Recently, China Jushi disclosed its Q3 2026 report. The report shows that the company achieved operating revenue of CNY 18.078 billion in the first three quarters, a year-on-year increase of 30.02%; total profit was CNY 6.533 billion, up 102.11% YoY; net profit attributable to shareholders of the listed company reached CNY 5.346 billion, an increase of 108.15% YoY; and net profit attributable to shareholders after deducting non-recurring gains and losses was CNY 5.313 billion, up 103.39% YoY. During the same period, net cash flow from operating activities was CNY 3.957 billion, up 85.36% YoY; weighted average return on equity (ROE) was 16.11%, an improvement of 7.79 percentage points compared to the previous year; and basic earnings per share (EPS) was CNY 1.3422.
Breaking down by quarter, the profit elasticity becomes more concentrated. In the third quarter, the company achieved operating revenue of CNY 6.919 billion, up 44.30% YoY; net profit attributable to shareholders was CNY 2.412 billion, up 173.80% YoY; and net profit attributable to shareholders after deducting non-recurring gains and losses was CNY 2.406 billion, up 163.98% YoY. Based on the net profit attributable to shareholders of CNY 2.933 billion in the first half of the year, the profit realized in the third quarter alone nearly equals the sum of the profits from the first two quarters. Compared to the full-year net profit attributable to shareholders of CNY 3.285 billion in 2025, the figure for the first three quarters of this year already accounts for 1.63 times last year's total; the operating revenue of CNY 18.078 billion represents 95.7% of the full-year revenue of CNY 18.881 billion in 2025.
Regarding the performance changes, the company's statement in the report is quite restrained—"increase in product sales volume and price." These twelve characters correspond to the simultaneous doubling of four indicators: total profit, net profit attributable to shareholders, net profit after deducting non-recurring gains and losses, and basic EPS. What truly warrants dissection in this quarterly report is how these twelve characters are materialized layer by layer in the income statement, and what corresponding traces they leave on the cash flow statement and balance sheet.
01、Profit Growth Rate Is Approximately Three Times Revenue Growth; Elasticity Does Not Stem From Cost Compression
Operating revenue grew 30.02% YoY in the first three quarters, while net profit attributable to shareholders grew 108.15% YoY, with the latter being approximately 3.6 times the former. This growth differential is first reflected in gross margin: calculated based on operating revenue and operating costs from the consolidated income statement, the gross margin for the first three quarters was 45.62%, compared to 32.42% in the same period last year, an increase of 13.20 percentage points over one year.
The rise in gross margin has largely transmitted to the profit side. Gross profit for the first three quarters was CNY 8.248 billion, an increase of CNY 3.740 billion YoY; during the same period, selling expenses were CNY 0.169 billion, administrative expenses CNY 0.596 billion, R&D expenses CNY 0.542 billion, and financial expenses CNY 0.339 billion, totaling CNY 1.647 billion, an increase of CNY 0.395 billion YoY, which accounts for 10.6% of the incremental gross profit. The period expense ratio was 9.11%, a slight increase of 0.11 percentage points from9.00% in the same period last year. Among them, the selling expense ratio decreased from 1.14% to 0.94%, and the administrative expense ratio decreased from 3.55% to 3.30%, clearly demonstrating the dilution effect of expanding revenue scale on these relatively fixed costs.
Among the four expense categories, financial expenses showed the most significant increase in expense ratio. Financial expenses for the first three quarters were CNY 0.339 billion, up 69.79% YoY, with the financial expense ratio rising from 1.44% to 1.88%. However, upon closer inspection, interest expenses during the same period were CNY 0.197 billion, a decrease of approximately 11.5% YoY, indicating that the rise in expenses was not due to increased debt costs. Everbright Securities' commentary released on October 21 judged this account item as follows: "The increase in the financial expense ratio is estimated to be caused by a higher YoY exchange loss." Concurrently, the foreign currency financial statement translation difference in other comprehensive income was negative CNY 0.192 billion, consistent with this judgment.
The "purity" of profit can also be verified. Non-recurring gains and losses totaled CNY 0.032 billion in the first three quarters, accounting for less than 1% of net profit attributable to shareholders. The growth rate of net profit after deducting non-recurring gains and losses (103.39%) is almost synchronized with the growth rate of net profit attributable to shareholders (108.15%). This means that the doubled profit is primarily contributed by core business operations, with low dependence on one-off items such as asset disposal or fair value changes.
R&D investment represents another upward curve. R&D expenses for the first three quarters were CNY 0.542 billion, up 35.87% YoY, with an R&D expense ratio of 3.00%, higher than 2.87% in the same period last year. In the 2027 "Quality Improvement, Efficiency Enhancement, and Return Focus" action plan, the company disclosed that R&D investment increased from CNY 0.519 billion in 2023 to CNY 0.582 billion in 2025. In 2025, it obtained 75 authorized invention patents, filed 21 international invention patent applications, and participated in formulating 16 national, industry, and group standards, bringing the cumulative number of effective authorized patents to over one thousand. Continuing to ramp up R&D while significantly increasing gross margins is a detail easily overlooked in this quarterly report.
02、Electronic Cloth Volume and Price Both Rise, Becoming the Main Variable Driving Profitability Improvement
If attributed by product line, electronic cloth is the primary source of this round of profit increment.
According to China Jushi's 2027 "Quality Improvement, Efficiency Enhancement, and Return Focus" action plan (hereinafter referred to as the "Action Plan"), the company's main business involves the R&D, production, and sales of glass fiber and products. Core products include roving and products, electronic yarn, and electronic cloth, alongside supporting new energy power generation operations. Among these, electronic cloth is the core reinforcing substrate for copper-clad laminates (CCL) and PCBs (Printed Circuit Boards). The company's electronic cloth sales volume increased from 836 million meters in 2023 to 875 million meters in 2024, reaching 1.062 billion meters in 2025, showing year-over-year growth over three years.
The price increase is even steeper. According to data from Zhuochuang Information, the average price of 7628 electronic cloth in the industry for Q3 2026 was approximately CNY 10.0/meter, a quarter-over-quarter increase of about 48%; Guojin Securities' calculation indicates a YoY increase of 143% and a QoQ increase of 49%, noting that since Q4 2025, the cumulative price increase for 7628 electronic cloth has reached 216%, rising from CNY 4.15/meter at the end of Q3 2025 to CNY 13.1/meter in October 2026. Entering October, electronic cloth prices saw another round of hikes: the 7628 specification rose by CNY 1.5/meter, thin cloth specifications like 2116 and 1080 rose by CNY 2.5/meter, and G75 electronic yarn rose by CNY 3,000/ton.
The root cause of sustained price increases lies in supply. Ding Zhenyu, Senior Investment Advisor at Great Wall Fund Advisory, analyzed: "As AI server demand for PCBs evolves towards high speed, it drives exponential growth in demand for low dielectric constant and low coefficient of thermal expansion electronic cloth. High-end looms are constrained by core supply issues; although existing stock looms prioritize switching to high-margin electronic cloth, capacity cannot expand rapidly due to equipment quantity limits, keeping high-end electronic cloth in a state of tight supply." He Li, General Manager of Beijing Zhiyu Zhishan Investment Management Co., Ltd., also judged that second-generation low-dielectric electronic cloth is the tightest among high-end electronic cloths, with quotes being 2 to 3 times those of first-generation low-dielectric electronic cloth, and the supply-demand gap is expected to persist until 2027.
Constrained supply and expanding demand directly map to the company's capacity rhythm. According to Shanghai Securities News, the annual 100,000-ton electronic-grade glass fiber and 390 million-meter electronic cloth production line at the Huai'an base was ignited and put into operation in phases in March and June this year, currently reaching full production status; on May 13, the company announced plans to build an annual 50,000-ton electronic yarn and 320 million-meter electronic cloth production line in Huai'an, with a total investment of CNY 4.431 billion. Everbright Securities' commentary corroborates this rhythm: "The Huai'an 100,000-ton electronic-grade glass fiber zero-carbon smart production line is at full capacity, and the under-construction 50,000-ton electronic yarn and 320 million-meter electronic cloth project opens up future growth space."
Higher-tier products are also advancing. Guojin Securities noted in its October 19 commentary that the company's "R&D, customer certification, and sample delivery work for low-dielectric series glass fiber and electronic cloth products are proceeding in an orderly manner, and will steadily advance product implementation and capacity release according to customer verification progress and market demand." Although this part has not yet entered the income statement, it is a key clue for observing whether the product structure can continue to move upwards.
03、Roving Base Remains Solid, Supply Rhythm Provides Price Support
Electronic cloth explains the elasticity of profitability, while roving determines the stability of the base.
In terms of business volume, the company is the world's largest professional glass fiber manufacturer, with a global market share of approximately 30%. It has four major domestic production bases in Tongxiang, Zhejiang; Jiujiang, Jiangxi; Chengdu, Sichuan; and Huai'an, Jiangsu, as well as overseas bases in Suez, Egypt, and South Carolina, USA. Total glass fiber capacity exceeds 3.5 million tons, with products covering over 100 major categories and nearly 3,000 specifications, serving customers in over 100 countries and regions. Sales volume of roving and products increased from 2.4814 million tons in 2023 to 3.0250 million tons in 2024, reaching 3.2026 million tons in 2025, also showing year-over-year growth.
Roving price performance has been relatively moderate. According to Zhuochuang Information data, the average price of nationwide winding direct roving 2400tex in Q3 2026 was CNY 3,749/ton, up 5% YoY but down 0.8% QoQ. This trend contrasts with the steep curve of electronic cloth and constitutes a key to understanding the company's performance structure: roving provides scale and cash flow, electronic cloth provides price elasticity, and both moved upwards simultaneously in the first three quarters of this year, resulting in the combination of 30% revenue growth and 100% profit growth.
The supply-side rhythm is noteworthy. According to Guojin Securities' compilation, only two new production lines were ignited in the industry in the first three quarters of 2026: Inner Mongolia Tianhao Line 3 (150,000 tons) and China Jushi Huai'an Zero-Carbon Base Line 4 (200,000 tons); during the same period, two lines underwent cold repairs: China Jushi Tongxiang Line 4 (180,000 tons, renovated from 180,000 to 200,000 tons, cold repair in January 2026, restart in June) and Taibo FO2 Line (100,000 tons); on August 20, the company simultaneously announced plans to cold-repair Tongxiang Line 5 (180,000 tons). The institution thus judges that 2026 is a small year for supply, a state expected to continue into 2027, providing support for the central price level of roving.
The company's capacity layout continues to advance, but the rhythm has been weighed. On October 19, the board approved the change in the implementation plan for the annual 200,000-ton high-performance glass fiber production line construction project at China Jushi Group Chengdu Co., Ltd. The total project investment was adjusted from CNY 2.348 billion to CNY 2.748 billion, an increase of CNY 0.4 billion, and the construction period was shortened from 3 years to 2 years. The reason given in the announcement for the change was "significant rise in precious metal prices and the need to enhance plant intelligence levels," disclosing that the estimated total investment yield after full completion is 7.06%.
04、Cash Flow and Debt Ratio Remain Robust, Accounts Receivable Growth Warrants Attention
After profit doubles, what is more worth watching is whether the profit has turned into cash.
Net cash flow from operating activities for the first three quarters was CNY 3.957 billion, up 85.36% YoY, 22.8 percentage points lower than the 108.15% net profit growth rate, but the absolute amount already approaches the full-year figure of CNY4.201 billion in 2025; calculated based on the total shares outstanding at the end of the period, net operating cash flow per share is approximately CNY 0.99. During the same period, cash received from selling goods and providing services was CNY 13.742 billion, equivalent to 76.0% of operating revenue. The company disclosed in the Action Plan that operating cash flow has remained positive and grown steadily over the past three years.
The intensity of capital expenditure has risen significantly. Cash paid for constructing fixed assets, intangible assets, and other long-term assets in the first three quarters was CNY 3.133 billion, compared to CNY 0.599 billion in the same period last year, an increase of over 4 times. Correspondingly, construction in progress at the end of the period was CNY 0.806 billion, a decrease of 47.4% from the end of the previous year; fixed assets were CNY 38.257 billion, an increase of 10.0% from the end of the previous year. The concentrated transfer of projects under construction to fixed assets means that previously invested production lines are entering the output phase. As the scale of transfers expands, subsequent depreciation and amortization will increase accordingly, and their impact on gross margins needs to be observed in future reports.
The asset-liability structure remains robust. Total assets at the end of the period were CNY 60.984 billion, up 11.64% from the end of the previous year; owners' equity attributable to shareholders of the listed company was CNY 34.293 billion, up 10.29%; the asset-liability ratio was 41.28%, a slight increase of 0.87 percentage points from 40.41% at the end of 2025. The company described this as "at a low level within the industry" in the Action Plan and proposed maintaining the asset-liability ratio around 40% in 2027.
It should be objectively pointed out that the growth of receivables is faster than revenue. Accounts receivable at the end of the period were CNY 3.182 billion, notes receivable CNY 1.458 billion, and financing receivables CNY 3.115 billion, totaling CNY 7.755 billion, an increase of 41.6% from CNY 5.478 billion at the end of the previous year, exceeding the 30.02% revenue growth rate. The company's response in the Action Plan is to "continuously strengthen full-cycle management of accounts receivable" and "persistently reduce dual funds (inventory and receivables)." For comparison, inventory at the end of the period was CNY 3.846 billion, an increase of only 8.2% from the end of the previous year, significantly lower than the revenue growth rate, indicating tighter control on the inventory side.
The improvement in cash flow is also reflected in return arrangements. The company disclosed in the Action Plan that it implemented interim dividends for the first time in 2025, with a full-year dividend payout ratio of 43.66%; it continued to implement interim dividends in 2026, with amounts exceeding CNY 1.3 billion. On the balance sheet, dividends payable at the end of the period were CNY 1.336 billion, corroborating this statement. Additionally, the company completed A-share buybacks in 2025, cumulatively repurchasing 34.5282 million shares for a total payment of approximately CNY 0.540 billion.
05、Consensus Among Institutional Judgments
After the disclosure of the Q3 report, multiple securities firms issued commentaries intensively within two weeks, with highly consistent directions but different focal points.
China Post Securities' commentary on October 20 provided a boom cycle judgment. The institution stated: "Sustained high growth in AI computing power demand drives rapid volume expansion in high-end electronic cloth demand. On the supply side, constraints such as tight loom supply and the shift of industry capacity structure towards high-end result in persistent shortage of traditional electronic cloth supply. We judge that the high prosperity of electronic cloth will continue for a longer period." Its forecasts for net profit attributable to shareholders in 2026 and 2027 are CNY 7.72 billion and CNY 11.76 billion respectively, representing YoY increases of 135.1% and 52.3%.
Everbright Securities' commentary on October 21 emphasized validation from the financial statements. The institution wrote: "Overall gross margin for Q1-Q3 2026 was 45.6%, +13.2 pcts YoY; single Q3 gross margin was 51.2%, +18.4 pcts YoY, further improving by 6.9 pcts QoQ from 44.4% in Q2, hitting new highs for several consecutive quarters. The core driver lies in the accelerated rise in electronic cloth prices in Q3..." Regarding Q4, its judgment is "Q4 price elasticity is still releasing," and "On the capacity side, the Huai'an 100,000-ton electronic-grade glass fiber zero-carbon smart production line is at full capacity, and the under-construction 50,000-ton electronic yarn and 320 million-meter electronic cloth project opens up future growth space."
Guojin Securities' commentary on October 19 focused on the structure of the dual main businesses. The institution believes that for ordinary electronic cloth, "the frequency and magnitude of price increases exceeded expectations," and for AI electronic cloth, R&D and certification are "proceeding in an orderly manner"; for roving, "only 2 new ignition lines and 2 cold repair lines in the industry in Q1-Q3 2026, limited new supply (expected to continue until 2027), providing support for the central price level of roving." Its forecasts for net profit attributable to shareholders from 2026 to 2028 are CNY 7.898 billion, CNY 12.087 billion, and CNY 12.84 billion respectively. At the industry level, Hualong Securities also stated that with the rapid development and application of AI technology, demand for high-performance electronic cloth will continue to expand.
In summary, the facts confirmed from China Jushi's Q3 report are that simultaneous volume and price increases have left traces on all three financial statements: gross margin increased by 13.20 percentage points, period expense ratio remained basically flat, operating cash flow grew by 85.36%, and projects under construction concentratedly transferred to fixed assets while fixed assets expanded synchronously. As for how long this round of electronic cloth prosperity driven by computing infrastructure demand will last, the answer is not in the already disclosed Q3 report, but in the matching degree between the pace of capacity release and real downstream demand in the coming quarters.