with the pledge term running from August 14, 2026 to August 12, 2027. This was not a supplemental pledge. The funds are for personal financing and are not related to major asset-restructuring performance compensation or similar purposes. The pledge represents 4.19% of Hong Jie’s holdings and 2.81% of the company’s total shares. Following completion, Hong Jie had cumulatively pledged approximately 167.7 million shares, representing approximately 28.27% of his holdings and approximately 18.94% of the company’s total shares.

4.5 Equity-Pledge Ratio Remains High, with Differences among Third-Party Data Sources

As of September 11, 2026, third-party equity-pledge data showed a total company equity-pledge ratio of approximately 19.1% and pledged shares of approximately 169 million, slightly different from the 18.94% disclosed in the August 14 announcement. The difference may relate to changes in pledge registration, share-count definitions or rounding. Specific figures should be based on subsequent formal company announcements and China Securities Depository and Clearing Corporation data. Existing announcements do not indicate that a liquidation line has been reached or that there has been a change in control.

4.6 Company Provides Total Guarantees of RMB 282 Million for Three Subsidiaries

The company disclosed an announcement on August 29, 2026 regarding guarantees for subsidiaries. It provided guarantees of RMB 82 million for Hezhou SKSHU New Materials Co., Ltd., with an existing guarantee balance of zero; RMB 100 million for Sichuan SKSHU Paint Co., Ltd., with an existing guarantee balance of RMB 363.3057 million; and RMB 100 million for Hubei SKSHU New Materials Technology Co., Ltd., with an existing guarantee balance of RMB 8.95 million. The total amount of the new guarantees was RMB 282 million, all within previously estimated annual guarantee limits and without counter-guarantees.

4.7 Estimated Credit Facilities and Guarantee Limits for 2026

The company expects total comprehensive credit facilities for 2026 of no more than RMB 15 billion and total guarantee limits of no more than RMB 9.5 billion. Guarantees for entities with asset-liability ratios above 70% are expected to be no more than RMB 5.9 billion, while guarantees for entities with asset-liability ratios below 70% are expected to be no more than RMB 3.6 billion.

4.8 2026 Interim Performance Briefing

The company planned to hold its 2026 interim performance briefing through the Shanghai Stock Exchange’s “SSE Roadshow Center” from 10:00 to 11:30 on September 11, 2026. Participants included Chairman and General Manager Hong Jie; Director, Deputy General Manager and CFO Zhu Qifeng; Board Secretary Gu Minna; and Independent Director He Peipei.

4.9 Investor Interaction: Continued Focus on Architectural Coatings and Retail Channels

In investor interaction on September 4, 2026, the company stated that in the second half of the year it would continue to focus on its architectural-coatings core business, promote channel development and retail-business growth, focus on its main business, cultivate channels in depth, and strive to improve performance and profitability. Regarding secondary-market share-price volatility, the company urged investors to take a rational view. These statements do not constitute a commitment or guarantee regarding the share price.

4.10 No New Announcements on Buybacks, Share Purchases, M&A or Major Asset Restructuring

As of September 13, 2026, no new share-repurchase plan, repurchase-progress announcement or repurchase-cancellation announcement issued by the company from August to September 2026 was identified. No new plan for share purchases or sales by the controlling shareholder, actual controller or major shareholders was identified. No new announcement regarding major asset restructuring, major M&A, a change in control or major overseas projects was identified.

4.11 Earnings Guidance and Regulatory and Litigation Background

The company’s most recent relatively clear earnings guidance was the 2025 annual earnings preannouncement disclosed on January 31, 2026. It estimated 2025 net profit attributable to shareholders at RMB 760 million–RMB 960 million, representing year-on-year growth of approximately 129%–189%. This is not a latest September 2026 development. As of September 13, 2026, no new earnings forecast or warning for the first three quarters of 2026 had been identified. The company previously disclosed on July 25, 2026 its response to the Shanghai Stock Exchange’s regulatory inquiry letter regarding information disclosure in its 2025 annual report. On June 9, 2026, it disclosed litigation developments in a case where the principal amount was adjusted during proceedings to approximately RMB 6.2487 million. The case was ultimately settled through mediation at first instance and is not expected to have a negative impact on the listed company’s profit or loss.

4.12 Overall Characteristics of Recent News Flow

As of September 13, 2026, the company’s news flow was characterized by relatively stable revenue, pressure on profit, a high controlling-shareholder pledge ratio, and no buyback or M&A catalysts. Key items to monitor include the 30.92% year-on-year decline in first-half net profit attributable to shareholders, approximately RMB 109 million in impairment provisions, the 15.44% year-on-year decline in engineering wall-paint revenue, the controlling shareholder’s cumulative pledge ratio of approximately 28% of his holdings, and the company’s guarantees for subsidiaries.

5. Share-Price Performance and Technical Analysis

5.1 Price Overview

5.2 Technical Indicators

As of September 11, 2026, SKSHU closed at RMB 20.83, below MA5, MA10, MA20 and the lower band of the 20-day Bollinger Bands, with MA5 < MA10 < MA20. The short-term technical structure was weak. RSI(14) was approximately 26, indicating that the price had approached a relatively low or oversold area and that a technical rebound was possible, but this cannot yet confirm a bottom. The share price weakened continuously from September 7 to September 11, while major funds recorded continuous net outflows of approximately RMB 53.4427 million, indicating weak short-term support. RMB 20.70–RMB 21.00 is the immediate support-monitoring area; approximately RMB 22.10 is short-term rebound-confirmation resistance; and RMB 19.80–RMB 20.10 is a strong support-monitoring area if the price declines further. Specific MACD data is unavailable, so no unverified reading is provided.

5.3 Short-Term Outlook (Next Week, Scenario Analysis for Reference Only)

⚠️ Risk warning: The following is only a subjective scenario analysis based on the September 11, 2026 closing data, historical prices and technical indicators. It does not constitute investment advice or a definitive forecast of future share prices.

① Key Technical Levels

② Scenarios for the Next Week (Subjective Weights, Not Statistical Probabilities)

• Weak range trading (relatively high weight, approximately 50%; a subjective heuristic weight based on current technical conditions and fund flows, not a statistical probability): price range of approximately RMB 20.70–RMB 22.10. The trigger would be support near RMB 20.70, without a clear shift in major funds to net inflows, turnover value remaining within a normal recent range, and the rebound failing to hold above RMB 22.10. Low RSI may produce a technical rebound, but the bearish moving-average alignment and weak fund flows make low-level range trading and a weak rebound more likely.
• Moderately weak decline (medium weight, approximately 30%; a subjective heuristic weight based on current technical conditions and fund flows, not a statistical probability): price range of approximately RMB 19.80–RMB 20.70. The trigger would be an effective break below approximately RMB 20.70, together with daily turnover value significantly above the recent normal level and continued large net outflows of major funds. If the decline occurs on increased volume, selling pressure is likely still being released; if it occurs on lower volume, it is necessary to distinguish between exhausted selling pressure and insufficient liquidity. Price alone is not sufficient for a judgment.
• Stronger rebound (low weight, approximately 20%; a subjective heuristic weight based on current technical conditions and fund flows, not a statistical probability): price range of approximately RMB 22.10–RMB 23.50. The trigger would be a move back above RMB 22.10 and maintenance of that level for at least one trading day, turnover value rising to approximately RMB 300 million or more, major funds shifting from continuous net outflows to net inflows, and simultaneous strength in coatings, building materials or related consumer-building-materials sectors. If RMB 22.10 is recovered, RMB 22.70–RMB 23.00 can be monitored. If RMB 23.50 is subsequently broken on increased volume, recovery toward the MA10 area at approximately RMB 23.50–RMB 24.00 can be monitored. However, below MA20 at approximately RMB 24.31, the move should first be viewed as a rebound recovery rather than a trend reversal.

③ Fund and Liquidity Background

As of September 11, 2026, the turnover ratio was 1.08%, turnover value approximately RMB 201.1 million, and trading volume approximately 9.562 million shares. Recent turnover value was generally in the range of approximately RMB 100 million to RMB 340 million, with approximately RMB 338 million on August 31 and approximately RMB 201.1 million on September 11. The top 10 tradable shareholders collectively held 78.80%, based on data as of June 30, 2026, announced on August 29, 2026. This is one quarter behind the latest market data, and the ownership structure may have changed. First-largest shareholder Hong Jie held approximately 67.02%; the other nine holders collectively held approximately 11.78%. The top 10 tradable shareholders included public funds, social-security funds, insurance funds and Stock Connect-related holdings, but their positions were substantially smaller than those of the controlling shareholder. High concentration should not be equated simply with high institutional control. The latest turnover ratio was low, while cumulative net outflows of major funds over the latest five trading days were approximately RMB 53.44 million, indicating weak current support. If turnover value does not expand significantly during a decline, the stock may experience a low-turnover gradual decline; if turnover value expands, it is necessary to determine whether this reflects buying support or accelerating selling pressure. Under low turnover, order-book depth and actual transaction support still need to be assessed using intraday data.

One observable volume-confirmation signal would be a daily turnover value of approximately RMB 300 million or more for several sessions during the next week, together with a closing price above RMB 22.10. This could indicate short-term fund participation or improved support. If turnover value expands but the closing price remains below RMB 20.70, the move would be closer to a high-volume breakdown than effective accumulation.

④ Points to Monitor (Observational Framework Only, Not Trading Instructions)

• Observe whether the RMB 20.70–RMB 21.00 area can stop the decline. If it fails, focus further on the strong support zone at RMB 19.80–RMB 20.10.
• Observe whether the share price can regain RMB 22.10. If not, the rebound should temporarily be regarded as a weak recovery.
• Observe whether MA5, MA10 and MA20 continue to diverge downward, with particular attention to medium-term resistance near MA20 at approximately RMB 24.31.
• Observe whether turnover value can repeatedly reach approximately RMB 300 million or more and be corroborated by major funds shifting from net outflows to net inflows. These are observational considerations only, not trading instructions.

The above scenario analysis is based on September 11, 2026 closing data and calculations using historical prices and technical indicators. Short-term share prices will also be affected by news flow, capital flows, the broader market environment and other factors. Technical indicators are inherently lagging and limited. This does not guarantee future actual performance or constitute a buy or sell recommendation. Investors should independently assess the latest market information and bear investment risks themselves.

6. Industry Structure and Competitor Analysis

6.1 Industry Overview

China’s coatings industry is large in scale but remains relatively fragmented overall. Demand for architectural coatings has been affected by pressure on new-home and completion activity in the property market. Industry growth is gradually shifting toward structural opportunities such as existing-home renovations, urban renewal, green building materials, low-VOC and water-based products, functional coatings, energy-saving insulation materials and home-decoration construction services.

6.2 Competitive Landscape

• According to the China National Coatings Industry Association, China’s coatings industry produced 35.341 million tonnes in 2024, with principal operating revenue of RMB 408.903 billion and total profit of RMB 26.29 billion. Output declined 1.60% year on year, principal operating revenue increased 1.56%, and total profit increased 9.34%.
• SKSHU’s 2025 annual report disclosed that China’s coatings industry produced approximately 34.602 million tonnes in 2025, down 7.1% year on year; principal operating revenue was approximately RMB 388.15 billion, down 3.9%; and total profit was RMB 29.25 billion, up 11.5%.
• Competition in architectural coatings is shifting from pure capacity and price competition toward brand influence, retail and engineering channel coverage, environmentally friendly and low-VOC products, R&D and formulation capabilities, nationwide production capacity, rapid delivery, and integrated capabilities in waterproofing, insulation, base and auxiliary materials and construction services.
• The industry remains relatively fragmented overall. Small coatings companies face pressure to upgrade environmental compliance, R&D, branding and supply chains, and industry concentration is expected to increase. Public information indicates that leading companies by share of the 2024 architectural-coatings market included Nippon Paint China, SKSHU, Dulux, Carpoly and Asia Cuanon.
• Market-share and CR5 data mainly come from brokerages or industry research materials rather than unified statistics for listed companies, and differ in market size, product and sales-revenue definitions. They should therefore be treated as reference data rather than audited figures.
• New-home engineering demand is under temporary pressure, while existing-home renovation, old-city redevelopment, urban renewal and self-built rural housing have become important sources of demand. Low-VOC, water-based, green building, functional coatings and energy-saving insulation materials retain growth potential.
• Supporting businesses such as waterproofing, insulation, putty, adhesives and construction services are key directions for architectural-coatings companies seeking to increase average transaction value and customer stickiness. Retail channels and home-decoration service capabilities are becoming more important, while companies relying solely on property-engineering demand have relatively weaker resilience.

6.3 Major Competitors

By segment, architectural wall paint can mainly be compared with Nippon Paint, Dulux, Carpoly and Asia Cuanon; waterproofing materials can mainly be compared with Beijing Oriental Yuhong, Keshun and Beijing New Building Materials; and insulation, mortar and comprehensive building materials can be compared with Asia Cuanon, Beijing New Building Materials and Beijing Oriental Yuhong. In industrial coatings, PPG, Akzo Nobel, Sherwin-Williams and Meijia New Materials have some comparability, but overlap less with SKSHU’s overall business structure. In its 2025 inquiry-response announcement, SKSHU identified Beijing Oriental Yuhong, Keshun, Asia Cuanon and Beijing New Building Materials as peer companies for certain businesses. These companies are therefore more suitable for horizontal analysis of its engineering-building-materials and waterproofing businesses.

7. Risk Factors

• Risk of pressure on engineering-business revenue and profit: Engineering wall-paint revenue declined 15.44% year on year in the first half of 2026. Engineering customers also feature long payment terms, strong price-negotiation power and relatively high credit risk. If engineering demand remains weak, revenue, gross margin and cash collections may come under further pressure.
• Accounts-receivable and credit-impairment risk: At the end of 2025, the carrying value of accounts receivable was approximately RMB 2.797 billion, representing approximately 22.3% of annual operating revenue. In the first half of 2026, the company recognized approximately RMB 89.0999 million in credit impairment losses, including approximately RMB 89.4224 million in accounts-receivable impairment losses. If customer collections deteriorate further, full-year impairment could exceed the first-half level.
• Raw-material price volatility risk: Materials accounted for approximately 86.77% of costs in the fine-chemicals business. Procurement prices for raw materials used in home-decoration and engineering wall paint declined in 2025, while certain raw-material prices rose in the first half of 2026 and product-price pass-through was slow. If prices of emulsions, titanium dioxide, resins, fillers or additives continue to rise, gross margin may be squeezed.
• Risk to the sustainability of high profit growth: Net profit attributable to shareholders rose 133.45% year on year in 2025, also benefiting from lower raw-material prices, an improved product mix, a low base and lower credit impairment losses. In the first half of 2026, net profit attributable to shareholders had already declined 30.92% year on year. If cost, expense and impairment factors do not improve, the previous profit recovery may fall short of market expectations.
• Cash-flow and capital-occupation risk: Net cash flow from operating activities was only approximately RMB 9 million in the first half of 2026, down 97.50% year on year. The company also has significant accounts payable, notes payable, credit facilities and guarantee arrangements for subsidiaries. If operating collections fall short of expectations, working-capital and debt-servicing pressure may increase.
• Subsidiary-guarantee and operating risk: The company recently provided total guarantees of RMB 282 million for three subsidiaries, none of which had counter-guarantees. Estimated guarantee limits for 2026 are no more than RMB 9.5 billion. If the operations or cash flows of guaranteed subsidiaries deteriorate, actual guarantee obligations could arise and affect the listed company’s financial security.
• Controlling-shareholder equity-pledge risk: After controlling shareholder Hong Jie pledged an additional 24.85 million shares, cumulative pledged shares represented approximately 28.27% of his holdings and approximately 18.94% of the company’s total shares. If the share price continues to decline or pledge-financing conditions change, attention should be paid to pledge risk and its potential impact on market expectations and control stability.
• Channel-transformation execution risk: The company is promoting retail channels, home-decoration services, “Ma Shang Zhu” and base and auxiliary-material businesses. These businesses require sustained investment in branding, channels, personnel and construction-service systems. If channel expansion and service-delivery efficiency fall short of expectations, expenses may rise while revenue and gross-margin improvement remains limited.
• Valuation and technical-volatility risk: As of September 11, 2026, the share price was below multiple short- and medium-term moving averages, and major funds recorded continuous net outflows over the latest five trading days. Depending on the methodology, dynamic PE was approximately 23.81x–28.81x, and the market valuation still incorporated some expectation of profit recovery. If subsequent results fall below institutional forecasts or the share price continues to weaken, valuation volatility may be amplified.

8. Conclusion and Outlook

The company’s medium- and long-term growth drivers mainly come from home-decoration wall paint, existing-home renovation, deeper penetration of retail channels, and integrated expansion into base and auxiliary materials, waterproofing, insulation and construction services. Home-decoration wall paint maintained growth in the first half of 2026, indicating some resilience on the retail side. If “Ma Shang Zhu” services, community stores and integrated home-decoration services can improve customer stickiness and continue to raise the proportion of high-margin products, the company may reduce its dependence on property engineering.

Short-term profit recovery still depends on whether gross margin, accounts-receivable quality and engineering-business risks improve. The sharp profit growth in 2025 included the effects of lower raw-material costs, an improved product mix and lower credit impairment losses. Gross margin and net profit declined year on year in the first half of 2026, indicating that the sustainability of the previous profit improvement still needs to be validated. Institutional forecasts for 2026–2028 differ considerably. Subsequent monitoring should focus on whether retail-business growth can offset the decline in engineering wall paint and whether pressure from raw materials, expenses and impairments eases.

The company must also maintain a balance between expansion and financial security. At the end of 2025, the carrying value of accounts receivable was approximately RMB 2.797 billion, accounting for approximately 22.3% of operating revenue, and bad-debt provisions had been identified as a key audit matter. At the same time, the company expects 2026 credit facilities of no more than RMB 15 billion and guarantee limits of no more than RMB 9.5 billion, while the controlling shareholder’s cumulative pledged shares represented approximately 18.94% of the company’s total shares. Accordingly, the company’s outlook depends not only on revenue and profit growth, but also on changes in cash collections, subsidiary operating quality, guarantee risks and the controlling shareholder’s pledge situation.

Data Sources

• SKSHU Paint Co., Ltd. 2025 Annual Report
• SKSHU Paint Co., Ltd. Announcement on the Response to the Shanghai Stock Exchange’s Regulatory Inquiry Letter Regarding Information Disclosure in the Company’s 2025 Annual Report | Shanghai Securities Journal
• SKSHU (603737) Annual Data Analysis—AskCI Industry Research Database—AskCI.com
• 2024 Economic Operations Report of China’s Coatings and Pigments Industry—Association Updates—China Coatings
• 〖Western Building Materials〗SKSHU: Differentiated Breakthrough in New Retail Formats, Capturing the Existing-Housing Market | Sina Finance
• *ST Asia Cuanon (603378)_Company Announcements_Asia Cuanon: 2024 Annual Report | Sina Finance
• SKSHU Paint Co., Ltd. Announcement on the Response to the Shanghai Stock Exchange’s Regulatory Inquiry Letter Regarding Information Disclosure in the Company’s 2025 Annual Report | Shanghai Securities Journal
• SKSHU (603737)_Company Announcements_SKSHU: 2026 Interim Report | Sina Finance
• SKSHU (603737)_Company Announcements_SKSHU: Summary of 2026 Interim Report | Sina Finance
• SKSHU (603737)_Company Announcements_SKSHU: 2025 Annual Report | Sina Finance
• SKSHU (603737) Earnings Forecasts_F10_Tonghuashun Financial Services
• Institutional Ratings | Two Institutions Update SKSHU Rating
• SKSHU (603737)_Stock Quote, Quote Homepage_Zhongcai.com
• SKSHU Paint Co., Ltd. Profile_SKSHU (603737) Company Profile_Stockstar
• SKSHU (603737)_Company Announcements_SKSHU: Key Operating Data for January–June 2026 | Sina Finance
• SKSHU Paint Co., Ltd. Summary of 2026 Interim Report | Shanghai Securities Journal
• SKSHU Controlling Shareholder Hong Jie Pledges 24.85 Million Shares; Cumulative Pledge Ratio Reaches 28.27% | Sina Finance
• SKSHU_Individual Stock Calendar_Eastmoney Data Channel
• SKSHU (603737)_Company Announcements_SKSHU: Announcement on Providing Guarantees for Subsidiaries | Sina Finance
• SKSHU (603737)_Company Announcements_SKSHU: Announcement on Applying for Credit Facilities from Financial Institutions and Providing Guarantees for 2026 | Sina Finance
• SKSHU (603737) Trading Alerts_Stockstar
• SKSHU (603737) Announcements (All) - Lixinger
• SKSHU (603737) Corporate Events_F10_Tonghuashun Financial Services
• China Securities Journal—SKSHU Paint Co., Ltd. Announcement on Litigation Developments
• SKSHU (603737)_Stock Quote, Quote Homepage_Zhongcai.com
• SKSHU (603737) Historical Stock Data: Historical Quotes, Prices and Charts—Investing.com
• SKSHU (603737) Fund Flows_Individual Stock Market Data_Tonghuashun Finance
• SKSHU (603737) - Tradable Shareholders - Sohu Securities Stock Market Center

This report was automatically retrieved, compiled and generated by AI based on publicly available information. Information is current as of the September 11, 2026 close; there was no A-share trading from September 12 to September 13, 2026, so the latest closing data remains that of September 11, 2026. Differences in timeliness may exist. Specific data should be based on the company’s formal announcements and authoritative data terminals. This report is for information compilation and research reference only and does not constitute investment advice. Investors should make independent judgments and bear investment risks themselves.