Summary of the Conference Call on China Jushi Co., Ltd. and the Fiberglass Industry Industry Overview - The fiberglass industry has been experiencing a downward trend since 2020, characterized by declining demand and shrinking profit margins. Many companies have seen revenue declines and significant stock price drops. Despite the stock price declines, valuations for many companies remain high. Some lower-tier companies are facing cash flow pressures, with increased merger and acquisition activity noted during the most challenging times in 2024 [3][4][7]. Key Points on China Jushi Co., Ltd. - China Jushi is expected to benefit from an improving market environment and its competitive advantages. The company’s scale and state-owned enterprise background allow it to gain from market de-involution. The unexpected growth in wind power demand is also supporting its business development. The net profit for 2025 is projected to reach 3.5 billion yuan, up from 3 billion yuan in 2024 [4][12]. - The fiberglass production lines require continuous operation for 8-10 years once started. Companies are cautious in adjusting supply, opting to delay ignition plans or postpone the resumption of production lines to optimize supply. An estimated 700,000 tons of effective supply is expected to be added in 2025, with demand growth of about 600,000 tons, leading to a stable supply-demand situation [4][9]. - The current valuation of China Jushi is relatively reasonable, with a PE ratio close to 15 times and a PB ratio of about 1.6 times, which is low compared to historical levels. If the company achieves a net profit of over 5 billion yuan in the future, its valuation will become more attractive, thus recommending investment in China Jushi [4][15]. - China Jushi holds over 40% market share in the domestic fiberglass market. As its market share increases, the company is focusing more on profitability. During industry-wide price increases, China Jushi, due to its market position and scale effects, stands to benefit the most [4][12]. - In 2025, China Jushi achieved price increases in the roving sector, particularly in wind power roving and short-term thermal products. The electronic fabric shipment volume also increased, with an expected contribution of 0.5 to 0.6 yuan net profit per meter, totaling around 1.1 billion meters, contributing over 500 million yuan in net profit [4][13][14]. Industry Pricing Trends - The fiberglass prices have been on the rise since the first half of 2024, continuing into 2025. This price increase is not limited to fiberglass but also includes cement and other construction materials. Cement prices saw a significant increase of 100 yuan in October last year, with multiple rounds of price hikes observed since March this year. These trends indicate a narrowing decline in demand and a lack of capacity for companies to engage in price wars, thus driving price increases [5][6]. - The sustainability of price increases is closely related to the competitive landscape of the industry. In the fiberglass sector, the top eight companies hold over 80% market share, primarily state-owned enterprises, which have profit assessment requirements. This structure supports the successful implementation of price increases [6][10]. Future Outlook - The fiberglass industry is expected to see significant supply-demand improvements and potential price increases in 2026, driven by the completion of the 14th Five-Year Plan and the gradual implementation of the 15th Five-Year Plan. New capacity is anticipated to be released, which will take time to materialize [10][11]. - Despite the cyclical nature of the market, China Jushi's growth potential remains significant. The company is expected to achieve a net profit of 3.5 billion yuan in 2025, up from 2.1 billion yuan in 2024, indicating strong profitability [15]. Recommendations - Investment in China Jushi is recommended based on its market position, competitive advantages, and the expected upward trend in the fiberglass industry. The current market conditions suggest that now is a rational time to invest rather than waiting for potential future price increases [16]. Additional Insights - The demand for fiberglass in photovoltaic frames is expected to face challenges in achieving large-scale growth in 2025, with production likely limited to around 100,000 tons due to various constraints [21]. - The wind power sector is anticipated to maintain a strong demand outlook, with expectations of sustained growth despite potential fluctuations in installation volumes [24]. This summary encapsulates the key insights from the conference call regarding China Jushi Co., Ltd. and the broader fiberglass industry, highlighting the current challenges, future opportunities, and investment recommendations.

Key Points Industry Overview 1. **Overall Performance**: The company's performance is on an upward trend, with sales targets for the year expected to exceed the board's annual expectations. The sales volume target of 3 million tons achieved in the semi-annual report was met, and prices have been stable and rising since the second quarter [1]. 2. **Supply and Demand Balance**: The industry's supply has increased compared to previous years, but the overall inventory level is not high. The volume is expected to catch up in the fourth quarter, with the third quarter being a low point due to price increases and insufficient demand [2]. 3. **Price Trends**: Prices have been stable and rising, although they have not yet reached a reasonable level. The overall trend is upward [1]. 4. **Industry Supply Control**: The industry has done a good job controlling supply, with actual effective production growth in 2024 being relatively low. The expected effective production increase in 2025 is expected to be slightly higher than in 2024, but the actual volume increase will not be significant [12]. 5. **Supply and Demand Match**: The industry's supply increase is expected to be around 15% in a normal year, which is roughly matched by demand. In 2025, there are some structural factors, such as the expected good performance of wind sand and hot water sand, which may affect prices [13]. Product Pricing and Demand 1. **Long-term Price of High-end Products**: The long-term price of high-end products will be implemented throughout 2025, but the specific price has not yet been agreed with customers. The price will be adjusted based on the new price once the agreement is reached [8]. 2. **Price Transmission**: The price transmission of hot melt will be better than that of other products due to demand support [4]. 3. **Market Demand**: The company is optimistic about the demand for 2025, with expectations for growth in the field of double-sided tape and hot melt. The demand for hot melt is expected to be good due to the application in automotive, infrastructure, and consumer electronics [4, 5]. 4. **Electronic Material**: The demand for electronic materials is expected to increase gradually due to the expansion of application fields such as PCB, industrial applications, and smart applications [6]. 5. **New Production Capacity**: The new production capacity of electronic materials will not be added in 2025, and the existing capacity will not be significantly increased. The expansion of the industry is relatively slow, and the inventory level is not high, which may lead to price elasticity in 2025 [7]. Industry Supply and Demand 1. **Supply Concerns**: There are concerns about supply in the industry, with the main risk factor being supply. The industry has done a good job controlling supply, with actual effective production growth in 2024 being relatively low. The expected effective production increase in 2025 is expected to be slightly higher than in 2024, but the actual volume increase will not be significant [11, 12]. 2. **Price Stability**: The company expects price stability in 2025, with prices for high-end products remaining stable and prices for cover glass and hot melt increasing slightly [13]. 3. **Price Transmission**: The price transmission of hot melt will be better than that of other products due to demand support [4]. 4. **Market Demand**: The company is optimistic about the demand for 2025, with expectations for growth in the field of double-sided tape and hot melt. The demand for hot melt is expected to be good due to the application in automotive, infrastructure, and consumer electronics [4, 5]. Other Key Points 1. **Tariff Hike Expectations**: The impact of potential tariff hikes in the US is uncertain, but the company has several plans to mitigate the impact, including further price transmission to customers, exporting to countries with no tariff barriers, and building factories in other regions [20]. 2. **Export Growth**: The company expects export growth to continue in 2025, but the specific growth rate has not been disclosed [21]. 3. **Export Tax Refund**: There is no information about the possibility of reducing the export tax refund rate for copper, aluminum, and other products, including glass fiber [21]. 4. **New Production Capacity**: The company plans to build new production capacity for electronic materials in 2026, but the specific details have not been disclosed [23]. 5. **Research and Development**: The company is developing new products and improving cost competitiveness to expand the market [24]. 6. **Price Bottom**: The price of electronic materials is at a relatively low level, and the company expects it to start rising in the future [25]. 7. **Market Demand Growth**: The growth rate of market demand for electronic materials is expected to slow down in 2025 compared to 2024, with a growth rate of a few percentage points [26]. 8. **Lightweight Frame**: The company expects the lightweight frame market to grow in 2025, with a growth rate of 100% compared to 2024. The main challenge is to improve the efficiency of material manufacturers and the acceptance of lightweight frame materials by component manufacturers [27]. 9. **Long-term Incentive Plan**: The company plans to explore and implement a long-term incentive plan to motivate employees [29]. 10. **Price Expectations**: The company expects prices to remain stable in the first half of 2025, with price increases for mid-to-high-end products [36].

Investment Rating - The report assigns a neutral rating to China Jushi with a 12-month target price of Rmb 11.45, while the stock price on January 15, 2025, was Rmb 11.57 [4][5][23]. Core Insights - Management is cautiously optimistic about the glass fiber market in 2025, expecting slight price increases and continued high sales growth [1][2]. - The company anticipates that electronic fabric prices will improve in 2025 due to better demand and low channel inventory, aiming for a production target of 1 billion meters of electronic fabric [2]. - The company has paused domestic capacity expansion for roving yarn and is exploring opportunities for overseas production, citing low profitability in the industry [3]. Summary by Sections Market Outlook - Management expressed cautious optimism for the glass fiber market in 2025, with expectations of price increases for electronic fabrics and stable demand for roving yarn [1][2]. Production and Capacity - The company plans to produce 1 billion meters of electronic fabric in 2025, up from approximately 900 million meters in 2024, with an expected increase in unit net profit by Rmb 0.2-0.3 per square meter [2]. - Domestic new capacity construction for roving yarn has been halted, while the company is seeking opportunities for overseas expansion [3]. Financial Projections - The report provides financial projections indicating a gradual increase in dividend payout ratios from 2024 to 2026 [1]. - Revenue and profit forecasts show a slight recovery in 2025, with net profit expected to rise from Rmb 2.13 billion in 2024 to Rmb 2.27 billion in 2025 [6].

Key Points General Information - **Purpose of the Call**: The call is exclusively for clients on the white list of Guolian Securities Research Institute. It does not constitute investment advice and participants should make their own investment decisions and bear their own risks. Guolian Securities assumes no responsibility for any losses incurred by participants due to the use of the call content [1]. Industry and Company Specifics - **Industry**: The specific industry or company involved is not mentioned in the provided content. - **Core Views and Arguments**: No core views or arguments are presented in the provided content. - **Other Important Content**: No other important content is provided in the given content.

Financial Data and Key Metrics Changes - In Q1 2024, 80% of multinational companies achieved their performance targets, indicating strong resilience in the global economy [8] - Revenue growth in the China region for multinational companies has gradually rebounded since Q2 2023, reaching 12.1% in Q1 2024, although the revenue share has declined over the past two years [9] Business Line Data and Key Metrics Changes - Companies in the consumer discretionary, pharmaceuticals, and TMT sectors show strong willingness to increase spending [9] - Capital expenditure intentions are strong among companies, particularly in sectors expecting demand recovery, such as consumer discretionary and healthcare [10] Market Data and Key Metrics Changes - The overall sentiment towards the Chinese market remains optimistic, with companies recognizing the vast potential despite concerns over consumer confidence and policy effectiveness [9] - Semiconductor giants like ASML and QUALCOMM highlight significant demand for high-end chips from China, which continues to drive the industry [9] Company Strategy and Development Direction - Multinational companies are optimistic about the opportunities in the Chinese market, with a focus on the recovery of consumer confidence and the effectiveness of growth-stabilizing policies [9] - Companies are increasing capital expenditures in anticipation of demand recovery, particularly in sectors like consumer goods and healthcare [10] Management Comments on Operating Environment and Future Outlook - Management expresses optimism for the second half of the year, despite uncertainties from geopolitical issues and elections, indicating that these factors have limited impact on operational confidence [9] - Companies are focusing on cost control and efficiency improvements, leveraging AI and digital technologies to enhance productivity and reduce costs [24][27] Other Important Information - The demand for AI infrastructure is expected to drive significant increases in capital expenditures, particularly in the information technology sector [10] - Companies are adopting various cost control measures, including optimizing operations and investing in technology to enhance efficiency [24][27] Q&A Session Summary Question: What is the outlook for capital expenditures in the coming year? - Companies are generally increasing capital expenditures, with many prioritizing investments in high-growth areas and infrastructure to support demand recovery [10] Question: How are companies addressing cost control? - Many companies are focusing on reducing labor costs and improving operational efficiency through technology and process optimization [24][27]