Editorial Article
China Sold the Roofs and Collected the Receivables: The Balance-Sheet Turn in Construction Chemicals
China’s largest waterproofing manufacturer sold a great deal of membrane in 2024. Very little of it became profit, and less of it became cash. That gap is now the most instructive number in the global construction chemicals market.
Beijing Oriental Yuhong reported 2024 revenue of CNY 28.06 billion, down 14.5%, and net profit attributable to shareholders of CNY 108.2 million — down 95.2%, including a CNY 1.17 billion loss in the fourth quarter. Revenue fell by roughly one-seventh. Profit fell by nearly all of it.
The number-two player tells the same story, but from the balance sheet rather than the income statement. Keshun Waterproof Technology reported revenue of CNY 6.83 billion, of which CNY 5.34 billion (78.2%) came from waterproofing materials, against gross receivables of CNY 5.62 billion and a bad-debt provision of CNY 1.54 billion — 27.4% of gross receivables (a Pheonix Research calculation), per its audited 2024 accounts. More than a quarter of everything the company was owed had to be written down.
The mechanism, and why it travels
Demand for construction chemicals is derived demand: it tracks infrastructure investment, housing cycles and renovation spend, not consumer preference. That means the customer is often a project company, and in the Chinese property market of the last three years the project company was frequently a leveraged developer. When that is the buyer, revenue converts into an impairment rather than into cash, and selling more makes the problem larger rather than smaller. Two of the largest waterproofers in the world’s biggest construction market demonstrated it in the same reporting period.
The lesson is not specific to China. It is that in a category where the product is consumed inside someone else’s construction project, the ability to be paid is a competitive capability — as much as formulation, brand or plant.
The opposing model, and what it monetises
Compare Pidilite Industries, India’s largest adhesives and construction chemicals group. It reported FY2025 net sales of INR 13,094 crore, up 8%, EBITDA of INR 3,013 crore at a 23.6% margin, and profit after tax of INR 2,096 crore, with business-to-business growth of 19.2% and gross margin up 254 basis points on lower input costs.
The two businesses sell into the same product category and monetise opposite things. Oriental Yuhong monetises project volume, which converts into receivables when the customer is stretched. Pidilite monetises brand and distribution to a fragmented base of applicators, dealers and small contractors, and a manufacturing base that benefits when raw materials are cheap. One model’s profit collapsed by 95.2% while the other’s margin widened by 254 basis points. The scoreboard is legible.
A fragmented market with a concentrated top
This is a fragmented leadership market. The ten largest suppliers hold around 40% of value between them and the global leader holds roughly 12%, on Sika’s published share structure. The majority of the market sits with regional formulators and applicator-suppliers that frequently dominate their own national channels — which is precisely why ownership of this category has been re-cut twice in five years.
BASF sold its construction chemicals business to Lone Star for EUR 3.17 billion in 2020, creating MBCC Group on roughly EUR 2.6 billion of sales. Sika then agreed to acquire MBCC for CHF 5.5 billion — 11.5x EV/pro-forma EBITDA, falling to 8.5x once CHF 160–180 million of annual synergies are included — and closed in May 2023, divesting admixtures assets to Cinven to satisfy regulators. Saint-Gobain built its own platform around GCP, bought at USD 2.3 billion, and FOSROC at roughly EUR 960 million. Across all of it the deal logic has been consistent: buyers are paying for route to market, geography and specification position, in that order.
Three tests, only one of which is size
Competition in this category is decided by three features. It is specification-led: value is captured where a product is written into a design or a standard, not where it is sold. It is service-led at the top end, where technical support, on-site advice and system warranties are part of the product itself. And, as the Chinese accounts show, it is increasingly balance-sheet-led: whether you get paid matters as much as whether you can sell.
Where the cycle sits in the portfolio
The demand picture is genuinely two-speed. Europe has run two consecutive years of contraction — following a decline of 2.5% in 2024, EU construction investment fell a further 2.1% in real terms in 2025, with a moderate recovery of 2.7% forecast for 2026 — and weakness has been concentrated in building and residential work as financing costs delayed or blocked projects. Inside that, admixture, flooring and tile-fixing volumes fall first because they track poured volume, while repair, waterproofing and protective coatings hold up better where they are driven by asset-life extension and statutory renovation.
Counterparty stress is now a sector-level signal rather than a company-level one. Germany recorded 23,900 corporate insolvencies in 2025, a decade high and 8.3% above 2024, with construction, retail, services and manufacturing leading the increase. Insolvency in this market transmits through the chain as unpaid receivables, exactly as the Chinese waterproofing accounts show — it does not arrive as a demand shock.
The net assessment for the category is that risk here is portfolio risk rather than category risk. Pheonix Research sizes the global construction chemicals market at USD 88.0 billion in 2025 rising to USD 138.2 billion by 2033, a 5.8% compound annual growth rate, with waterproofing at 6.2% a year to USD 42.7 billion. The suppliers most exposed to that growth not arriving are those with commodity-heavy product mixes and project-heavy customer bases in stressed property markets. The most insulated are those whose revenue sits in specification, service and rehabilitation — where the payer is an asset owner, not a developer under construction-cycle pressure.
The full analysis is in Global Waterproofing and Construction Chemicals Market Size, Share & Forecast to 2033.
Frequently Asked Questions
Why did China's largest waterproofing producer's profit collapse in 2024?
Beijing Oriental Yuhong reported 2024 revenue of CNY 28.06 billion, down 14.5%, and net profit attributable to shareholders of CNY 108.2 million, down 95.2%, including a CNY 1.17 billion fourth-quarter loss. When the end customer is a leveraged property developer, revenue converts into an impairment rather than into cash.
How large were the receivables problems at Keshun Waterproof Technology?
Keshun reported revenue of CNY 6.83 billion in 2024 against gross receivables of CNY 5.62 billion and a bad-debt provision of CNY 1.54 billion — 27.4% of gross receivables, a Pheonix Research calculation from the company's audited 2024 accounts.
How concentrated is the global construction chemicals market?
It is a fragmented leadership market: the ten largest suppliers hold around 40% of value between them and the global leader holds roughly 12%, according to Sika's published share structure. The majority of value sits with regional formulators that often dominate their own national channels.
Which suppliers are most insulated from the construction cycle?
Those whose revenue sits in specification, service and rehabilitation, where regulation creates demand and the payer is an asset owner rather than a developer under construction-cycle pressure. Admixture, flooring and tile-fixing volumes track poured concrete and fall first; repair, waterproofing and protective coatings hold up better.