Results Review

2025 results slightly miss our forecast

China Jushi announced its 2025 results: Revenue rose 19% YoY to Rmb18.9bn, net profit attributable to shareholders grew 34% YoY to Rmb3.29bn, and recurring attributable net profit rose 95% YoY to Rmb3.48bn. The firm’s earnings slightly missed our expectations, possibly due to higher expense ratio weighing on profit margin and asset disposal gains and losses. The firm suffered a non-recurring loss of Rmb196mn.

Roving and electronic fabrics exceeded full-year sales volume targets, with average earnings improving. In 2025, revenue from glass fiber and related products rose 18.5% YoY to Rmb18.3bn, and gross margin expanded 7.9ppt YoY to 32.2%. Sales volume of roving and electronic fabric reached 3.2mnt and 1.06bn meters, exceeding the full-year targets. We estimate the 2025 net profit approached Rmb900/t for roving and Rmb0.6/m for electronic fabric.

On the overseas front, the company reported that its Egyptian base generated revenue of Rmb1.8bn and net profit of Rmb333mn in 2025, implying an 18% net margin. Meanwhile, its US base recorded earnings of Rmb42.19mn, turning profitable.

The expense ratio edged up, while cash flow improved notably. Expense ratio reached 9.8% in 2025, with the G&A expense ratio rising 1.8 ppt YoY—likely reflecting a high base effect in 2024. Net operating cash flow reached Rmb4.2bn in 2025, vs. Rmb2.0bn in 2024, while free cash flow increased to Rmb2.8bn from Rmb729mn. The dividend payout ratio edged up 4.4 ppt to 44% in 2025.

Trends to watch

Rising overseas energy prices to benefit leading roving firms; tight balance between electronic fabric supply and demand to continue. We expect domestic roving prices to remain stable or rise modestly in 2026. The recent surge in European natural gas prices is likely to benefit leading producers with overseas production bases, access to stable low-cost gas supply, and meaningful exposure to European markets. On the electronic fabric front, we expect the structural shortage of looms to persist, supporting further price appreciation. The company recently commenced operations at Phase I of its Huai’an base (50,000t capacity), bringing effective electronic fabric production capacity to 1.2bn meters annually. We expect these price increases to translate into meaningful profit contribution.

Financials and valuation

Due to higher-than-expected electronic fabric price hikes, we raise our 2026 and 2027 EPS 14% and 18% to Rmb1.27 and Rmb1.48. The stock is trading at 19x and 16x 2026e and 2027e P/E. We maintain an OUTPERFORM rating, and as electronic fabric price hikes may boost average valuation, we raise our TP 41% to Rmb29.6 (23x and 20x 2026e and 2027e P/E), offering 26% upside.

Risks

Demand recovery disappoints; capacity expansion faster than expected; price hikes disappoint.