2026-01-13 02:11Summary of China Jushi 2026 Business Outlook Call Company Overview - Company: China Jushi (600176.SS) - Date of Call: January 12, 2026 - Participants: Mr. Ding Chengche (Board Secretary), Ms. Xu Mengdan (IR Director) Key Industry Insights - Cyclical Outlook: Management anticipates 2024 as the cycle trough, 2025 as a recovery year, and 2026 as a favorable year with resilient demand and moderated supply growth [3][15] - Supply-Demand Dynamics: Expected supply growth of approximately 500,000 tons in 2026 compared to around 1 million tons in 2025. Demand growth in 2026 is estimated at around 6%, with potential upside to 8-9% [3][15] Financial Performance - Fiberglass Profitability: Profitability has stabilized at a higher level, with net profit per ton consistently exceeding RMB 800, currently around RMB 900-1000. Most peer producers are near breakeven [4][12] - E-fabric Demand: A broad-based recovery in E-fabric demand has been observed, with profitability exceeding RMB 1/sqm. Management expects to maintain this level in 2026 [5][13] Strategic Initiatives - Capex Discipline: Capital expenditures remain stable at RMB 3-5 billion, with maintenance capex capped at approximately RMB 1 billion [11] - Low DK Fabrics: Progress is being made in low DK products, with ongoing customer validation. Challenges remain in yield rates and process stability [8] Market Outlook - Overseas Demand: After a weak 2025 due to geopolitical factors, overseas demand is expected to recover in 2026, with exports guided at approximately 1.1 million tons and total shipments at around 3.3 million tons [9][10] - US Plant Performance: The US plant was loss-making in 2024 but significantly improved in 2025, with expected profitability in 2026 under current tariff conditions [10] Pricing Strategy - Glassfiber Pricing: Annual contract pricing is under negotiation, with moderate price increases expected. Jushi is avoiding aggressive price hikes to prevent triggering excess capacity [4][12] Risks and Opportunities - Downside Risks: Include weaker-than-expected demand for glass fiber products, rising energy costs, and greater-than-expected capacity additions [15] - Upside Risks: Include better-than-expected demand and supply-side discipline that could help protect margins [15] Valuation - Target Price: The target price for Jushi is set at RMB 19.8/share, based on a price-to-earnings ratio of 19.8x on 2026 estimated net income [14] Conclusion - The call reinforces a more constructive medium-term outlook for China Jushi, with a recommendation to maintain a "Buy" rating based on the anticipated recovery and growth in demand for fiberglass and E-fabric products [1][6]