3Q26 Preview: persistent demand weakness, divergent ASP outlook and cost inflation pressure

We expect our BM coverage to deliver on average 1%/-5% yoy revenue and net profit growth in 3Q. We see ASP trends and raw material cost inflation pressure slightly diverging for Yuhong, BNBM, Skshu and Vasen, albeit with shared volume challenges due to persistent demand weakness. Channel deepening, product premiumization, volume-price rebalancing (mainly BNBM) and overseas expansion (mainly Yuhong) are still the main buffers for earnings downside for our Buy rated names. Fiscal stimulus and FAI acceleration are the key areas of focus to gauge the potential demand improvement into 4Q and next year. We revise our 2026E-28E EPS forecasts by an average -4%/-5%/-3%. We retain our Buy ratings on Yuhong, BNBM and Skshu, and Neutral rating on Vasen. Rising bitumen prices (above Rmb6,000/ton, up c.50% qoq) pressure waterproofing margins, while architectural paint faces persistent price competition;