Core Viewpoint - Zhejiang Zhenstone New Materials Co., Ltd. (hereinafter referred to as "Zhenstone") has completed its IPO counseling filing report with the Zhejiang Securities Regulatory Bureau, with CICC as the counseling institution [2] Group 1: Company Overview - Zhenstone was established in September 2000 and specializes in the research, production, and sales of fiberglass fabrics, primarily used in the wind power sector [2] - The major shareholder, Tongxiang Huajia Enterprise Management Co., Ltd., holds a 56.27% stake, while Zhenstone Holding Group Co., Ltd. owns 39.4% [2] - The company operates seven production bases located in Zhejiang Tongxiang, Henan Xinyang, Egypt Suez, and Turkey Taekildar, exporting products to over 30 countries and regions globally [2] - Zhenstone has established strong business relationships with numerous well-known wind turbine blade manufacturers worldwide [2] Group 2: Financial Control and Compliance - During the reporting period, Zhenstone faced issues related to financial internal control, including fund occupation by related parties and issuance of commercial bills without real transaction backgrounds [4] - By the end of 2023, Zhenstone had rectified these issues through loan repayments, fund recoveries, and correction of improper behaviors, with no new occurrences of financial internal control issues reported thereafter [4] - The company did not face administrative penalties for the aforementioned financial internal control issues and received confirmation letters from various regulatory bodies [4] - Zhenstone has established and effectively implemented internal control systems to prevent financial internal control irregularities and has maintained effective financial reporting internal controls in all significant aspects [4] Group 3: Related Party Transactions - The company engaged in significant related party procurement and was previously managed by Zhenstone Group, which included purchasing fiberglass raw materials from China Jushi and logistics services from Yushi Logistics [5] - Zhenstone has cleaned up unnecessary related transactions before the reporting benchmark date and established an independent business system, strictly controlling related party transactions based on necessity [5]

Company Status - The market is focusing on the company's high-end electronic yarn products, highlighting its leading capabilities in technology reserves and production line configuration compared to peers [1] - The demand for Low-Dk electronic fabrics is expected to grow due to AI-driven upgrades in the PCB industry, while low-expansion yarn demand is anticipated to increase driven by advanced chip packaging [1] Product Commentary - Low-expansion yarn is crucial for high-precision and high-heat dissipation electronic components, significantly impacting the reliability and lifespan of packaging [2] - The demand for low-expansion yarn is catalyzed by the increase in CoWoS packaging capacity, which requires efficient heat dissipation designs [2] - Major companies like Nvidia, Broadcom, Google, and Microsoft are adopting low-expansion yarn, with domestic demand also rising [2] - According to SemiWiki, TSMC's CoWoS capacity is expected to reach 35,000-40,000 pieces/month in 2024, increasing to 65,000-75,000 pieces/month in 2025, and 90,000-110,000 pieces/month in 2026, which will directly boost low-expansion yarn demand [2] Industry Supply Dynamics - Unlike low-dielectric products, the supply of low-expansion products is limited, with Nitto Denko's T-glass becoming the industry standard [3] - Current production capacity is insufficient to meet downstream demand, with existing suppliers like Zhongcai Technology and Honghe Technology facing challenges in expanding capacity [3] - Zhongcai Technology plans to invest 1.4 billion yuan in a project to produce 35 million meters of specialty fiberglass cloth, which will enable the production of high-value-added products including second-generation electronic fabrics and low-expansion yarn [3] Profit Forecast and Valuation - The company's EPS forecasts for 2025 and 2026 are 0.96 yuan and 1.15 yuan, respectively, with current stock prices corresponding to P/E ratios of 17x and 14x for those years [4] - The company maintains an outperform rating with a target price of 17.7 yuan, implying a 7% upside potential based on P/E ratios of 18x and 15x for 2025 and 2026 [4]

Group 1 - The company plans to invest approximately RMB 720 million in the construction of a high-performance fiberglass yarn production line through its wholly-owned subsidiary, Huangshi Honghe Electronic Materials Technology Co., Ltd [1] - The project aims to reduce production costs and enhance product competitiveness, aligning with the company's main business development strategy [1]