Orient: The implementation of the "anti-insider" policy in the fiberglass industry may yield promising results. It is recommended to pay attention to China Jushi Co., Ltd (600176.SH) and Sinoma Science & Technology (002080.SZ).

Orient released a research report stating that the profits of fiberglass companies in the first half of 2025 showed a significant improvement compared to the previous year, thanks to the collective price increase in the industry. Looking ahead, in the context of cracking down on "internal competition," the firm believes that the implementation of stable quantity and price policies may be more effective, thereby enhancing market resilience and expectations for the growth of fiberglass companies' performance. It is recommended to pay attention to the leading companies in the fiberglass industry: China Jushi Co., Ltd (600176.SH, Buy) and Sinoma Science & Technology (002080.SZ, Not Rated). Key points from Orient are as follows: The fiberglass industry has spontaneously reversed the trend of "internal competition" and has achieved significant results. Cracking down on "internal competition" has become an important focus of government work. The sixth meeting of the Central Finance and Economics Committee on July 1, 2025 proposed to "govern the disorderly and low-price competition of enterprises in accordance with the law and regulations, promote the orderly withdrawal of backward production capacity." According to China Business News, the imbalance between supply and demand since the second half of 2022 has led to a decline in fiberglass product prices and kept them at a low level. The price of 2400tex direct roving without alkali dropped to 3495 yuan/ton in September 2023, a decrease of 18.3% year-on-year. Faced with industry challenges, in March 2024, fiberglass companies led by China Jushi Co., Ltd collectively began to increase prices, temporarily easing the "price war" in the industry and driving a recovery in profitability. In the first half of 2025, the profits of leading enterprises showed growth. For example, China Jushi Co., Ltd achieved a net profit attributable to the parent company of 730 million yuan in Q1 2025, an increase of 108.5%. Additionally, according to its performance forecast, the profit for the first half of 2025 is expected to be 16.5-17 billion yuan, an increase of 71.7%-76.9%. The contradiction between supply and demand still exists, and there are divergent views in the market on whether prices will fall back. Currently, the disorderly price competition within the industry has eased, but the supply and demand contradiction has not been completely resolved. Unlike the cement and glass industries, the fiberglass industry has not been identified as an industry with overcapacity, but instead as a new industry encouraged by the country. Therefore, fiberglass production capacity construction has not been restricted, and in recent years, there have been many new production capacities. In terms of annual production, the output was 5.41 million tons in 2020, expanding to 7.35 million tons in 2024. With no significant increase in demand, the continuous growth of production capacity has led some market views to believe that the fiberglass industry is not heavily affected by "internal competition," with limited policy constraints on stable prices being temporary, and there is still a risk of significant price reductions once competition intensifies. Under the backdrop of "anti-internal competition," the implementation of stable quantity and price policies may be more effective. The profitability of the fiberglass industry is still acceptable, and the effect of supporting prices is good, which has already reflected the industry's consensus on stabilizing prices, and the supply and demand contradiction is still under control. At the end of 2024, the Fiberglass Industry Association officially issued the "CHINA GLASS Fiberglass and Products Industry Self-Discipline Convention" to create a fair and orderly competitive environment, rejecting the duplicative construction of high, medium, and low-end capacities and homogenization of vicious competition. The firm believes that under the current macro policy guidance, the implementation effect can be expected, thereby enhancing market resilience and expectations for the growth of enterprise performance. Risk warning: Reintensification of industry competition, further decline in demand, accelerated construction of fiberglass production capacity, rising raw material prices, and inadequate implementation of the "anti-internal competition" policy.