AI boom lifts electronic cloth prosperity, China Jushi's quarterly net profit hits a new high of 2.41 billion yuan

"AI servers are driving growth in demand for high-performance electronic cloth, including low-dielectric, low-loss and low-thermal-expansion products. After orders for high-end products increased, electronic yarn, looms and production personnel have concentrated on high-value-added products, and the supply of ordinary electronic cloth has consequently contracted," Huolong Securities noted recently.

After the supply contraction drove a systemic rise in electronic cloth prices, related companies subsequently entered a period of explosive earnings growth.

On the evening of October 19, fiberglass leader China Jushi released its third-quarter report. The company's profit grew quarter by quarter in the first three quarters, with third-quarter net profit reaching 2.41 billion yuan, setting a new single-quarter profit record since the company's listing.

In its previously disclosed earnings forecast, China Jushi noted: "Demand in major downstream application areas of fiberglass increased, and product volumes and prices rose together."

Considering the supply gap in high-end electronic cloth looms and the pace of capacity deployment by various companies, including China Jushi, the electronic cloth industry's strong prosperity is still expected to continue.

Contribution of electronic cloth to earnings surges

China Jushi is a global leader in the fiberglass industry. At its Tongxiang headquarters, Jiujiang, Chengdu and other locations, the company has a total of 3 million tons of raw yarn capacity, ranking it in an absolutely leading position in the industry by capacity scale.

According to its periodic reports, China Jushi ranks first globally in capacity scale and has achieved and maintained three "world number ones": thermoset roving, thermoplastic reinforcement and electronic base cloth.

At present, the company's consolidated main products include fiberglass yarn and products, and electronic cloth, of which electronic cloth is made from fine fiberglass yarn through weaving and other processes.

Because of properties such as high strength and high heat resistance, electronic cloth can be used to produce copper-clad laminates (CCL) and printed circuit boards (PCB), and is ultimately used in communications equipment, consumer electronics, automotive electronics and other fields.

Precisely because of these industrial relationships, as well as the industry's capacity shifting toward high-performance electronic cloth products, the electronic cloth industry's prosperity improved systemically in the first half of the year.

Data from Huolong Securities show that in October 2025, domestic leading companies quoted 7628 electronic cloth at 4.3 to 4.5 yuan per meter; by June 2026 the price had reached 7.3 to 7.7 yuan per meter, and in October this year it broke above 10 yuan per meter.

Over the same period, 2116 thin cloth and 1080 ultra-thin cloth rose to 12.7 yuan per meter and 13.1 yuan per meter respectively, with year-to-date increases of more than 140%.

Against this backdrop, China Jushi's revenue and profit structure changed significantly, with the weight of electronic cloth products increasing markedly compared with before.

According to the company's prospectus for the renewal of historical ultra-short-term financing bonds, in 2025, China Jushi's fiberglass yarn and products, and electronic yarn and electronic cloth, accounted for 79.54% and 19.47% of revenue respectively, with gross margins of 31.83% and 33.78%; in that period, electronic yarn and electronic cloth products contributed about 20% of the listed company's gross profit.

Along with the rapid rise in electronic cloth prices, in the first quarter of 2026 the gross margin of China Jushi's electronic yarn and electronic cloth products climbed rapidly to 52.94%, and their share of gross profit rose to more than 33%.

In its interim and third-quarter reports, although China Jushi did not disclose more operating data "by product," considering the continued rise in electronic cloth prices this year, its earnings contribution is expected to increase further and is very likely to become the core driver of the company's profit growth.

In addition to the increase in unit profit brought by higher electronic cloth prices, China Jushi's sales volumes of main products this year also grew somewhat compared with the same period last year.

Taking the first half of the year alone as an example, the company achieved sales of 1.7004 million tons of roving and products and 544 million meters of electronic cloth, up 7.5% and 12.2% respectively from the same period last year.

Rising volumes and prices of main products jointly boosted China Jushi's operating performance in the first three quarters, showing a profit trend that rose quarter by quarter.

In the first three quarters of this year, the company's single-quarter net profit attributable to shareholders was 1.27 billion yuan, 1.62 billion yuan and 2.41 billion yuan respectively, with the third quarter setting a new single-quarter profit high since the company's listing.

2027 profit expected to exceed 10 billion yuan

The single-quarter net profit of 2.41 billion yuan may not be China Jushi's limit.

Looking at the supply situation in the electronic cloth industry, strong prosperity is still expected to continue. First, industry supply from new capacity will be relatively small in 2026; the Huai'an Phase I project that China Jushi put into operation in March this year is already the largest project increment of the year.

Large-scale capacity will not come on stream until 2027. Other new capacity, including that of Hong Kong-listed Kingboard Laminates and International Composite Materials, is expected to be commissioned in 2027.

Second, global electronic cloth loom capacity is also tight, especially the supply of specialized air-jet looms for high-end electronic cloth, which has constrained the expansion of electronic cloth capacity to some extent.

GF Securities estimates that under a neutral expectation, the supply-demand gap for electronic cloth looms will reach 608 units and 1,050 units in 2026 and 2027 respectively, while the supply-demand gap for ordinary electronic cloth will be 113 million meters and 160 million meters respectively.

According to media reports, delivery times for some imported equipment have reached 18 to 24 months or even longer, and new order schedules have been pushed back to 2028-2029.

It is precisely against this backdrop that the aforementioned scene has emerged: capacity within the industry has shifted toward high-value-added products, crowding out supply of 7628 ordinary electronic cloth, and the internal diversion of capacity has triggered a comprehensive rise in electronic cloth prices.

This means that the tight supply pattern for electronic cloth this year will be difficult to reverse, and the supply gap may only improve marginally after new capacity comes on stream in the second half of 2027.

In the short term, electronic cloth prices also continue to rise. Data from Guojin Securities show that in October electronic cloth prices rose again by 1.5 yuan per meter (7628 model), while thin cloth (2116 and 1080 models) rose by 2.5 yuan per meter.

From China Jushi's own perspective, its electronic cloth business is expected to create another "China Jushi" in the next two years.

Related data show that in 2025 the company's total electronic cloth capacity was 960 million meters per year. After the Huai'an Phase I project was put into operation in March this year, the company's total electronic cloth capacity increased to 1.35 billion meters per year.

In May and July this year, China Jushi also disclosed the Huai'an Phase II project and the Tongxiang project with an annual capacity of 250 million meters of electronic cloth, both with construction periods of 1.5 years.

After all the above new capacity is brought on stream, the company's total electronic cloth capacity will increase from 960 million meters per year in 2025 to close to 2 billion meters per year.

Strong earnings delivery capability and the continuation of the volume-and-price growth logic have made institutions very optimistic about China Jushi's profit growth, and since the beginning of this year several research institutions have repeatedly raised the company's earnings expectations.

After the third-quarter report was disclosed, brokerages including Ping An Securities generally forecast China Jushi's 2026 net profit attributable to shareholders at more than 7.6 billion yuan, and their profit expectations for 2027 at more than 10 billion yuan.