As the release of 2026 half-year reports concludes, the operational landscape for listed paint companies has come into sharp focus. This is not a broad-based recovery but an intense period of structural divergence. The real estate chain continues to hit bottom, shrinking demand for architectural coatings; raw material prices are rising in phases, eroding profits; and currency fluctuations have become a "buffer" in the financial reports of some foreign enterprises. Simultaneously, industrial sectors such as marine, containers, new energy vehicles, electronics, new energy, aerospace, and heavy-duty anti-corrosion have emerged as a minority of high-growth poles capable of navigating the cycle. Overall, the defining keyword for the paint industry in the first half of 2026 is not "growth" but "divergence"—divergence in revenue, profits, cash flow, and market segments. A company's ability to convert revenue into profit and cash flow is becoming more critical than the revenue figure itself.

The overall picture shows revenue bright spots, but profits are broadly under pressure. Among leading companies, Nippon Paint China recorded sales of 268.8 billion yen (approximately RMB 11.636 billion) in the first half of 2026, a 9.6% year-on-year increase, with adjusted operating profit of 43.3 billion yen (approximately RMB 1.874 billion), up 12.3%, and an adjusted operating margin of 16.1%, an increase of 0.4 percentage points. Notably, its second-quarter adjusted operating profit was 18.7 billion yen, a slight 0.1% year-on-year decline, indicating persistent cost pressures. The growth for Nippon Paint China was significantly bolstered by favorable exchange rates and strong performance in automotive coatings, industrial coatings, and non-paint auxiliary materials, rather than a comprehensive recovery in architectural paints.

Segment-wise, in the first half of 2026, Nippon Paint China's automotive coatings business saw sales of 35 billion yen, a substantial 30.5% increase. Despite a slight dip in overall vehicle production, robust sales to Chinese manufacturers and favorable currency effects drove this significant revenue surge. Its general coatings (architectural) segment posted sales of 219.7 billion yen, up 6.6%, benefiting largely from significant volume growth in its non-paint business, while both its TUC and TUB revenue streams experienced year-on-year declines. The industrial coatings segment grew by 14.9% to 13.6 billion yen, fueled by strong demand in coil coatings and general industrial coatings, alongside currency impacts.

The domestic leader San Ke Shu reported first-half 2026 revenue of RMB 6.039 billion, a 3.83% year-on-year increase, but its net profit attributable to shareholders plummeted 30.92% to RMB 301 million. Its non-GAAP net profit fell 28.41% to RMB 209 million, and net operating cash flow drastically declined 97.5% to a mere RMB 8.78 million. This is a classic case of "increasing revenue without increasing profit, and increasing profit without increasing cash." By business line, its home renovation wall paint revenue grew 11.53% to RMB 1.756 billion, while engineering wall paint revenue dropped 15.44% to RMB 1.518 billion. Substrates and auxiliary materials revenue increased 11.99% to RMB 1.940 billion. Waterproofing membrane revenue rose 9.65% to RMB 504.7 million, and decorative construction services revenue surged 41.15% to RMB 167.8 million.

In the first half of 2026, Beijing New Building Material (BNBM)'s coatings and building materials division (excluding waterproof coatings) achieved revenue of RMB 2.194 billion, a marginal 1.43% increase, but net profit fell 7.53% to RMB 161 million. The division's net operating cash flow was severely negative at -RMB 1.033 billion, a significant deterioration. Its subsidiary BNBM Carpoly saw revenue of RMB 1.827 billion, nearly flat with a 0.11% increase, while net profit dipped 3.94% to RMB 143.9 million. Its operating cash flow improved 24.07% to RMB 186.6 million, and total liabilities decreased 7.88% to RMB 1.064 billion. Excluding merger amortization, BNBM Carpoly's net profit was RMB 189.9 million for the period, a 5.38% year-on-year decline.

Foreign and joint ventures also showed divergent results. Axalta's China region generated sales of approximately USD 286 million (about RMB 1.948 billion) in the first half of 2026, a 7.14% decrease. Siweitu (Shanghai) Coatings Co., Ltd. recorded revenue of RMB 2.344 billion, a 2.00% increase, but its net profit fell 32.32% to RMB 127.1 million. COSCO Chimbridge Marine Coatings achieved sales revenue of approximately RMB 2.364 billion (based on previous selling prices), up 7.7%, yet its attributable profit decreased 4% to HKD 163.7 million. COSCO Kansai reported an 8.108 billion yuan sales revenue, a 13% increase, with pre-tax profit up 7% to RMB 189.3 million. It's clear that growth in the first half of 2026 was not absent; it simply shifted sources. Real-estate-linked businesses broadly struggled, while autos, industry, marine, containers, new energy, electronics, and going-global initiatives became the primary growth drivers. Profits were generally eroded by rising raw material costs, increased R&D and sales expenses, and credit impairment losses.

Architectural coatings and the real estate chain are shifting from "scale expansion" to "de-real-estate-ization." This segment remains the most heavily impacted by the property downturn. Nippon Paint China's general coatings (architectural) sales reached 219.7 billion yen, a 6.6% increase, but its TUC business revenue, while growing in non-paint volumes, declined 14% in local currency terms, and TUB revenue fell 9% year-on-year. This shows that its architectural coatings growth relied on exchange rates and non-paint auxiliary materials, while traditional demand stayed weak. The company emphasized "adherence to channel discipline and avoiding excessive channel inventory build-up," reflecting that channel health is more critical than short-term shipments.

The changing structure at San Ke Shu is more representative. While its home renovation wall paint grew 11.53% and engineering wall paint fell 15.44%, its substrate and auxiliary materials revenue increased 11.99%, waterproofing membranes grew 9.65%, and decorative construction services jumped 41.15%. Retail, substrates, waterproofing, and construction services countered the downturn in engineering coatings, but the significant drop in net profit and cash flow indicates the profitability quality of these new growth areas is not easy. BNBM Carpoly's first-half revenue was nearly flat at RMB 1.827 billion, with building coatings volumes actually growing, but net profit decreased 3.94%. Even though its operating cash flow grew 24.07% year-on-year, the overall coatings division's cash flow was -RMB 1.033 billion, showing tension between expansion and receivables. More severe was *ST Yashi, whose first-half revenue plunged 52.31% to RMB 128.4 million, with a net loss attributable to shareholders widening to RMB 223.6 million from RMB 191.6 million. Its functional building coatings revenue fell nearly 60%, with engineering coatings down 60.79% and building energy-saving materials down 57.71%. This is the direct impact of the deepening real estate downturn.

Yip's Chemical's coatings business (Bauhinia New Materials Group) saw sales volume decline 8.0% to 72,000 tons, but turnover increased 2% to HKD 688 million, with gross margin improving to 29.9% and segment results up 2% to HKD 22 million. The proportion of architectural coatings within its overall business has greatly reduced as the group accelerates "de-real-estate-ization," pivoting towards higher-margin industrial coatings. Zhanchen New Materials saw architectural coatings revenue fall 39.21% to RMB 5.2183 million, citing a "proactive strategic contraction" of this business. Linghu Co.'s coatings revenue was down 7.20% to RMB 85.7557 million, with net profit attributable to shareholders falling 57.97% to RMB 2.4164 million. Meijia New Materials's powder coatings revenue declined 13.62% to RMB 86.5062 million, resulting in a net loss of RMB 15.6018 million. The conclusion is clear: a broad recovery in architectural coatings hasn't arrived. Companies tied to the real estate chain are navigating a difficult transition from engineering expansion to retail, substrates, waterproofing, construction, and industrial coatings. Those who can control receivables, channel inventory, and cash flow will be best positioned to wait for opportunities from existing home renovation and urban renewal.

Within automotive coatings, a high-growth sector, new energy vehicles and refinish paints provide support while the traditional new car chain faces pressure. Nippon Paint China's automotive coatings business saw first-half sales of 35 billion yen, up 30.5%, with second-quarter sales of 18.4 billion yen, up 26.5%, driven by Chinese manufacturers and currency effects. Siweitu benefited from NEV customers like Li Auto and NIO, growing revenue by 2.00%, but rising raw material costs led to a 32.32% fall in net profit. Axalta China's revenue fell 7.14%, showing competitive and demand pressures facing foreign companies. Donglai Technology's automotive refinish coatings revenue grew 23.85% to RMB 156 million, but its new car interior/exterior parts and body coatings revenue combined fell 15.39% to RMB 125 million due to the market slowdown and customer concentration issues. However, its 3C consumer electronics coatings revenue surged 107.56% to RMB 7.1937 million. KNT Co. saw first-half revenue grow 19.73% to RMB 439 million, with net profit attributable to shareholders up 9.83% to RMB 9.5646 million and non-GAAP net profit up 93.12%. Its cathodic electrophoretic coatings revenue increased 12.97%, and topcoat revenue grew 27.42%, benefiting from NEV industry expansion, import substitution, and vehicle exports, though gross margins slightly declined. Sokan Co.'s first-half revenue fell 4.49% to RMB 331.9 million, with a net loss attributable to shareholders of RMB 5.0035 million. Its high-end consumer electronics segment revenue dropped 23.11%, while its passenger vehicle segment revenue grew 38.88%, showing pressure in consumer electronics but strength in automotive. Yatu High-tech, focused on automotive refinish coatings, saw revenue grow 7.09% to RMB 350.4 million with a strong 46.22% gross margin, and its operating cash flow improved 31.46% to RMB 96.2914 million. Overall, growth in automotive coatings is driven by NEV customers, refinish paints, interior/exterior trims, and import substitution in E-coat and topcoats, while traditional OEM body paints, some JV customers, and consumer electronics coatings face headwinds. Raw material inflation and competition pressure margins, but companies with superior customer structures and technical barriers can maintain healthy cash flow.

Industrial coatings, marine, and heavy-duty anti-corrosion segments are supported by high-end manufacturing, making them one of the most promising sectors in the first half of 2026. COSCO Chimbridge Marine Coatings sold 78.615 million liters of marine coatings (about 106,130 tons), up 14%, with new building coatings volumes up 20% and maintenance coatings down about 2%. However, attributable profit fell 4% to HKD 163.7 million due to commodity market fluctuations and increased production costs, partially mitigated by cost management. COSCO Kansai saw container coatings sales volume surge 29% to 37,060 tons, while industrial heavy-duty anti-corrosion coating volumes fell 3% to 10,810 tons. Its revenue grew 13% to RMB 810.8 million, with pre-tax profit up 7% to RMB 189.3 million. Mega Cores' first-half revenue decreased 6.04% to RMB 834 million, with net profit attributable to shareholders down 65.61%. Its marine equipment segment revenue fell 18.47%, but its new energy segment grew 20.22%. Encouragingly, second-quarter revenue grew 32.43% sequentially, and net profit jumped 176.05% quarter-on-quarter, indicating improving trends. Jitai Co.'s coatings product revenue fell 18.95% to RMB 113 million, with container segment revenue down 16.01%, but second-quarter container sales rebounded 55.44% sequentially due to the shipping season and geopolitical factors. CNOOC Changzhou Environmental Protection Coatings saw revenue slightly decline 2.96% to RMB 219.8 million but net profit grew 6.84% to RMB 33.4299 million, a "revenue contraction, profit growth" pattern driven by a premium product mix focusing on marine engineering, offshore wind, and nuclear power. Huaqin Technology's revenue surged 42.12% to RMB 734 million, with net profit up 17.55%. Its special functional materials (mainly stealth coatings) revenue grew 20.50%. Jiachi Technology's revenue fell 6.50% to RMB 261 million, and net profit dropped 40.91%, despite electromagnetic functional coating material revenue growing 69.0%, due to slowed order releases, credit impairments, depreciation, and higher R&D costs. Haohua Technology's special coatings output increased 8.96% but sales volumes fell 16.02%, leading to a 9.65% revenue decline to RMB 280.1 million, though average prices rose 7.65%. Other companies like Huayi Fine Chemicals saw overall revenue fall 19.65%, but its pigment business grew 10.01%, partially offsetting coatings declines. Feilu Co.'s anti-corrosion coating revenue fell 5.67%, but its new energy materials revenue surged 143.80% (though with negative gross margins). Furen Xuanwei saw revenue grow 32.15% with narrowed losses, connecting with over 40 customers in marine heavy-duty and petrochemical anti-corrosion. Yuxi Co.'s anti-corrosion functional materials revenue grew 48.69%. China Paint Group's industrial coatings revenue increased 19.1% to HKD 67.283 million, with general industrial coatings and ancillary products up 35.5%. The logic here is clear: high-end manufacturing demand from new shipbuilding, container repairs, marine engineering, petrochemicals, new energy (wind/PV), and aerospace (including military) offers the most certain growth. But raw material costs, project cycles, and collection schedules dictate profit realization.

New energy, electronics, and new materials are the second growth curves for paint companies, but results in the first half of 2026 were mixed. Mega Cores' new energy segment grew 20.22%. Huigu New Materials saw revenue grow 16.22% to RMB 576.5 million, but net profit only rose 3.37%. Its packaging business grew 27.12%, new energy business grew 61.05%, and electronics business grew 19.58%, but increased R&D and raw material costs capped profit growth. Feikai Materials' UV-curable materials business grew 29.84%, boosted by AI data center infrastructure demand for fiber optics and a 28% increase in automotive interior trim coatings. Sokan Co.'s passenger vehicle segment grew 38.88%, but its high-end consumer electronics decline led to an overall loss. Donglai Technology's 3C electronics coatings grew 107.56%. China National Electric Apparatus Research Institute (CEI)'s environmental coatings and resins business saw revenue grow 7.49%, with net profit up 38.36% due to market expansion and cost control. Yusanxia A grew revenue 13.83% and net profit 28.37%, but its non-GAAP net profit fell 62.68%, highlighting the impact of non-recurring items. The opportunities in new energy and electronics are real, but intense competition, rapid technological iteration, and heavy R&D mean profit realization often lags behind revenue. Companies must balance R&D, capacity, customer certification, and cash flow.

Profit quality and cash flow were more significant signals than revenue in the first half of 2026. The deterioration in profits and cash flow is the most concerning trend. San Ke Shu's net operating cash flow was a mere RMB 8.78 million, down 97.5%. BNBM's coatings division had negative net operating cash flow of -RMB 1.033 billion. Others like Mega Cores, Jitai Co., Zhanchen New Materials, Huier Ming, Feijing New Materials, and Huatu Technology all reported negative cash flows, indicating significant pressure from receivables, inventory, and payments. Conversely, certain companies demonstrated strong profit and cash flow performance. Yatu High-tech had net operating cash flow of RMB 96.2914 million, up 31.46%. Huigu New Materials saw cash flow grow 42.65%. Yuxi Co. grew net profit by 31.07%. Jufeng Co.'s cash flow grew 58.76%, and Pentium Co. turned its cash flow positive. On gross margins, raw material inflation was a common pressure point. Sokan Co.'s gross margin fell 3.12 percentage points. KNT Co. saw its E-coat margin slip to 32.00% and topcoat margin to 28.25%. Hengxing Co. saw its margin fall to 35.26%, and Kede Technology to 24.74%. Meijia New Materials' margin was just 4.67%. However, Yatu High-tech saw its gross margin slightly improve to 45.02%, a rare bright spot. Non-recurring items also affected profit quality. Champion Technology reported a 163.26% increase in net profit, but its non-GAAP profit plunged 57.17% due to a RMB 7.5 million government subsidy. Yusanxia A and Pentium Co. also showed large gaps between reported profit growth and non-GAAP profit, indicating that some profit growth relies on subsidies, asset disposals, or lower finance costs.

Looking ahead, several trends will continue. First, the real estate chain will continue to grind lower, with no broad recovery for architectural coatings. Engineering coatings will remain under pressure, while opportunities lie in existing home renovation, retail, substrates, and urban renewal. Companies must control engineering risks and avoid poor receivables. Second, industrial coatings and overseas expansion will be the main growth engines. Sectors like marine, containers, marine engineering, petrochemicals, nuclear, wind, aerospace, NEVs, and electronics will supply growth. Import substitution and going global are the two main threads. Zhanchen saw overseas revenue grow 17.82% to RMB 153.6 million, Hengxing saw overseas revenue grow 27.21% to RMB 168.7 million (nearly 40% of its revenue), and China Paint Group saw a 25.6% increase in sales to industrial manufacturers. Third, cost pressures and price competition will persist. Raw material price hikes and industry "involution" will make margin recovery difficult, requiring product premiumization, pricing mechanisms, and supply chain management. Fourth, profit and cash flow are more important than revenue. The cash flow stress at companies like San Ke Shu, BNBM, Mega Cores, Jitai Co., and Zhanchen serves as a warning: growth without cash collection is dangerous. The companies that thrive will be those with healthy cash flow, strong customer structures, and rational channel inventory, not necessarily the fastest-growing. Fifth, industry consolidation and merger activity will accelerate. *ST Yashi's revenue collapse highlights the risk exposure from the real estate chain. BNBM's acquisition of Carpoly shows the shift from fragmented competition to consolidation. Companies with capital, brand, channel, and technology advantages will expand shares during this shakeout.

In conclusion, the Chinese paint industry in the first half of 2026 presents a "two worlds" scenario. Companies tied to real estate are in contraction, losses, and transformation, while those serving marine, containers, NEVs, electronics, new energy, and exporting are growing against the trend. Even leaders like Nippon Paint China, San Ke Shu, BNBM, Siweitu, and Mega Cores face profit or cash flow pressures, making the challenges for smaller firms even more severe. The essence of this divergence is a fundamental shift in the industry's growth logic—from real estate-driven to industrial and consumption-driven, from scale expansion to value creation, and from domestic competition to global competition. The companies that can successfully "de-real-estate-ize," premiumize, and globalize, while defending margins and cash flow against cost increases and price wars, will be best positioned for the next recovery. The first half of 2026 is not the end but the start of a new reshaping of the industry landscape.

Note: Data comes from financial reports or announcements. Revenue and net profit are in RMB hundreds of millions. Nippon Paint China figures represent operating profit. COSCO Chimbridge's sales are estimated based on 2025 data. BNBM figures are for its coatings business only. For some companies like Jiachi, Feikai, Guangxin, Shanghai Sinyang, Jufeng, Jitai, Linghu, Yuxi, and Meijia, revenue is for coatings business while net profit is for the group. For others, specific business segments are noted.