What's new

China Jushi recently announced its 2025 restricted share incentive plan (draft). The firm plans to grant a total of up to 34.53mn restricted shares (representing around 0.86% of total share capital), with an initial grant price of Rmb10.19/sh.

The performance targets for the vesting of the incentive plan are as follows: 1) Recurring attributable net profit of at least Rmb3.43bn, Rmb3.66bn, and Rmb3.96bn in 2026, 2027, and 2028; and 2) ROE of no less than 10.25%, 10.28%, and 10.45% in 2026, 2027, and 2028.

As the firm's recurring attributable net profit reached Rmb2.61bn in 1–3Q25, the supply and demand of ordinary roving may be relatively stable, and electronic fabric prices are likely to rise in 2026, we believe the equity incentive plan shows the firm's confidence in its growth and lays a solid foundation for steady earnings growth.

Comments

Ordinary roving: Structural price hikes likely in 2026. We expect net new roving capacity in 2026 to be around 200,000t, with actual net production potentially reaching 400,000– 500,000t, representing 4–5% of global capacity and broadly in line with demand growth. Prices for high-end products, such as automotive thermoplastics and wind power products, are still expected to see steady growth.

In November 2025, the firm issued a price-increase notice for 2026 long-term contracts, including wind power and engineering thermoplastics (with price hikes of 5–10%) and ordinary roving. We expect this to boost net profit per tonne and maintain the profitability gap with second- and third-tier suppliers.

Electronic fabric: New supply controllable; prices to recover mildly. According to sci99.com, new production capacity of electronic yarn (upstream of electronic fabric) in 2026 includes: 1) Phase I of China Jushi’s 100,000t productionline in Huai’an, with actual net new capacity likely around 30,000t based on a weighted average of start-up timing; 2) Kingboard Holdings’ (KB) 70,000t electronic yarn project, with commissioning expected in 2026; and 3) Chongqing Polycomp International Corporation’s (CPIC) 85,000t ordinary electronic yarn project, commissioned at end-December 2025, while the existing 76,000t line may undergo cold repairs later.

Given that KB primarily supplies products internally within its group, we expect new supply in the industry to be mainly controlled by China Jushi and CPIC in 2026. Coupled with stable demand for copper-clad laminates, we expect electronic fabric prices to recover moderately.

Financials and valuation

We maintain our 2025 EPS forecast at Rmb0.88. We raise our 2026 EPS forecast 9.4% to Rmb1.11, given possible price hikes of high-end roving products and electronic fabrics in 2026. We introduce our 2027 EPS forecast of Rmb1.25. The stock is trading at 16x 2026e and 14x 2027e P/E. We maintain an OUTPERFORM rating. As the firm's equity incentive plan may boost market confidence and thus its average valuation, we raise our TP 15% to Rmb21, implying 19x 2026e and 17x 2027e P/E with 20% upside.

Risks

Overseas tariff hikes weigh on exports; supply-demand imbalance in domestic fiberglass market.