GUOTAI HAITONG SECURITIES·2026-02-11 11:31Investment Rating - The report maintains an "Overweight" rating for the fiberglass electronic cloth industry, indicating a projected increase of over 15% relative to the CSI 300 index within the next 12 months [4][10]. Core Insights - The acceleration in price increases for traditional fiberglass electronic cloth since February, combined with reduced supply of E-glass products announced by Taiyao Technology, has led to a continued expectation of tight supply for traditional cloth, enhancing profitability for leading fiberglass companies [2][4]. - The report highlights that the tight supply of traditional electronic cloth is primarily driven by two factors: unexpected price increases in February and a significant reduction in E-glass supply due to production shifts towards low-dielectric cloth [4]. - The report anticipates that 2026 will be a year of realization for AI electronic cloth, with strong demand expected to translate into financial performance for companies with comprehensive product structures and leading customer certifications [4]. Summary by Sections Price Trends and Supply Dynamics - Traditional electronic cloth prices have risen significantly, with the first week of February seeing prices between 4.9-5.45 RMB/m, an increase of 0.5-0.6 RMB/m compared to previous rounds of price hikes [4]. - The inventory levels for traditional electronic cloth are currently low, estimated at only two weeks, compared to a normal level of 1-1.5 months, indicating a supply shortage exacerbated by production shifts [4]. Company Recommendations - Recommended stocks include China Jushi, Kingboard Laminates, and China National Building Material, with expectations of increased profitability driven by price hikes in traditional electronic cloth [4]. - The report notes that the production capacity expansions planned for 2026 include significant increases from companies like International Composites and China Jushi, which are expected to alleviate some supply pressures [4]. Market Outlook - The report suggests that the demand for AI electronic cloth will remain strong, with specific segments like CTE cloth and low-dielectric cloth experiencing high demand due to their applications in AI chips and consumer electronics [4]. - Overall, the report indicates that companies with strong cost management and innovative product offerings are likely to outperform the industry as the market evolves in 2026 [4].