Electronic Cloth Prosperity Unshaken; No Need for Pessimism at Current Levels

English summary

Latest changes in the electronic cloth industry: [Blessing] 1. The US and South Korea signed orders for storage chips worth approximately $900 billion, potentially rebalancing industry profits. AI industry trends continue to accelerate, and NVIDIA's Rubin series is about to mass-produce in H2, ensuring demand for electronic cloth. [Blessing] 2. Approaching the August electronic cloth price increase window, current expectations are for an increase not less than July's rise, with 7628 electronic cloth expected to rise by more than 1.2 yuan/meter. Since July, the electronic cloth sector has undergone deep adjustment, but industry trends have not changed. Supply and demand remain very tight, with shortages of looms and electronic yarn. Electronic yarn/electronic cloth inventories are at historical lows, which is the most realistic situation. The price increase chain from electronic cloth to CCL to PCB is smoothly transmitting. We believe that at current levels, we should be more optimistic. The uptrend in electronic cloth prices continues, and the performance elasticity of electronic cloth companies will improve quarter by quarter. Corresponding to 2027 performance expectations, China Jushi's PE valuation is only around 10x. Pay attention to China International Composites (leader in second-generation cloth), Sinoma Science & Technology (complete range of specialty electronic cloth), Honghe Technology (leader in T cloth), etc. Welcome to exchange details of each company.