CJS(SH:600176) Zhong Jin Zai Xian·2025-11-17 12:35Core Viewpoint - Zhejiang Zhenstone New Materials Co., Ltd. (Zhenstone) is set to undergo a review by the Shanghai Stock Exchange for its IPO, with significant attention on its relationship with China Jushi, the largest glass fiber manufacturer globally, and the implications of their extensive related-party transactions [1][2]. Group 1: Company Overview - Zhenstone's core product is glass fiber materials for wind turbine blades, with over 60% of its raw materials sourced from China Jushi [1]. - The actual controllers of Zhenstone, Zhang Yuqiang and Zhang Jiankang, hold a combined 96.51% stake in the company, with Zhang Yuqiang also serving as the vice chairman of China Jushi [1]. - Zhenstone's predecessor, Hengshi Limited, was listed on the Hong Kong Stock Exchange in 2015 and was privatized in 2019 [1]. Group 2: Related-Party Transactions - Zhenstone has a complex web of related-party transactions with China Jushi, including significant logistics and service contracts, raising questions about the company's competitive edge [5][6]. - In 2022, Zhenstone's procurement from China Jushi amounted to approximately 12.96 billion yuan for inventory goods and 645.2 million yuan for raw materials [6]. - The procurement structure has shifted over the years, with a notable increase in transactions through subsidiaries, suggesting potential manipulation of transaction costs and tax avoidance [8]. Group 3: Market Position and Competition - Zhenstone's main competitors in the wind turbine blade materials sector include Taishan Fiberglass, Hongfa New Materials, Chongqing Wind Crossing, and Zhongcai Technology Shandong Branch, all of which have clear ownership and operational ties to their parent companies [2]. - Unlike its competitors, Zhenstone does not have direct equity control from China Jushi, yet maintains a strong business relationship, relying heavily on Jushi for raw materials [2][4]. Group 4: Strategic Responses - In response to market concerns regarding its reliance on related-party transactions, Zhenstone has committed to reducing its related-party procurement to below 50% within three years and enhancing internal controls [9].