Earnings call transcript: China Jushi Q2 2025 sees strong profit growth

China Jushi Co Ltd, with a market capitalization of approximately ¥7.9 billion, reported robust financial results for the second quarter of 2025, marked by significant year-over-year growth in revenue and profit. The company’s operating revenue reached ¥9.109 billion, reflecting a 17.7% increase, while total profit surged by 83% to ¥2.119 billion. Following the earnings announcement, China Jushi’s stock price rose by 5.42%, closing at ¥13.46, demonstrating positive investor sentiment. According to InvestingPro analysis, the company maintains a "GOOD" overall financial health score of 2.7 out of 4.

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Key Takeaways

• Operating revenue increased by 17.7% year-over-year.
• Total profit saw an 83% rise, reaching ¥2.119 billion.
• Non-GAAP net profit grew by 170% year-over-year.
• Stock price increased by 5.42% post-earnings announcement.
• The company completed significant capacity expansions ahead of schedule.

Company Performance

China Jushi demonstrated strong performance in Q2 2025, with significant growth in both revenue and profit compared to the same period last year. The company maintained a healthy gross profit margin of 27.2% and achieved a return on equity of 9%. The company capitalized on increased demand for its products, particularly in the high-end electronic cloth market. This growth is in line with broader industry trends, where demand for composite materials and electronic cloth is rising.

Financial Highlights

• Revenue: ¥9.109 billion, up 17.7% year-over-year
• Total profit: ¥2.119 billion, up 83% year-over-year
• Net profit: ¥1.758 billion, up 78% year-over-year
• Non-GAAP net profit: ¥1.701 billion, up 170% year-over-year
• Net cash flow from operating activities: ¥1.441 billion, up ¥1.214 billion year-over-year

Market Reaction

Following the earnings announcement, China Jushi’s stock price increased by 5.42%, closing at ¥13.46. This movement reflects investor confidence in the company’s strong financial performance and strategic initiatives. The stock has delivered impressive returns, with a 42.45% gain over the past year and currently trades near its 52-week high. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels.

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Outlook & Guidance

Looking forward, China Jushi plans to achieve a 15% market share in the high-end electronic cloth segment. The company anticipates balanced capacity growth both domestically and internationally as part of its 15th Five-Year Plan. Strategic priorities include enhancing sales efficiency, driving innovation, and expanding its presence in high-end markets. Analysts maintain a bullish outlook on the stock, with consensus recommendations leaning strongly toward "Buy" and revenue growth forecast at 15% for FY2025.

Executive Commentary

General Manager Yang Guoming emphasized the company’s commitment to cost-effective growth and innovation. "We need to take strong measures now, we absolutely must take strong measures," he stated, highlighting the importance of strategic initiatives. Guoming also noted, "If we do it, we must do it well, and the costs must be relatively low," underscoring the focus on efficiency and quality.

Risks and Challenges

• Potential supply chain disruptions could impact production schedules.
• Market saturation in certain segments may limit growth opportunities.
• Fluctuating raw material prices could affect profit margins.
• Geopolitical tensions might influence international operations.
• Economic downturns could dampen demand for high-end products.

Q&A

During the earnings call, analysts inquired about the company’s pricing strategies and capacity control measures. Executives discussed efforts to manage industry competition and the potential for overseas expansion. The development of high-end electronic cloth was also a focal point, with plans to enhance product offerings and explore new application scenarios.

Full transcript - China Jushi Co Ltd (600176) Q2 2025:

Ding Chenche, Deputy General Manager and Board Secretary, China Jushi: Good afternoon, everyone. Welcome to China Jushi’s 2025 semi-annual performance briefing. First, on behalf of the company’s management team, I would like to extend a warm welcome and heartfelt thanks to all investors, analysts, and media friends who have taken time from their busy schedules to attend this briefing either in person or online. Now, let me introduce the company’s management team attending this briefing. Present at the venue are Mr. Yang Guoming, Director and General Manager of the company, Ms. Xu Mengdan, Securities Affairs Representative of the company, and I am Ding Chenche, Deputy General Manager and Board Secretary of the company. Attending online from Beijing is our Independent Director, Professor and Doctoral Supervisor at Peking University, Mr. Wu Yajin. The company has already disclosed our semi-annual report yesterday on the information disclosure platform designated by the securities exchange. The operating data and financial situation for the first half of the year have been disclosed in detail in the semi-annual report. Today, to quickly help everyone grasp some core information, I will briefly introduce the company’s operating situation for the first half of 2025. First, let me report on the industry situation in the first half of the year. In the first half of this year, the overall market supply and demand situation of the entire industry showed significant improvement. From the domestic perspective, according to statistics from the China Glass Fiber Industry Association, our country added only five glass fiber furnace production lines with capacity above 10,000 tons. The scale of new furnace capacity was approximately 500,000 tons. During the same period, about ten furnace production lines were in cold repair shutdown status. The shutdown capacity scale also reached 510,000 tons. In terms of output, from January to June, glass fiber yarn output growth was approximately 4.9% year-over-year, which was 0.3 percentage points higher than the same period last year, continuing the low-speed growth trend since 2023. From a global perspective, foreign glass fiber giants OCR, PPG, and others have successively announced their exit from the glass fiber business. In June this year, NEG’s largest glass fiber plant in the UK also announced closure. Therefore, the overall competitiveness of Chinese glass fiber companies is further strengthening. The market demand structure has also undergone deep adjustment. Market demand in the first half of this year continued to grow. Combined with the continuous improvement in glass fiber product penetration rates, the industry as a whole is recovering. In renewable energy, wind power yarn demand continues strong. According to GWEC forecasts, global wind power new installed capacity in 2025 will be approximately 138GW, with year-over-year growth of about 18%. In the first half of the year, China’s new wind power installed capacity was 51.39 million kilowatts, with year-over-year growth of 98.9%. In automotive and home appliances, segmented market demand growth has driven thermoplastic shortage to continue improving. In the first half of the year, China’s total automotive production was 15.565 million vehicles, with year-over-year growth of 10.8%. Among these, new energy vehicle production was 6.872 million vehicles, with year-over-year growth of 36.2%. Home appliance and audio equipment retail was ¥608.5 billion, with year-over-year growth of 30.7%. Infrastructure and building materials glass fiber yarn demand remained basically stable. On one hand, constrained by deep adjustment in the real estate market, building insulation glass fiber, mesh cloth, and other construction glass fiber products markets continued the previous sluggish trend. Real estate market development investment nationwide decreased by 11.2%. On the other hand, infrastructure investment in water conservancy, railways, electricity, and other areas maintained growth. In the first half of the year, China’s infrastructure investment excluding electricity grew 4.6% year-over-year. The electronic information industry market prosperity continued to improve, with various electronic-grade glass fiber cloth continuing to increase volume. In the first half of the year, China’s total microcomputer production reached 166 million units, growing 5.6% year-over-year. Integrated circuits reached 239.5 billion pieces, growing 8.7% year-over-year. With the development of AI, big data, and other new-generation information technologies, server and data center demand will show high growth trends, driving continued expansion of related PCB markets. In emerging fields, glass fiber products’ application development in pipeline repair, glass fiber reinforcement bars, low-altitude economy, and robotics and other emerging markets continues to gradually improve penetration rates. In the first half of the year, the company continued to adhere to dual-wheel drive of volume increase and price enhancement, strengthening market competitive advantages, fully implementing marketing strategies of volume increase, price stabilization, price enhancement, and price adjustment, making every effort to adjust structure, expand markets, and promote volume increase, achieving simultaneous volume and price increases for glass fiber yarn and electronic cloth.

Seizing structural opportunities from wind power and other demand growth, optimizing and adjusting market structure, sales structure, and production structure, with high-end product proportion continuously improving. Leveraging global layout advantages, actively responding to overseas tariff policy fluctuations, utilizing global marketing network advantages, focusing on core markets, core customers, and core products, fully meeting market and customer demands, achieving dual improvement in market recognition and operational efficiency. In the first half of the year, both yarn and electronic cloth sales volumes reached historical highs. The company sold 1.5822 million tons of yarn and products, growing nearly 4% year-over-year, and sold 485 million meters of electronic cloth, growing 5.9% year-over-year. In the first half of the year, we also advanced project construction initiatives, improving global production and sales coordination efficiency, seizing opportunities to comprehensively advance construction projects at various production bases, efficiently responding to market demand changes. Jiujiang Company’s annual 200,000-ton production line completed phased production ahead of schedule.

The headquarters’ annual 120,000-ton production line completed cold repair renovation ahead of schedule, with capacity increased to 200,000 tons, effectively alleviating supply-demand contradictions. Huai’an Company’s annual 100,000-ton electronic yarn production line officially began construction, with supporting 500MW wind power project also actively advancing. This project’s construction provides strong support for the company to improve industrial layout, enhance green manufacturing levels, and strengthen core competitiveness. Chengdu Company completed new investment project planning, with preliminary project work proceeding orderly. We also completed a new round of overseas investment inspection and comparative analysis, actively planning overseas layout. On another front, we continued to deepen innovative development, creating sustainable development benchmarks. The company adheres to emphasizing innovation and strengthening R&D, with technological innovation capabilities continuously strengthening. First-half R&D investment was ¥280 million, up 10.73% year-over-year. We implemented board leadership and point leadership mechanisms, promoting transformation and application of hundreds of achievements, laying out long-cycle technology reserves for low-energy furnaces, high-strength high-modulus formulations, and hydrogen combustion. Technology standards lead the industry. Led by Huai’an zero-carbon intelligent manufacturing base, we improved clean energy systems including wind and photovoltaic power, enhancing green manufacturing capabilities.

The company also highly values ESG work, releasing ESG reports for five consecutive years. MSCI ESG rating improved to A, Wind ESG rating improved to 2A, establishing new benchmarks for industry sustainable development. We adhere to refined control and cost reduction, revitalizing management innovation vitality. In the first half of the year, through conducting world-class management improvement actions, we stimulated management effectiveness across multiple dimensions, passed ISO 37301 compliance management system certification, continuously improved corporate governance mechanisms, completed supervisory board reform, deepened subsidiary board construction, comprehensively improving corporate governance levels. We deeply implemented cost reduction work methods, strengthening budget management, broadening channels, reducing consumption, achieving decreases in production costs, management expenses, and financial expenses. We accelerated digital and intelligent transformation, improving operational synergy efficiency, comprehensively deepening digital transformation strategy, accelerating deep integration of intelligent technology with production operations, implementing AI+ glass fiber projects, systematically laying out artificial intelligence innovation application ecosystems, comprehensively improving global digital capabilities, constructing efficient coordination between marketing and manufacturing services. Jushi Group’s electronic cloth end-to-end integrated control intelligent factory and Jushi Jiujiang glass fiber yarn end-to-end integrated control intelligent factory were both selected for the Ministry of Industry and Information Technology’s first batch of excellent-level intelligent factory lists, achieving full coverage of glass fiber yarn and electronic base cloth varieties. In terms of financial indicators for the first half of the year, benefiting from simultaneous volume and price increases in glass fiber yarn and electronic base cloth businesses, as well as significant growth in Huai’an wind power generation business, the company achieved operating revenue of ¥9.109 billion, growing 17.7% year-over-year. The company’s profitability level in the first half significantly improved compared to the same period last year, achieving total profit of ¥2.119 billion, growing 83% year-over-year, net profit of ¥1.758 billion, growing 78% year-over-year, and non-GAAP net profit of ¥1.701 billion, significantly increasing 170% year-over-year. The company’s net cash flow from operating activities in the first half was ¥1.441 billion, increasing ¥1.214 billion year-over-year. As of the end of June 2025, the company’s total assets reached ¥53.7 billion. The company’s asset-liability ratio fell below 40% for the first time, with overall operating quality continuously improving. In market value management, we continued to strengthen communication with investors, actively listening to opinions and suggestions from shareholders and investors, actively responding to relevant calls, and promoting completion of large-scale shareholder increases.

The two major shareholders increased holdings by a total of ¥1.6 billion. The largest shareholder China National Building Material’s shareholding ratio increased to 29.2%, and the second-largest shareholder Zheng Group’s shareholding ratio increased to 16.88%. We further improved business operations, maintaining stable shareholder returns. In the semi-annual report, we also plan to implement interim dividends for the first time, with dividend amount of ¥680 million and dividend ratio exceeding 40%. As of this interim dividend, the company’s cumulative cash dividends reached ¥11.2 billion. We reviewed and evaluated the effectiveness of the 2024 quality improvement, efficiency enhancement, and return emphasis action, and released the 2025 quality improvement, efficiency enhancement, and return emphasis action plan. Looking ahead to the second half of the year, the company will focus on the overall goal of "one increase, one decrease, four improvements, one optimization" proposed by General Manager Yang, maintaining development confidence, fully leveraging our comparative advantages, successfully achieving annual targets, and perfectly concluding the 14th Five-Year Plan. The focus will be on six areas of work: First, adhering to sales priority, securing the basic foundation for achieving annual benefits, firmly maintaining annual sales volume and price targets, keeping sales strategies of volume increase, price stabilization, price enhancement, and price adjustment unchanged, promoting synergy through production-sales coordination. Second, adhering to efficiency improvement and cost reduction, restoring the fundamentals of high and stable production, seeking progress while maintaining stability, self-pressuring to achieve cost reduction target expectations, continuing to build cost advantages.

Third, adhering to innovation-driven development, urgently cultivating Jushi’s new productive forces, grasping innovation directions, optimizing innovation mechanisms, continuously advancing machine replacement and automation projects, keeping pace with times in promoting the breadth and depth of artificial intelligence applications in glass fiber. Fourth, adhering to quality requirements, recreating new benchmarks for engineering project construction, managing project preparation, design, construction, acceptance, and other links well, achieving effectiveness from cold repair projects and momentum from new construction projects. Fifth, adhering to system construction, comprehensively improving high-level precise control, comprehensively strengthening product quality control, continuously building solid safety and environmental protection defense lines, consolidating benchmark creation achievements, supporting world-class enterprise construction. Sixth, adhering to Party-government leadership, promoting effective team culture construction, continuously advancing in-depth implementation of the Central Committee’s Eight-Point Regulations spirit learning and education, managing team construction well, strengthening cultural empowerment.

The above is a brief introduction to the company’s operating situation for the first half of 2025. Next, we enter the Q&A session. For this briefing, we have also opened online question channels and on-site question sessions. Investors can leave messages about issues of concern or raise hands to ask questions. When asking questions, please state your institution name and your name. Now, please feel free to ask questions.

Fan Chao, Analyst, Yangtze River Securities: Uh, hello General Manager Yang, hello General Manager Ding, thank you for the opportunity to ask questions. I am Fan Chao from Yangtze River Securities, and my first question is still about our coarse sand segment. Because we can see that after we adjusted our overall pricing strategy last year, the overall operational performance this year has been very good, I think. Our unit profitability has also recovered to a historical median level. So I think that even in the first half of this year, despite some fluctuations in external demand, our unit profitability has been recovering quarter by quarter. So my first question, based on this, I would like to ask about the company’s judgment on the supply and demand situation for coarse sand going forward, and whether the anti-involution efforts will bring some positive changes to the supply pattern of the glass fiber industry.

Additionally, based on our supply and demand judgment, what is our pricing strategy? Will it change, or will we continue to maintain the previous pricing strategy? Thank you.

Yang Guoming, Director and General Manager, China Jushi: Thank you for General Manager Fan’s question. Regarding coarse sand, as General Manager Ding just reported to everyone, actually in the first half of this year, the overall new capacity added was quite substantial, including ourselves. We also have Jiujiang’s 200,000 tons, which were ignited in two phases successively. Actually, we were also quite conservative, also out of requirements to control capacity. We actually limited this 200,000-ton line, dividing it into two production launches. This was also to control capacity release to some extent. Then for others, in the first half of this year we had Taibo’s 150,000 tons and Tianhao’s 150,000 tons. Actually, our coarse sand is approximately 500,000 tons. Um, um, um, in the first half of this year, overall speaking, due to the boost from wind power, it may have exceeded our expected imagination. But actually, from current judgment, compared to the first half analysis of 150 gigawatts or something, it probably won’t reach that now, basically around 100 gigawatts of capacity. As for us, because these few companies, we got certified early, plus Zhengshi shares is also our largest client, their demand is indeed quite stable. So now, in the first half of the year when prices, especially in the second quarter, loosened somewhat, we also proactively gave up some mid-to-low-end markets, particularly the low-end markets that were directly being slashed, giving our competitors some breathing room. Regarding anti-involution, for changes in supply and demand, um, mainly everyone has formed some consensus, because in previous years prices dropped to historical lows. Now there is also, and everyone’s internal opinions also hope for some recovery. However, to be honest, we are now in a dilemma. You could say our profitability is overall still okay, but regarding mid-to-low-end involution, we basically don’t participate much. Actually, the current mid-to-low-end involution is mainly second and third-tier competitors fighting each other. We might, but we can’t say we completely give up, we might participate a little bit, but the impact on us shouldn’t be significant.

Um, regarding future prices, in July we also held a high-quality development symposium with our competitors, forming a relatively good consensus, which is that everyone now focuses on controlling capacity and stabilizing prices. What I mean is, if everyone can’t consume it, then produce a bit more.

If you can’t consume it, then produce less, or keep more inventory. Don’t have everyone competing with each other, competing until prices are driven down. Now, after this meeting was held, overall the effect should be quite good. I see the probability of further decline is unlikely, but indeed some of their prices have quite large gaps compared to our product prices. Unlike before when the difference might be one or two hundred, now the difference could be five or six hundred, and these products themselves are mid-to-low-end. For mid-to-high-end products, overall prices are now quite stable. Since the first quarter of this year or since the end of last year, prices have been relatively stable. The entire market and clients all quite agree. Because from the interim reports that everyone has released, you can also see that in the second quarter some of our competitors saw their profitability decline, or some even don’t have much profitability. This also shows the second quarter situation was down, and the third quarter might be even more difficult for some. As for us, speaking of the third quarter, from our own analysis, um, there is indeed a decline in mid-to-low-end prices, but there’s also optimization of our structural adjustments. Looking at our July prices, it seems our overall average price still increased, mainly benefiting from good structure. Second, our export proportion might be better than others, plus our costs have decreased somewhat, and exchange rates are also favorable to us. This year because of the Euro exchange rate, especially the US dollar is also quite good, and the Euro is even more favorable to us. Because our European market is also quite large, particularly products going to Egypt and some from China, so settlements in Euros are also quite common, so foreign exchange also helps us to some extent. So I think regarding prices, um, we expect the next step should be stable with some increase, should be stable with increase, but mainly stable. That’s roughly the situation.

Fan Chao, Analyst, Yangtze River Securities: General Fan, regarding what was just discussed, General Yang just introduced the overall situation of this industry. I’ll add one more point, which is about anti-involution. We are also very concerned about this anti-involution policy. So beyond the business operations themselves, after the country’s anti-involution policy, it will regulate some government behaviors, especially in investment attraction, and we are very pleased to see this. That is to say, in the future capacity deployment, especially under some local governments’ irrational policies and vicious competition in investment attraction policies, I think it could be much better. So this way, for our entire industry’s future capacity deployment, it could be more rational. I think this has some promoting effect in this regard.

Ding Chenche, Deputy General Manager and Board Secretary, China Jushi: Yes, uh, thank you General Manager Yang, General Manager Ding, I just want to add a bit more, actually regarding anti-involution I just want to ask this, because in the past it was because of these new entrants crossing boundaries to enter, and there was also certain support from local governments, so now we, uh, apart from logical deduction, have we seen some signals? For example, have these cross-boundary players started to, uh, shrink their original large-scale plans or something like that? Are we seeing these kinds of signals now?

Yang Guoming, Director and General Manager, China Jushi: Which major contraction are you referring to?

Ding Chenche, Deputy General Manager and Board Secretary, China Jushi: No, it’s just that originally there wasn’t much, but now with this expansion they’re shouting out how much they want to expand by.

Yang Guoming, Director and General Manager, China Jushi: Ah, so now actually everyone has slowed down their pace, right now the only one that might still be going a bit faster is probably Tianhao, which is still relatively fast, and we ourselves have also slowed down. Um, anti-involution, we started this from the holiday in March last year, actually it was anti-involution, right, it’s just called differently. At that time we might have called it self-discipline, industry self-discipline, everyone started, this is what we added. So this situation, because everyone’s painful time is not very far away, so now everyone has a relatively personal feeling about it. Now if we’re going to start losing money again, everyone still feels uneasy in their hearts.

So you see our production line in Huai’an now, you say it can be put into production in seven years, there’s a 200,000 ton line, my 400,000 ton line we actually built simultaneously, some steel structures were actually built together at that time, it’s just that we need to add some equipment, mainly key equipment, kilns and such need to be built again. You say building is very fast, right, so this might be that in the future we will base it on our own judgment, especially in the 15th Five-Year Plan, we estimate roughly because it hasn’t been announced yet, it’s not good to say everything, roughly our reasonable growth amount is about how much, then where do we start building which production line, where do we do cold repairs, we are arranging this entire plan, that is within five years we might basically maintain this 14th Five-Year development or growth speed slightly reduced a bit, like this, because the base is large now, right, so this is definitely slower, everyone is slower.

You say Changhai invested in second place, 600,000 tons at that time, but now after investing in one line there’s no sound from behind, right, including cold repair lines, they are also slowing down now, General Manager Yang is also slowing down, it seems there’s an old line technology he told me he doesn’t want to do cold repairs either, because under current circumstances cold repairs are meaningless, just slowing down each time, including Dongfang Hope is only building in one place, other places haven’t moved at all. Because now some, if you enter without any benefits, investing so much is meaningless, right, including ourselves, if we report to China National Building Material Group, if according to current prices the benefits are not good, they won’t approve it for you now, they definitely require you to achieve a certain profit margin, a certain return on investment, this has hard regulations. So if you can’t achieve what we’re pursuing now, then what are you still doing, you can’t manage it, there’s no need to create trouble for yourself. So this definitely has changes.

Ding Chenche, Deputy General Manager and Board Secretary, China Jushi: Um, ah, hello to all the leaders, I am Fang Yuxin, a research analyst from Cathay Haitong. I’m following up on Fan Chao’s question just now, first regarding coarse sand, now that we have recovered to above 900 yuan per ton net profit, for this round, what is our outlook on the future price fluctuation range for this per-ton net profit? Is there a possibility of recovering to the historically best level of around 2,000 yuan per ton? Ah, then the second question is about our overseas factories, the U.S. factory has already turned from loss to profit in the first half of the year, so do we have plans to continue expanding production overseas in the future? Then there’s also the outlook for overseas and export markets in the second half of the year. Finally, there’s a question about fine sand, which is about our progress on thin cloth and these mid-to-low proximity products, how to leverage our advantages in porcelain kilns in this area, what kind of planning do we have in this field? These are the main questions, thank you.

Yang Guoming, Director and General Manager, China Jushi: Well, regarding the net profit of coarse sand blasting sand, there are actually very large differences now. Some products actually have no profit, some may still be okay, and there are also big differences between domestic and international markets. So when we talk about our blasting sand profit of 900, domestically it might be four to five hundred, while internationally it could be over a thousand or even more than that, so different markets have very large gaps. Domestically, this is also why we call it three cores - core markets, core customers, and core products. The core market is indeed relatively high-end for us, which is the international European and American markets.

No matter what, their prices are indeed high, right, because we compete with competitors, our peers have high costs. This anti-dumping just shows that our pricing is still on the low side I think, right, so I’ve always told our sales team that we need to adjust, adjust.

Some places might not be priced very reasonably, others have no food to eat or are even selling at a loss, so they propose anti-dumping against you, right. If there’s anti-dumping later, we ourselves will also face quite a bit of pressure, because taxes are added, so our users will also face great pressure, because we can’t bear all of it ourselves, so their costs will rise, and ultimately the price will actually go up. So regarding this net profit of 900, I think 900 to 1,000 is a very ideal price, very ideal, because we now have such a large volume, for example over 3 million tons. If we really had 1,000 yuan, then this alone would be over 3 billion in profit, right, net profit would be incredible. What kind of situation would cause 2,000 yuan to appear in the future?

There might be new situations like when COVID appeared, right, panic buying and such. If it’s not that kind of situation, I think reaching 2,000 with the current scale would be very abnormal. Whether there’s a possibility of encountering this before I retire, that might happen in abnormal situations, because if we encounter 2,000 again, what would happen? One day we won’t make money again, then definitely big capital will rush in, and we ourselves might also go crazy, right, just like the recent stock market. You say as long as you’re associated with AI or associated with low-altitude economy, right, or associated with low-altitude, they’re all incredible, right. So I think these are abnormal. I think the current situation is relatively normal. I’ve always said that in our industry, there must be some people losing money, some breaking even, some making a little money, and some who are indeed doing well for themselves and might make a little more. This price and profit are also reasonable. Otherwise, if profits are too high, our customers will also have opinions about us - why do you make so much money, right. Of course, we now have many varieties and many customers. It’s not necessarily about making a certain amount from any particular customer, right, so I think we need to look at this rationally. Second, regarding overseas expansion work, because in the United States, this year we also benefited from the adjustment of US tariffs in the China-US relationship. Last year we also negotiated some goods, so when tariffs went up, many Chinese goods couldn’t get through, so we actually adjusted prices twice relatively - once at the beginning of the year and again in April when tariffs were adjusted again. The first time we adjusted from last year’s losses to basically not losing money, at least achieving that, right, so in the first quarter our US company basically didn’t lose money. In the second quarter we started to be profitable. Starting in April, this round was basically profitable adjustments, because once tariffs go up, Chinese goods can’t get through, right, so our US operations should naturally adjust upward, because originally last year they were actually losing money. So in July we seemed to do quite well, right, about 8-9 million in profit in one month. When I saw this, I said it also matches what we said before about making 100 million a year, which I think is reasonable for such a 100,000-ton facility. Of course, if tariffs stabilize in the future and we adjust our structure better, it might be even better. Regarding expansion work, because now in the 15th Five-Year Plan, we already had our board meeting yesterday or the day before and audited and reviewed everything. We have preliminary plans. In the United States, it might be quite difficult now because everyone knows the current China-US relationship. So in other places, we think because starting last year we extensively researched many countries - Southeast Asia, Africa, Europe. But now the relatively ideal ones that we can move quickly on, we’re urgently taking action. These opinions are already being pushed forward in the decision-making process.

There are also some for the layout of new production sites, which are also being actively promoted. So for the 15th Five-Year Plan capacity growth, we estimate it will be roughly half domestic and half international - half might be overseas, half domestic. This is roughly the number, not completely accurate. This depends on the final market situation and might be slightly adjusted, but the general plan is like this. Regarding the outlook for export markets, we believe that in the second half of the year, we should see steady growth with some increases. In the first half, we declined by about 1.9% in terms of volume.

The reason for profit decline, in my analysis, is mainly because last year in the US we did some stockpiling, so this year, because of tariff issues, we basically didn’t ship for two months to the US, right. So with this back and forth scissor difference, we indeed seemed to have some decline. Nationally, I saw statistics from the association showing about a 5% decline, so we’re actually better than our peers, better than them. So in the second half, because I see July and August are off-season, but our overall situation seems better than last year, including our overall sales volume. July and August also showed quite large increases compared to last year.

Starting in September and October will be the golden September and silver October, so overall I think regarding tariffs, mainly because tariffs were unstable in the early period, so everyone was watching and waiting. Now, except for the China-US tariffs which haven’t been completely finalized, our analysis estimates it will probably be about this situation, right. Dragging for three months, dragging for several months, probably dragging until later it becomes like this, or possibly even better than now. Other countries have basically settled, so everyone is starting to stabilize now.

Turkey’s anti-dumping in Europe has also been decided, right, and we got a relatively good tax rate. In these two months, we basically negotiated the respective sharing ratios, so now we’ve all started normal shipping. In Europe, because some might be against China in December, right, yes, and against Egypt next year, so I think for us, the impact is not big, or we’ll be in a more advantageous position. So regardless of how much the tariffs are, because this is just relative comparison. If I’m two points lower than others, then I have a two-point advantage, right. Then compared to European peers, whether it’s Egypt or China, actually this cost advantage is really there, right. Then our product quality is no worse than theirs, even some are better than theirs, so there’s no issue of only being able to use certain products or not being able to use some foreign peers’ products. Even now, products can be used anywhere. There’s nowhere that says our basic products can’t be used. This is no problem. Regarding electronic cloth, when we had our meeting last time, we also honestly admitted that we indeed didn’t pay enough attention to this issue. At that time, we might have underestimated it too much. The AI era came too fast, and we indeed didn’t prepare enough. So recently, we’re also actively working on simultaneous advancement of different formulations. Because since we’ve all obtained it, I think we shouldn’t boast anymore, right.

When we actually produce results, then I’ll report to everyone at that time. Now everyone should just quietly work on it. I said we hope to give everyone a clear statement by the end of this year or early next year. We’re actively working on it now. Now, because peers are also worried that if we succeed, we might destroy this market again, or we might destroy this market. We indeed are like this - if we do it, we must do it well, and the costs must be relatively low, right. According to the current high costs, I think the significance is not very great, right. I always say we’re like Li Mu.

I said we started at 15 yuan and now we’re doing it for a few cents. This is especially true according to current predictions. As long as these few companies all start production, capacity will immediately be oversupplied. Now I see from the statistics we collected, eight companies are all frantically expanding production, but actual demand isn’t that big all at once. Look at Donghai Technology - they only sold 8.95 million meters in the first half, right. That’s already the leading number one, and the leading number one didn’t even reach 10 million meters in the first half, right. We can casually do tens of millions of meters in a month, right, so this is different, right. And I also mentioned last time, we have a lot of platinum, right, we’re financially strong. I said let’s use a few tons of platinum for you to work with. This thing, once we break through, we can expand production very quickly, and our backend is basically mature. These thin processes are already certified by us, right. So now we’re not going generation by generation anymore. I said let’s do everything together at once. Once we break through, yes, we break through. Okay, but that’s roughly the situation. In our planning, we also made a special planning for the 15th Five-Year Plan. This planning won’t be worse than others, but the plan they reported to me was even more aggressive, more outrageous. I said don’t do so much. I said let’s do less in five years, don’t end up doing too much which wouldn’t be good either. So we later gave them a 50% discount. We made a rough plan - in the 15th Five-Year Plan, we’ll also have such a production base in Tongxiang, specifically for making this special cloth, and also for special molding and sealing products. That’s roughly the situation.

Sun Mingxin, Analyst, Zhongxing Securities: Uh, General Manager Yang, hello General Manager Yang, hello General Manager Ding, hello General Manager Xu, I am Sun Mingxin from Zhongxing Securities. I want to continue asking following up on the question that Bao Daxia just asked. First, regarding our high-end electronic fabric field, you just mentioned that regarding our progress, we might give everyone a general statement around the end of this year or early next year. But we don’t want to, so if we don’t ask about progress, if we ask about our future approximate allocation ratio in terms of volume for first generation, second generation, and third generation overall, and comprehensively speaking, what kind of approximate scale do we hope to achieve after we succeed, and whether there is a general guidance for this - this is the first question. The second question is about our ordinary electronic fabric. Since our volume is relatively large after all, price fluctuations definitely still have a very significant impact on our profit elasticity. We see that this year’s CCL has actually had two rounds of price increases, including upstream copper foil prices which are much higher compared to historically, and resin prices are also moving upward. However, in the electronic fabric field, after raising prices once in February and March of this year, the overall prices afterward have been relatively stable. We want to understand, considering that the new capacity additions in our electronic fabric industry this year are not very substantial, we would like to understand the general outlook for future prices in the ordinary electronic fabric field. Thank you.

Yang Guoming, Director and General Manager, China Jushi: Regarding future demand forecasting, it’s like this: we also base it on the industry or our downstream sectors, such as first generation, second generation, third generation. We have roughly such a demand forecast for the next five years, so we also make our own planning according to this. For the five years, for example, we roughly hope to achieve about 15% market share. I said because they started doing this from the beginning, wanting to achieve 15%, I said this can’t be done.

We should take it slowly, don’t be so rushed, right? If you do too much, you might invest a lot in production capacity, but you can’t utilize it all at once, which might lead to a lot of idle assets. I said there’s no need to be too rushed. That’s roughly the situation. Regarding the copper foil price increase you mentioned, copper foil price increase - they didn’t increase much either. It’s mainly that copper prices rose too much, right? Now it’s stabilizing at just under 80,000. At that time, we also followed the copper foil price increase to 80,000 or above 80,000, and then we followed with a price increase. When we made that price increase, first of all, it was in the fourth quarter of last year when the situation wasn’t very good and sales weren’t very good either.

I told everyone to control production capacity a bit, right? When spring comes and flowers bloom, everyone can increase prices together, because indeed everyone was losing money at that time. So in March, I remember we seemed to have increased prices once. At that time, we proposed 30 cents, but actually we probably did about 20-something cents. As for the relatively thin cloth, we also increased prices recently. Why? Because many people are going to make those ultra-thin ones, right? These first and second generation ones are tight. This has also caused us to have large shortages in many products like 2116 and 1080. However, if we want to fill this shortage, it would have a big impact on our costs because the efficiency is low. Since efficiency is low, we also made some adjustments.

Recently, we can only increase prices and are increasing them, but the magnitude of the increase should be bearable for everyone. To be honest, our middle layer of electronic circuit boards is still making relatively good money. Our end customers, except for late night ones who might have better benefits, I see that others are mostly like Huawei and Nan Ya - I see they haven’t exceeded 100 million, right?

They only had tens of millions in profit in the first half of the year. Their stock prices have indeed risen very well, right? This has already exceeded their performance. I said if they cash out a bit, it might be better than this, so they’re also having difficulties. So we’re also considering, we’re considering that around the fourth quarter, we might take advantage of their different versions, because recently they’ve also proposed - like Jiantao and Wang Lixin - they all proposed increasing by 10 yuan per board. I said for that, we should also get a share of the pie. They eat meat while we suffer losses - getting some soup to drink would also be okay, because now overall, our peers aren’t making much money directly. We actually have some profit, but not much, not much. We’re just running volume, so we make a little bit of money. But from our total assets of 15 billion, earning this little money is quite pitiful, right?

Very pitiful. So we will also act at the appropriate time. I also mentioned this to Shen Guomin yesterday. I said we need to seize this opportunity quickly, right? When I was coming here just now, I was still thinking about having a meeting with them early next month. I also need to grab the opportunity, grab the opportunity - how to seize this chance. So we’re also considering this matter.

Fan Chao, Analyst, Yangtze River Securities: What General Manager Yang just mentioned about that price increase, let me add a little supplement. It’s not a price increase. I mean the attachment, this attachment now we need to call it good, it’s in the repair, the repair, not like we used to attach it like before. Now some abnormal and unreasonable repairs need to be fixed. That’s what I mean. So the meaning of this attachment is a little different from before. Before it was indeed seemingly low, when it was low it seemed like it should have been raised, restore restore, now the repair becomes the previous restoration. Now this action is not so so big.

Ding Chenche, Deputy General Manager and Board Secretary, China Jushi: The price of this electronic cloth in the first half of the year still increased by more than 15% year-over-year, so this magnitude is more than 30 cents.

Yang Guoming, Director and General Manager, China Jushi: Let me add that for electronic cloth, indeed because you raised it by 30 cents, this magnitude is really quite large, because originally it was just over 3 yuan, or 3 to 4 yuan, right? If you raise it by 30 cents, that’s a bit much. If you raise it twice, it would be a few percentage points less. Don’t push it up. Anyway, this number isn’t large, but actually the proportion is very large.

Ding Chenche, Deputy General Manager and Board Secretary, China Jushi: I am Wu Kuidong from domestic Minsheng Securities. Uh, I have two questions to ask. One is about this high-end electronic cloth, but when talking about first generation, second generation, third generation, I want to ask, there is also a product called this low thermal expansion coefficient electronic cloth. I want to know whether we are also making some simultaneous layout for this product, as well as with the terminal customers, like Huawei, Apple, whether there is some communication. This is the first question. The second question I want to ask is, uh, regarding our market value, that is our group, China Construction Finance, for each brother unit’s market value, whether there is some assessment, for example, some ranking, making some comparisons, whether there are some such situations, right, as well as what kind of expectations we have for this market value in the future.

Yang Guoming, Director and General Manager, China Jushi: Well, what you just mentioned is exactly what we’re doing - the simultaneous advancement we just talked about, first generation, second generation low expansion plus Shenying cloth Q cloth, these four simultaneous advancements. So now, it’s not easy to say this, um, because we have all these formulations, glass formulations, production processes, these technologies, current routes. Now we’ve specifically established a joint public relations team, led by company executives, with General Manager Cao in charge of technology, Zhang Zhijian in charge of R&D and Shen Lin in charge of production as deputy team leaders, plus other department heads from various departments - we’re doing this cross-departmentally in a joint effort. I’m saying we have to take strong measures now, we absolutely must take strong measures. Previously, I didn’t think this matter was particularly difficult, right? Now because of this, I’m saying we can’t continue doing this one by one anymore.

The previous approach they gave me was to work on this, work on that, work on this - that pace might be too slow. So now we’re doing this simultaneously. As for market value management, please have General Manager Ding report to everyone again.

Ding Chenche, Deputy General Manager and Board Secretary, China Jushi: Uh, thank you for Mr. Wu’s question. Uh, regarding market value management, it may be because the entire SASAC has requirements for market value management for all these central enterprises’ listed companies.

This may be different from what everyone directly sees as management of absolute market value numbers, because that way it would become us, uh, everyone’s listed companies going to manipulate stock prices, which would be wrong and violate regulations. What we emphasize more is taking proactive measures to maintain the company’s market value, such as improving operations and strengthening communication with investors. So, uh, last year we also responded to the call from the exchange, and we issued a total return plan, right, quality improvement and efficiency enhancement total return. This year, we conducted an evaluation and also released this year’s plan. In terms of the state-owned assets line, there are various different dimensions of management requirements for market value management, and we break down all these management requirements into daily work and advance according to these requirements.

Sun Mingxin, Analyst, Zhongxing Securities: Hello, leaders. I am Liu Jiacheng from Zhongtian Company, and I have two small questions I would like to ask. The first one is that we still see that the external environment is indeed quite complex, so I would like to ask, from the first half of the year’s perspective, with overseas additional tariffs, on average, how much of the tariff proportion can the company pass through to downstream customers in terms of price increases? We also see that the EU and Brazil have actually initiated anti-dumping investigations on glass fiber originating from Egypt. What measures might the company take subsequently to address these external risks? This is the first small question. The second small question is still focused on coarse sand, because in the first half of this year, we also saw that demand for high-end products performed quite strongly, so the company’s strategy has achieved certain results. Looking forward, demand for high-end products like wind power and automotive may indeed face some uncertainty, so I would also like to ask, if the uncertainty in high-end product demand increases, will the company make adjustments to its overall pricing strategy, or are there any relatively new demands emerging in the industry that are relatively high-end?

Yes, these are my two small questions, thank you.

Yang Guoming, Director and General Manager, China Jushi: Regarding the transmission of tariffs to overseas markets, because now this new one, Turkey, has already been determined. Currently, we preliminarily have basically an 80-20 split - they bear 80%, and we bear around 20%. However, for some of our distributors operating in Turkey, we also require our distributors to raise prices. In the future, our 20% also needs to be absorbed here. Temporarily, it might be to maintain everyone’s stable purchasing or their normal production and operations during these difficult times. Because I believe that some of our competitors in Turkey, for example, when they pursue anti-dumping measures, their purpose is to raise prices, right? Now that the tariffs have been determined, their prices will definitely rise too. We’ll follow suit with the rising tide, and in this way, much of these tariffs will also be absorbed. Actually, regarding other situations like the EU’s anti-dumping measures against China, there’s an issue that I’ve thought through very clearly. If Chinese products or European Egyptian products don’t go to Europe, Europe won’t have enough supply - there’s inherently a shortage. It’s impossible for them to open several new kilns tomorrow to make up for the European market gap tomorrow. They can’t make up for it because they also can’t invest there anymore. Since they’re having such a hard time now, if they invest in another production line, wouldn’t that be asking for trouble? Right now, I think even the probability of cold repairs is very low. Many are like this. There’s one like Longsheng, our client, who has 30,000 tons of white gasoline. He came to us long ago wanting to shut it down, right? We gave him a suitable price for our supply. Why can’t he shut it down? It’s because dealing with his 800 employees is too difficult. This can’t be solved just with money - there’s no way to handle the people, so it just can’t be shut down. Even if he’s losing money, he still has to keep people working. That’s the situation. But regardless, because there’s an overall shortage, products from other places must enter. This makes the matter easier to negotiate. If the local area can’t solve it, then bearing the tariff burden might have certain difficulties. So I think that when the time comes, once the tariff rate is set, we need to see what level of gap exists between us and other competitors, and then we can finally determine our strategy to respond. Talking about this now is still relatively early because we still can’t maintain the original tax system, so everyone is still operating normally. From our response this time, the EU officials are quite appreciative of our Egypt operations and our Chinese technology, because we’ve never sold below cost price, right? Actually, from all our production bases, Egypt should have the strongest profitability. So I told Shen Guomin last time - because Shen Guomin went on a business trip to Japan this time and wasn’t there when we responded, but he was the team leader - I told him that our review should truly reflect the situation, don’t take any new actions, right?

Let them proceed as they should. So overall, why did the first European anti-dumping case fail and get dropped? Later they forcibly imposed anti-subsidy measures at 3.1%, right?

Ding Chenche, Deputy General Manager and Board Secretary, China Jushi: Yes, we are still in litigation with the European Commission right now.

Yang Guoming, Director and General Manager, China Jushi: Yes, yes, um, later the anti-dumping case was not established, we have never done this kind of anti-dumping processing. So I think this situation should be said to be favorable to us, favorable. Now you mentioned high-end products, wind power and automotive have uncertainties, and now this uncertainty, because this is the most fashionable word now, everyone says everything is uncertain anyway, because in the current situation, whoever says what defects, the market is inherently uncertain, right?

But on the contrary, for example, this year’s wind power deployment volume, I want to tell our competitors, there’s no need to desperately increase production capacity, right? We just maintain stable supply capacity and let this prosperity extend into the future. So whether it’s Taishan or CPSI, overall they have increased capacity by one step first, but not too much. Now, Shanpo and maybe Changhai, they might also have one production line, but if this kind of line only does this, it won’t form a major climate. You can’t do it with just one production line, because the product variety structure in wind power is very complex. With one production line, people can only patch things up with you, but if you want to supply an entire customer, you can’t supply from your place alone. We now have, we currently have about seven production lines operating, seven production lines of various sizes, right? Different glass formulations, including 181, 817, 82, how are they divided together? There are four glass formulations for us to see, that’s how it goes. So this is different, the supply capacity is different. As for the automotive sector, because of new energy vehicles, we overall feel this is still the general direction. The penetration rate domestically is already nearly 50%, right? In the future, I don’t think the usage of glass fiber will decrease. With lightweighting, for example batteries, we recently, right? Originally calcium was used with composite materials, now we recently cooperated with a customer called Carlyle, they use composite materials for the entire battery box, because there’s a mandatory standard that it cannot burn for a certain amount of time, and composite materials won’t burn, right? Originally using aluminum profiles and such was unsafe, now there are mandatory safety standards, they must use composite materials, right? Many other automotive components using composite materials, glass fiber composite materials for anti-corrosion, rock wool and other applications are being widely used.

So this time with Huaan’s new production line, this electronic cloth production line, we also made a demonstration ourselves of how to use more composite materials. For example, our doors and windows, I use glass fiber pultruded profiles entirely, right? We ourselves have both heat insulation and anti-corrosion capabilities, right? And our cable trays, and including some road surface pouring, we also used composite material rebar to replace steel rebar, and many others. I think I’m particularly impressed with gratings, storage tanks, and pipelines. I told General Manager Cao, they use composite materials for everything, all composite materials. Now the price might be expensive, some places might be higher, but I think we need to take the lead in using them first, right? I said in the future we’ll let everyone see that all these places use composite materials.

In the future, including floor panels and furniture, all can use composite materials. Wanhua Chemical also wants to cooperate with us, they sell resin, we sell glass fiber, right? After making boards, they replace wood. So these new application scenarios, a few days ago General Manager Zhang was attending our board meeting talking about, for example, offshore photovoltaic frame supports, he said we were too conservative, doing this until the end of the 15th Five-Year Plan, we’re only doing 580,000 tons per year, maybe it could be hundreds of thousands or millions of tons, but we can’t produce too much either, right? And there’s what we mentioned before, offshore rebar, I think this area’s usage might explode into millions of tons like wind power, I don’t think this is nonsense, because this market is too big. Now offshore applications need anti-corrosion, and chemical plants, humid places, and saline-alkali areas, using steel directly corrodes easily, but using our glass fiber form. So recently to promote this ourselves, we also set up a glass fiber rebar production line in September, then we make some samples, right?

We start promoting ourselves. There are many customers we have now who are doing this and hope to cooperate with us, joint venture companies to do this. As long as we find a large-scale one, like Caesar Biology that everyone might know, right? They’re doing recycled nylon to make this rebar. From what I discussed with Chairman Liu, this cost can actually match steel materials, right? So once this kind of thing breaks through, it will be incredible, incredible. On pricing strategy, I think, as I just mentioned, our main focus is still on price stability and repairing price premiums. You mentioned price wars, everyone is worried about them, right? Before this, but I also told everyone last time, if we and Taishan don’t participate in this price war, then this isn’t a price war, this is a local war, right? Not a world war.

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