Summary of China Jushi (600176.SS) Conference Call Company Overview - **Company Name**: China Jushi - **Industry**: Glass fiber production and sales - **Headquarters**: Zhejiang, China - **Production Bases**: Zhejiang, Jiangxi, Sichuan, with additional facilities in Egypt, the US, and India - **Global Position**: Leading player in the glass fiber industry with a production capacity of 1.7 million tons as of 2018 [14][15] Key Financial Insights - **Target Price**: Raised to Rmb26.1 per share, reflecting a 39% expected return from the current price of Rmb18.78 [3][16] - **Market Capitalization**: Rmb75.179 billion (approximately US$10.788 billion) [3] - **Earnings Forecasts**: - 2025E: Net profit of Rmb3.472 billion, EPS of Rmb0.868 - 2026E: Net profit of Rmb5.287 billion, EPS of Rmb1.321 - 2027E: Net profit of Rmb5.992 billion, EPS of Rmb1.498 [5][8] - **Earnings Revisions**: - 2025/26/27 earnings forecasts revised up by 9.7%/35.8%/31.1% due to higher volume and gross margin expectations [2][8] Price and Profitability Trends - **E-fabric Price Increase**: E-fabric prices increased by approximately Rmb0.2 per square meter, with E-glass yarn prices rising by Rmb100-200 per ton month-over-month [1][2] - **Profit Margins**: - E-fabric unit net profit expected to rise to Rmb1.3-1.4 at current average selling prices (ASPs) of Rmb4.5 including tax [1] - Gross margin projected to improve significantly, reaching 36.9% in 2026E and 38.7% in 2027E [7] Market Dynamics and Catalysts - **Supply Constraints**: The supply of E-fabric remains tight, suggesting potential for further price increases in Q1 [1][11] - **Management Guidance**: Anticipated updates on low-DK fabric business progress expected around the annual results presentation [1][11] - **Upside Catalyst**: A 90-day upside catalyst watch has been initiated, anticipating further price hikes and management announcements [10][11] Risks and Considerations - **Downside Risks**: - Weaker-than-expected demand for glass fiber products - Rising energy and power costs - Greater-than-expected capacity additions [17] - **Upside Risks**: - Better-than-expected demand - Supply-side discipline that could protect margins [17] Conclusion - **Investment Recommendation**: The company is rated as a "Buy" due to improved earnings visibility, expected price increases, and a favorable market position within the glass fiber industry [1][15]

Investment Rating - The report maintains a "Strong Buy" rating for the fiberglass sector, indicating a positive outlook for investment opportunities in this industry [2]. Core Insights - The report highlights a favorable policy environment that is expected to support the fiberglass sector's growth, particularly in 2026, with anticipated price increases for electronic fabrics due to supply constraints and high demand for mid-to-high-end products [7][11]. - The report emphasizes the importance of leading companies in the construction materials sector, which are expected to show resilience and profitability as the real estate market stabilizes [7][11]. Summary by Sections Cement - The cement market is entering a seasonal slowdown, with prices expected to decline as demand weakens ahead of the Chinese New Year. The average price is around 353 RMB/ton, with a decrease of 4.7 RMB/ton week-on-week [25][27]. - Southern regions are experiencing a temporary uptick in demand due to project completions before the holiday, while northern regions face declining demand due to cold weather [32][34]. Glass - Float glass prices have seen a slight increase, with an average price of 1,138 RMB/ton, while inventory levels have decreased by 4% week-on-week [35]. - The report anticipates a stable price environment for glass in the short term, with supply reductions expected to support price stabilization as the industry faces ongoing profitability challenges [44]. Fiberglass - The report notes that electronic fabric prices have increased, with the G75 electronic yarn priced between 9,300-9,700 RMB/ton, and the 7628 electronic fabric priced at 4.4-4.85 RMB/meter, reflecting a stable demand and supply situation [49]. - The fiberglass sector is expected to benefit from structural adjustments in product offerings, leading to a favorable supply-demand balance and potential price increases in 2026 [11][45]. Carbon Fiber - Carbon fiber prices are expected to remain stable in the short term, with the report highlighting the potential for increased demand driven by advancements in commercial aerospace [11][13].

Group 1 - The glass fiber sector increased by 0.65% on January 16, with Honghe Technology leading the gains [1] - The Shanghai Composite Index closed at 4101.91, down 0.26%, while the Shenzhen Component Index closed at 14281.08, down 0.18% [1] - Key stocks in the glass fiber sector showed varied performance, with Honghe Technology rising by 6.00% to a closing price of 40.29, while other stocks like Qibin Group and China National Building Material experienced slight declines [1] Group 2 - The glass fiber sector saw a net outflow of 44.76 million yuan from main funds, while retail investors experienced a net outflow of 106 million yuan [2] - The sector attracted a net inflow of 151 million yuan from speculative funds [2] - Detailed fund flow data indicates that Honghe Technology had a main fund net inflow of 10.3 million yuan, while China National Building Material saw a net inflow of 56.69 million yuan [3]

Investment Rating - The industry investment rating is "Market Weight" [51] Core Insights - The construction materials industry is experiencing a continuous release of "stabilizing real estate" signals, with further optimization of supply-side measures [2][42] - Cement production is strictly regulated according to approved capacity, with over 280 clinker production lines replaced by the end of 2025, resulting in an annual capacity reduction of 150 million tons [3][42] - The glass fiber industry is undergoing a structural recovery driven by "anti-involution" policies, with demand shifting from traditional construction materials to high-growth emerging fields [44] Summary by Sections Industry Overview - The construction materials sector has shown a 3.37% increase over the past two weeks, outperforming the CSI 300 index by 0.75 percentage points [11] - The cement market is facing a decline in production and prices due to reduced demand from real estate and infrastructure [3][21] Cement - The average price of cement is currently 316 RMB/ton, down 2 RMB from the previous week, with regional variations in demand affecting prices [21] - The cement industry is expected to see demand supported by major infrastructure projects and urban renewal in 2026, despite ongoing price fluctuations [3][43] Glass and Glass Fiber - The average price of float glass in December 2025 was 1121.29 RMB/ton, reflecting a month-on-month decrease of 8.14% and a year-on-year decrease of 18.0% [44] - The glass fiber sector is benefiting from high demand in advanced applications such as AI servers and 5G communications, with a focus on upgrading production technologies [44] Consumer Building Materials - The Ministry of Commerce and other departments have issued a notice promoting green consumption, which is expected to drive growth in the renovation and urban renewal sectors [45] - Leading companies are enhancing their market share through brand advantages and service improvements, focusing on retail and overseas expansion [45] Recommended Stocks - The report suggests focusing on companies with strong fundamentals and high dividend yields, including Shangfeng Cement (000672), Tapai Group (002233), and Huaxin Cement (600801) [43][46]

Core Viewpoint - The article emphasizes that China Jushi is a leading company in the fiberglass industry, demonstrating strong financial performance, significant shareholder support, and a commitment to innovation and shareholder returns [4][35]. Group 1: Shareholder Support and Financial Performance - China Jushi's major shareholders, China National Building Material and Zhenstone Group, plan to increase their holdings by 1.3 billion to 2.5 billion and 5.5 billion to 11 billion respectively, signaling confidence in the company's future [4][7]. - In the first three quarters of 2025, China Jushi achieved a revenue of 13.9 billion, a year-on-year increase of 19.5%, and a net profit of 2.57 billion, up 67.5% year-on-year [8][15]. - The company reported a significant increase in cash flow from operating activities, reaching 2.13 billion, which doubled compared to the previous year [17]. Group 2: Market Dynamics and Growth Potential - The fiberglass industry is experiencing a turnaround, moving away from previous struggles, with increased demand driven by sectors like wind energy and automotive lightweighting [13][19]. - The demand for fiberglass in wind energy is particularly strong, with approximately 10,000 tons required for every GW of installed capacity, and the trend towards larger wind turbine blades is expected to sustain this demand [19]. - The automotive sector is also a growing market for fiberglass, as it contributes to weight reduction and improved fuel efficiency in electric vehicles [20]. Group 3: Competitive Advantages and Cost Control - China Jushi holds a dominant position in the fiberglass market, with a production capacity that accounts for 32% of the domestic market, alongside a high concentration of production among a few key players [22][23]. - The company has established a global production footprint, with facilities in China, Egypt, and the USA, allowing it to mitigate trade risks and maintain supply chain efficiency [24][25]. - China Jushi's cost control measures, including innovative manufacturing techniques, have resulted in consistently higher profit margins compared to competitors [26][28]. Group 4: Commitment to Shareholders - China Jushi has not reduced its holdings since its IPO 27 years ago and has consistently returned value to shareholders through cash dividends, totaling 11.26 billion, which exceeds the total capital raised since its listing [31][32]. - The company has committed to distributing a minimum of 35%, 40%, and 45% of its net profit as dividends in the upcoming three years [32][33].

Group 1 - The glass and fiberglass sector increased by 3.23% compared to the previous trading day, with International Composite Materials leading the gains [1] - The Shanghai Composite Index closed at 4112.6, down 0.33%, while the Shenzhen Component Index closed at 14306.73, up 0.41% [1] - Key stocks in the glass and fiberglass sector showed significant price increases, with International Composite Materials rising by 7.03% to a closing price of 7.76, and China Jushi increasing by 4.38% to 18.33 [1] Group 2 - The glass and fiberglass sector saw a net inflow of 419 million yuan from institutional investors, while retail investors experienced a net outflow of 490 million yuan [2] - The trading volume for International Composite Materials was 2.56 million shares, with a transaction value of 2.01 billion yuan [1] - The stock with the highest decline was Zai Sheng Technology, which fell by 10.03% to a closing price of 10.67 [2] Group 3 - Major stocks like Zhongcai Technology and Honghe Technology had varying net inflows and outflows, with Zhongcai Technology seeing a net inflow of 385 million yuan from institutional investors [3] - The net outflow for retail investors in Zhongcai Technology was 273 million yuan, indicating a significant divergence in investor sentiment [3] - The overall market sentiment in the glass and fiberglass sector reflects a mixed response, with some stocks experiencing strong institutional support while others faced retail selling pressure [3]

Group 1 - The core viewpoint of the news is that China Jushi Co., Ltd. has seen a stock price increase of 5.01%, reaching 18.44 CNY per share, with a trading volume of 874 million CNY and a turnover rate of 1.20%, resulting in a total market capitalization of 73.818 billion CNY [1] - China Jushi is primarily engaged in the production and sales of fiberglass and related products, with its main business revenue composition being 97.41% from fiberglass and its products, 1.63% from other sources, and 0.96% from wind power [1] Group 2 - From the perspective of fund holdings, one fund under Rongtong has a significant position in China Jushi, specifically the Rongtong Central Enterprise Selected Mixed A Fund (022237), which held 120,200 shares, accounting for 4.26% of the fund's net value, making it the sixth-largest holding [2] - The Rongtong Central Enterprise Selected Mixed A Fund (022237) has a total asset size of 403.378 million CNY and has achieved a year-to-date return of 3.63%, ranking 4411 out of 8840 in its category, with a cumulative return since inception of 16.86% [2]

Market Overview - The glass and fiberglass sector increased by 0.07% on January 14, with Jiuding New Materials leading the gains [1] - The Shanghai Composite Index closed at 4126.09, down 0.31%, while the Shenzhen Component Index closed at 14248.6, up 0.56% [1] Stock Performance - Jiuding New Materials (002201) closed at 12.52, up 10.02% with a trading volume of 722,900 shares and a transaction value of 879 million [1] - International Composites (301526) closed at 7.25, up 3.72% with a trading volume of 1,466,900 shares and a transaction value of 1.059 billion [1] - China Glass (600176) closed at 17.56, down 0.57% with a trading volume of 485,300 shares [1] - Other notable stocks include Zhongcai Technology (002080) at 36.39, up 2.22%, and Honghe Technology (603256) at 36.08, up 1.29% [1] Capital Flow - The glass and fiberglass sector saw a net inflow of 40.23 million from institutional investors, while retail investors contributed a net inflow of 13.7 million [2] - However, speculative funds experienced a net outflow of 178 million [2] Individual Stock Capital Flow - Jiuding New Materials had a net inflow of 3.09 billion from institutional investors, but a net outflow of 1.34 billion from speculative funds [3] - Zhongcai Technology saw a net inflow of 65.48 million from institutional investors, with a net outflow of 44.13 million from speculative funds [3] - International Composites had a net inflow of 33.60 million from institutional investors, while speculative funds experienced a net outflow of 31.69 million [3]

Summary of China Jushi 2026 Business Outlook Call Company Overview - **Company**: China Jushi (600176.SS) - **Date of Call**: January 12, 2026 - **Participants**: Mr. Ding Chengche (Board Secretary), Ms. Xu Mengdan (IR Director) Key Industry Insights - **Cyclical Outlook**: Management anticipates 2024 as the cycle trough, 2025 as a recovery year, and 2026 as a favorable year with resilient demand and moderated supply growth [3][15] - **Supply-Demand Dynamics**: Expected supply growth of approximately 500,000 tons in 2026 compared to around 1 million tons in 2025. Demand growth in 2026 is estimated at around 6%, with potential upside to 8-9% [3][15] Financial Performance - **Fiberglass Profitability**: Profitability has stabilized at a higher level, with net profit per ton consistently exceeding RMB 800, currently around RMB 900-1000. Most peer producers are near breakeven [4][12] - **E-fabric Demand**: A broad-based recovery in E-fabric demand has been observed, with profitability exceeding RMB 1/sqm. Management expects to maintain this level in 2026 [5][13] Strategic Initiatives - **Capex Discipline**: Capital expenditures remain stable at RMB 3-5 billion, with maintenance capex capped at approximately RMB 1 billion [11] - **Low DK Fabrics**: Progress is being made in low DK products, with ongoing customer validation. Challenges remain in yield rates and process stability [8] Market Outlook - **Overseas Demand**: After a weak 2025 due to geopolitical factors, overseas demand is expected to recover in 2026, with exports guided at approximately 1.1 million tons and total shipments at around 3.3 million tons [9][10] - **US Plant Performance**: The US plant was loss-making in 2024 but significantly improved in 2025, with expected profitability in 2026 under current tariff conditions [10] Pricing Strategy - **Glassfiber Pricing**: Annual contract pricing is under negotiation, with moderate price increases expected. Jushi is avoiding aggressive price hikes to prevent triggering excess capacity [4][12] Risks and Opportunities - **Downside Risks**: Include weaker-than-expected demand for glass fiber products, rising energy costs, and greater-than-expected capacity additions [15] - **Upside Risks**: Include better-than-expected demand and supply-side discipline that could help protect margins [15] Valuation - **Target Price**: The target price for Jushi is set at RMB 19.8/share, based on a price-to-earnings ratio of 19.8x on 2026 estimated net income [14] Conclusion - The call reinforces a more constructive medium-term outlook for China Jushi, with a recommendation to maintain a "Buy" rating based on the anticipated recovery and growth in demand for fiberglass and E-fabric products [1][6]

Investment Rating - The industry investment rating is "Positive" and maintained [11] Core Viewpoints - Focus on upstream materials for commercial aerospace, with a strong recommendation for UTG glass due to its significant market potential [6][2] - The cement market is experiencing seasonal declines in shipments, while glass inventory has decreased month-on-month [8] - For 2026, three main lines of opportunity are identified: stock chain, Africa chain, and AI chain [9] Summary by Relevant Sections Cement Market - After the New Year, domestic cement market demand continues to weaken due to factors like funding shortages and temperature drops, with key enterprises' shipment rates around 39%, down 1.5 percentage points month-on-month [8] - National cement prices have slightly declined, with price drops observed in regions like Zhejiang, Sichuan, Yunnan, and Xinjiang, ranging from 10 to 30 yuan per ton [23] - The national average cement price is 357.26 yuan per ton, a decrease of 0.32 yuan month-on-month [24] Glass Market - The domestic float glass market has seen a slight rebound in prices, driven by speculative demand, with a total inventory reduction of 183 million weight boxes, a decrease of 3.40% [8][36] - The average price of glass is 61.99 yuan per weight box, up 0.05 yuan month-on-month, but down 12.44 yuan year-on-year [36] - The production capacity of float glass has decreased, with 209 out of 262 production lines operational, resulting in a daily melting capacity of 149,535 tons [8] Investment Opportunities - UTG glass is projected to have a demand of approximately 1.2 million square meters based on the forecast of 6,000 satellites launched annually, translating to a market space of 6 billion yuan [6] - Carbon fiber demand is estimated at around 1,000 tons for satellite applications, with high profit elasticity due to the use of high-modulus series [7] - The report highlights three main investment themes for 2026: optimizing demand and supply in the stock chain, leveraging growth in the African market, and capitalizing on the upgrade trend in AI electronic fabrics [9]