CJS(SH:600176) Guohai Securities·2024-08-26 12:49Investment Rating - The report assigns a "Buy" rating for China Jushi Co., Ltd. (600176) as of August 26, 2024, marking the first coverage of the company [4]. Core Views - China Jushi has demonstrated strong sales growth in the first half of 2024, with significant increases in volume for both fiberglass and electronic fabrics, leading to a recovery in gross margins in Q2 2024 [3]. - The company is expected to benefit from new production capacity coming online, which will enhance its market position and profitability in the second half of 2024 [3][4]. - The report forecasts revenue growth for the company from 164.2 billion yuan in 2024 to 191.7 billion yuan in 2026, with net profit projected to rise from 23.3 billion yuan to 35.4 billion yuan over the same period [4][5]. Summary by Sections Financial Performance - In H1 2024, China Jushi reported revenues of 7.74 billion yuan, a slight decrease of 1.2% year-on-year, with net profit down 53.4% to 960 million yuan [2]. - The company achieved a gross margin of 21.5% in H1 2024, a decline of 7.9 percentage points year-on-year, but showed improvement in Q2 with a gross margin of 22.6% [3]. - The net profit margin for H1 2024 was 12.4%, down 13.9 percentage points year-on-year, primarily due to lower gross margins and reduced asset disposal gains [3]. Sales and Production - The sales volume for fiberglass and electronic fabrics reached 1.522 million tons and 460 million meters respectively in H1 2024, representing year-on-year increases of 22.6% and 12.5% [3]. - The company’s new production line in Huai'an, with an annual capacity of 100,000 tons, is expected to enhance domestic production capacity to 2.53 million tons per year [3][4]. Market Position and Outlook - China Jushi holds the largest fiberglass production capacity globally, and with the new capacity, its market share is anticipated to increase further [4]. - The report suggests that the company is well-positioned to capitalize on the upcoming peak demand in the consumer electronics sector, which may lead to price increases for its products [4].