The firm estimates that earnings rose 72-77% YoY in 1H25

China Jushi estimates that in 1H25, its attributable net profit grew 72-77% YoY to Rmb1.65-1.7bn and recurring net profit increased 163-171% YoY to Rmb1.65-1.7bn. In 2Q25, it estimates attributable net profit and recurring net profit at Rmb0.92-0.97bn and Rmb0.91-0.96bn, beat our expectations. We attribute this to profit generated by the supporting 500MW wind power project for the firm's Huai'an Zero-Carbon Base and improved per-tonne net profit driven by price increases for wind turbine yarn in 1Q25.

Trends to watch Product portfolio demonstrates competitive advantages; roving sales

improved notably YoY. According to Sci99.com, China Jushi commissioned production lines for its Jiujiang project in February and April, with total capacity reaching 200,000t. The firm’s Tongxiang production line also expanded capacity to 200,000t after cold repair.

Despite the increased supply, the firm’s inventories decreased slightly at end-1H25 compared to the beginning of the year, mainly due to the high proportion of wind turbine yarn and thermoplastic products in its product portfolio. We think sales volume of its roving products might have increased YoY in 1H25, reflecting the advantages of the firm’s product portfolio.

Demand for standard electronic fabric remained stable; ASP in the industry increased moderately QoQ in 2Q25. According to Sci99.com,

the tax-included average sales price (ASP) of 7628 electronic fabric increased slightly QoQ to Rmb4.23/m 2Q25, potentially due to coordinated price hikes by leaders in the industry. Traditional electronic fabric is widely used in downstream sectors such as automobiles and industrial automation, and demand for the product remains stable.

Leaders are stepping up efforts to advance the healthy development

of the industry. Some companies, including China Jushi, Taishan Fiberglass, and Shandong Fiberglass, have aging production lines nearing scheduled cold repairs. We assume: 1) Cold repairs are conducted in the middle of a year; and 2) new capacity will be released according to disclosed commissioning schedules. Based on these assumptions, we estimate that roving capacity in the industry will grow more than 500,000t on a net basis. This suggests relatively balanced industry supply-demand　　dynamics. From a medium- to long-term perspective, fiberglass prices will likely remain solid amid leaders’ efforts to support the healthy development of the industry.

Tariffs may introduce export uncertainty but will not undermine Chinese fiberglass leaders’ position in the global market. According to

corporate filings of China Jushi, its fiberglass yarn exports and sales at overseas bases totaled 1.06mnt in 2024, accounting for 35% of its total sales. The company’s 120,000t-capacity production line in Egypt started operating in early April 2024, and we think the project had reached its design capacity in late May 2024. As a result, we estimate that the actual fiberglass production at its bases in Egypt and the US totaled around 0.4mnt in 2024 and its fiberglass exports were 0.6-0.7mnt.

China Jushi directly exports products to Europe, the Middle East, Southeast Asia, and the US. We think current tariff policies may directly or indirectly suppress demand for fiberglass (e.g., reduced orders from Southeast Asian factories), and thus lead to short-term uncertainties.

However, we think its leading position in the global market will likely remain intact.

Financials and valuation

We keep our 2025 and 2026 EPS forecasts at Rmb0.88 and Rmb1.01.

The stock is trading at 13.8x 2025e and 12x 2026e P/E. We maintain an OUTPERFORM rating and our TP of Rmb14.9, implying 17x 2025e and 15x 2026e P/E and offering 22% upside.

Risks

Rising overseas tariffs weigh on exports; supply-demand imbalance in domestic fiberglass market; disappointing domestic policies.