Goldman Sachs maintains a Sell rating on Glodon, cuts target price to Rmb9.33

Overview

This is a Goldman Sachs company research report on the key takeaways from Glodon's 2026 annual event. The report says 2026 is the first year of Glodon's tenth three-year plan, with strategic priorities including a next-generation integrated platform, construction AI, high-growth segments such as infrastructure and urban renewal, and overseas expansion. In the near term, revenue fell 5% YoY to Rmb1.2bn in 1Q26 because new construction momentum was weaker than expected; over the longer term, AI transformation and customized industry solutions could provide upside.

Core views

The core view is cautious. Goldman Sachs recognizes Glodon's long-term positioning in construction data, AI products, and platform upgrades, but believes near-term revenue pressure, weak project demand, and rising R&D spending will weigh on profitability. The report therefore cuts 2026-2028E earnings estimates and maintains a Sell rating.

Analysis framework

The report analyzes the company using discussions from the annual event, 1Q26 results, business-line revenue assumptions, R&D spending assumptions, and a DCF valuation framework. It focuses on the progress of Glodon's strategic shift from traditional construction software to an integrated platform and AI solutions, while also assessing the impact of weak near-term construction project demand on revenue and profit.

Methodology notes

• Valuation methodTwo-stage DCF

  Estimate the target price by discounting long-term free cash flow

  Goldman Sachs uses a DCF approach to estimate Glodon's target price, assuming a 2% annual growth rate in second-stage FCF for 2032E-2036E, a 2% perpetual growth rate, and an 11.7% WACC.

• Relative valuation reference12-month forward P/S

  Compare the sales multiple implied by the target price with the historical trading range

  The target price implies 2026/2027 P/S ratios of about 2x/3x, and the 2026E P/S is broadly in line with the company's historical P/S trading range since January 2020.

• Factor frameworkGS Factor Profile

  Compare stock characteristics across growth, financial returns, valuation multiples, and an overall composite measure

  Goldman Sachs' factor framework compares stocks on standardized rankings for growth, financial returns, valuation multiples, and composite percentile as a background investment reference.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Glodon Co. (002410.SZ)

  Covered name; Goldman Sachs maintains a Sell rating

  Strengths

  Has construction-industry data assets and is advancing a next-generation integrated platform, PMLead, PMSmart, and other AI products, while establishing an AI engineering department to accelerate AI agent development.

  Weaknesses

  1Q26 revenue fell 5% YoY, new construction momentum was weak, revenue from cost-estimation and construction-management software was under pressure, and platform upgrades plus AI tool R&D spending increased expenses.

  Comparison

  The target price implies a 2026E P/S of about 2x, which the report says is in line with the company's historical P/S trading range since January 2020.

  Risks

  If construction-industry digitalization, construction-management expansion, macro and property market recovery, or easing competition proceed faster than expected, the Sell rating and target price could face upside risk.

Key data

• 1Q26 RevenueRmb1.2bnDown 5% YoY, mainly due to weaker-than-expected momentum in new construction starts.
• 2026E earnings estimate change-27%The downgrade mainly reflects lower revenue assumptions for cost-estimation and construction-management software, as well as higher R&D spending.
• 2027E earnings estimate change-32%The report shows the largest downgrade in 2027E earnings among the three years.
• 2028E earnings estimate change-29%The downgrade also reflects weak project demand and higher R&D spending on platform and AI tools.
• Target priceRmb9.33The previous target price was Rmb10.89.
• WACC11.7%DCF assumptions include beta of 1.3, a risk-free rate of 3.0%, and an equity risk premium of 6.5%.
• Perpetual growth rate2%In line with Goldman Sachs' assumption for China technology coverage.
• Implied 2026/2027 P/S2x / 3xDerived from the Rmb9.33 DCF target price.

Impact & implications

For investors, the report implies that Glodon's long-term narrative is shifting toward AI for the construction industry, data platforms, and industry-customized solutions, but near-term fundamentals remain constrained by weakness in real estate and new construction starts. The downward revisions to earnings estimates and the target price indicate that Goldman Sachs believes the long-term value from the transformation is not yet enough to offset recent revenue and expense pressure.

Risks

• Construction-industry digitalization accelerates faster than expected.
• Construction-management business expansion is faster than expected.
• The macroeconomy and real estate market turn upward.
• Competitive pressure eases.
• AI transformation and industry-customized solution monetization accelerate faster than expected.

What to watch

• Execution progress on the integrated platform in the new three-year plan, and whether data integration across cost estimation, construction, and design creates real synergies.
• Customer adoption and commercialization progress for core AI products such as PMLead and PMSmart.
• Project wins in new segments such as infrastructure, urban renewal, industrial, and energy.
• Whether the flagship construction-management platform projects can be replicated across more customers.
• The pace of overseas expansion and revenue contribution.
• The impact of R&D spending on margins and free cash flow.
• Whether new construction starts and demand along the property chain improve.