Skshu store visit & Nippon Paint China site tour takeaways: Extended demand weakness and intense competition; FAI acceleration/stimulus key to watch; Buy

We recently visited Skshu's retail store and went on Nippon Paint's China Site Tour 2026 in Guangzhou. Overall, our observations of industry dynamics and the competitive landscape include: 1) amidst the tough outlook for project demand, Nippon expects its TUB business to bottom out in 4Q26E while Skshu remains concerned; 2) shared focus on two fast-growing retail segments, i.e. repaint demand for aged urban housing and "stone-effect" exterior wall coating for rural self-built housing, where competition has been intensifying; 3) rising industrial coating penetration, with Nippon well ahead of Skshu in revenue share (mid-teens % vs. ~1% of Skshu's 2026E revenue), suggesting wide room for growth for Skshu;