Equity Research: First Applied Material (603806.SH)

Date: October 30, 2025
Rating: BUY (Maintained)
Current Price: CNY 15.76
Analyst: Yao Yao, Zhang Jiawen
Sector: New Energy & Power Equipment / Electronic Materials

Title: Optimizing PV Encapsulation Landscape; Electronic Materials Unlock New Growth Horizons

Executive Summary

First Applied Material Co., Ltd. ("First Applied" or the "Company"), a global leader in photovoltaic (PV) encapsulation materials, released its third-quarter financial results for 2025 on October 29. While the top-line and bottom-line figures reflect the ongoing cyclical pressures within the solar industry, a deeper analysis of the operational metrics reveals significant structural improvements in competitive positioning and the early stages of a robust second growth curve in electronic materials.

In the first three quarters of 2025, the Company reported revenue of CNY 11.79 billion (-22% YoY) and net profit attributable to shareholders of CNY 688 million (-45% YoY). Specifically, in Q3 2025, revenue stood at CNY 3.93 billion (-13% YoY, -12% QoQ), while net profit reached CNY 192 million (-42% YoY, +103% QoQ). The sequential rebound in profitability, despite a slight decline in shipment volume, underscores the Company’s resilience and pricing power amidst industry consolidation.

Our investment thesis rests on three pivotal pillars:
1. Competitive Landscape Optimization in PV Films: The accelerated exit of second- and third-tier competitors has stabilized market share for leaders like First Applied. The Company’s ability to maintain profitability while peers incur losses highlights its cost leadership and operational efficiency.
2. Robust Financial Health as a Cyclical Shield: With an asset-liability ratio of merely 19.74% and zero interest-bearing debt, coupled with approximately CNY 8 billion in cash and bank acceptances, First Applied is exceptionally positioned to weather the current industry downturn and capitalize on future consolidation opportunities.
3. Electronic Materials as a High-Growth Second Curve: The photosensitive dry film business is transitioning from capacity expansion to performance realization. With increasing penetration into high-end PCB and packaging substrate markets driven by AI server demand, this segment is poised for volume and price growth, diversifying revenue streams away from pure solar dependency.

We adjust our earnings forecasts for 2025-2027 to CNY 1.09 billion, CNY 1.82 billion, and CNY 2.65 billion, respectively. We maintain our BUY rating, citing the Company’s dominant market position, improving margin trajectory, and the successful diversification into high-value electronic materials.

Key Takeaways

1. Q3 2025 Performance Analysis: Resilience Amidst Volatility

1.1 Financial Overview

The third quarter of 2025 presented a mixed bag of top-line pressure and bottom-line recovery. The year-over-year declines are largely attributable to the broader slowdown in global PV module installations and the intense price competition that characterized the first half of the year. However, the quarter-on-quarter improvement in net profit (+103%) is a critical signal of stabilizing fundamentals.

Note: Q3 2024 revenue and profit figures derived from reported YoY/QoQ changes. Gross margin for Q3 2025 explicitly stated as 8.89%, down 2.5 percentage points from Q2.

1.2 Operational Dynamics: Shipment and Pricing

• Shipment Volume: Q3 film shipments were estimated at 722 million square meters, representing a 5% sequential decline. This decrease aligns with the seasonal adjustment in module production schedules following the rush installations in Q2. Despite the volume dip, the Company’s market share continued to rise steadily, indicating that it is gaining share from weaker competitors who are reducing output or exiting the market.
• Pricing and Margins: The gross margin compression in Q3 (8.89%) was primarily driven by low film prices prevailing in July and August. However, a crucial turning point occurred in late August when the cost of raw material EVA (Ethylene Vinyl Acetate) resin began to rise. In response, First Applied implemented three consecutive price hikes for its film products in August and September.
• Profitability Repair: The lag effect of these price increases suggests that the profitability observed in Q3 does not fully reflect the improved pricing environment of late Q3. We anticipate a tangible repair in gross margins in Q4 2025 and beyond, as the higher selling prices pass through the income statement while inventory costs normalize.

1.3 Cost Structure and Raw Materials

The correlation between EVA resin prices and film pricing is central to First Applied’s margin dynamics. Historically, the Company has demonstrated strong pass-through capabilities. The recent uptick in EVA prices, while increasing input costs, provided the necessary catalyst for raising film prices. Given the Company’s scale and long-term contracts with upstream suppliers, it is better positioned than smaller peers to manage raw material volatility without sacrificing market share.

2. Strategic Pillar I: Consolidation in the PV Encapsulation Film Market

The PV encapsulation film sector is undergoing a profound structural shift. After years of aggressive capacity expansion, the industry is now in a phase of "clearing out" inefficient capacity. This trend is highly beneficial for First Applied, the undisputed market leader.

2.1 Accelerated Exit of Second- and Third-Tier Players

Throughout 2024 and 2025, numerous small and mid-sized film manufacturers have faced sustained losses due to inability to achieve economies of scale and lack of technological differentiation. Many have either scaled back production significantly or exited the market entirely.
* Impact on First Applied: As these players retreat, First Applied’s market share has expanded organically. More importantly, the reduction in irrational price competition allows for a more rational pricing environment. The Company’s ability to remain profitable during this period, while competitors bleed cash, validates its superior cost structure and operational excellence.

2.2 Technological Leadership and Product Differentiation

First Applied is not merely competing on price but on technological superiority. The Company is actively developing and commercializing encapsulation solutions tailored for next-generation PV technologies:
* XBC (Back Contact) Cells: Requires high-reflection, high-durability films.
* HJT (Heterojunction) Cells: Demands low-temperature curing and specific barrier properties.
* Thin-Film and Perovskite Modules: Emerging technologies requiring specialized encapsulation to ensure longevity and efficiency.

By providing the "best cost-performance" encapsulation solutions for these advanced modules, First Applied locks in relationships with leading module manufacturers who are transitioning their product mixes. This technological moat makes it difficult for new entrants or laggards to compete, further solidifying the Company’s head advantage.

2.3 Global Capacity Layout: The Thailand Advantage

Geopolitical tensions and trade barriers (such as tariffs in the US and Europe) have made localised manufacturing outside of China increasingly valuable. First Applied’s overseas layout is industry-leading:
* Thailand Phase II: The 250 million square meter capacity in Thailand has commenced production.
* Strategic Benefit: This capacity allows the Company to serve international customers more effectively, bypassing certain trade restrictions and reducing logistics costs. It also diversifies geopolitical risk. As global demand for non-Chinese sourced components grows, the Thailand facility will contribute disproportionately to profitability due to potentially higher realized prices in international markets.

3. Strategic Pillar II: Financial Fortitude as a Competitive Weapon

In cyclical industries, balance sheet strength is not just a safety net; it is a strategic asset. First Applied’s financial health is exceptional compared to its peers and the broader manufacturing sector.

3.1 Balance Sheet Strength

• Asset-Liability Ratio: As of the end of Q3 2025, the Company’s asset-liability ratio stood at 19.74%. This is remarkably low for a capital-intensive manufacturing firm, indicating minimal financial leverage and low bankruptcy risk.
• Debt Profile: The Company reports zero short-term and long-term interest-bearing borrowings. This absence of debt burden means that interest expenses do not erode margins, and the Company is immune to rising interest rate environments.
• Liquidity: Cash and bank acceptances on hand total approximately CNY 8 billion. This substantial liquidity buffer provides several strategic options:
  1. R&D Investment: Sustained funding for new material development (e.g., electronic materials) without relying on external financing.
  2. M&A Opportunities: Potential to acquire distressed assets or technologies from exiting competitors at attractive valuations.
  3. Dividend Stability: Ability to maintain or increase shareholder returns even during periods of lower earnings.
  4. Operational Flexibility: Ability to purchase raw materials in bulk during price dips, further enhancing cost advantages.

3.2 Cash Flow Management

Despite the decline in net profit, the Company’s operating cash flow remains robust. The efficient management of working capital, evidenced by stable inventory turnover days (approx. 55 days) and receivables management, ensures that earnings are converted into cash. This quality of earnings is a key differentiator from peers who may report profits but struggle with cash collection.

4. Strategic Pillar III: Electronic Materials – The Second Growth Curve

While the PV film business provides the cash cow, the electronic materials segment, specifically Photosensitive Dry Film, represents the high-growth engine for the future. This business is transitioning from a "investment phase" to a "harvest phase."

4.1 Market Position and Customer Base

First Applied has successfully penetrated the supply chains of top-tier Printed Circuit Board (PCB) manufacturers, including:
* Avary Holding (Pengding)
* Wus Printed Circuit (Kunshan) Co., Ltd.
* Shennan Circuits
* Kinwong Electronic

These clients represent the highest echelon of the PCB industry, demanding stringent quality standards. First Applied’s ability to qualify and supply these customers validates the technical maturity of its dry film products.

4.2 Volume and Revenue Trends

• Q3 Sales Volume: Estimated at 50 million square meters, showing continuous sequential growth.
• Trajectory: The steady increase in volume indicates that the Company is gaining share from established international competitors (primarily Japanese and Korean firms) through import substitution and competitive pricing.

4.3 Upgrading Product Mix: The AI Driver

The most compelling aspect of this business is the shift towards higher-value applications:
* From Standard PCB to Packaging Substrates: The Company is expanding from traditional PCB dry film into packaging substrates, which are critical for advanced semiconductor packaging.
* AI Server Demand: The boom in Artificial Intelligence has spurred demand for high-performance computing chips, which require advanced packaging substrates (e.g., FC-BGA). These substrates require high-resolution, high-reliability photosensitive dry films.
* "Volume and Price" Rise: As the proportion of sales to high-end clients increases and the product mix shifts towards packaging substrates, the average selling price (ASP) and gross margin of this segment are expected to improve. This creates a "double engine" growth dynamic: increasing volumes from market share gains and increasing margins from product upgrades.

4.4 Long-Term Potential

The global photosensitive dry film market is dominated by a few foreign players. First Applied is one of the few domestic Chinese companies capable of mass-producing high-end dry film. Given the national strategic emphasis on semiconductor supply chain autonomy, the Company is well-positioned to benefit from policy support and customer preference for localized suppliers. Over the next 3-5 years, this segment could contribute significantly to overall profits, reducing the Company’s cyclicality linked to the solar sector.

5. Industry Context: The "Anti-Involution" Trend in Solar

The Chinese solar industry has been plagued by "involution" (neijuan) – excessive competition leading to price wars below cost. However, recent policy signals and market dynamics suggest a turning point.

• Policy Support: Government guidelines are increasingly discouraging low-quality, low-price bidding and encouraging technological innovation.
• Market Self-Correction: The sustained losses incurred by many manufacturers are forcing a natural selection process. Capital markets are also becoming more discerning, refusing to fund unprofitable capacity expansions.
• Implication for First Applied: As the "anti-involution" trend takes hold, industry profitability will restore. Leaders like First Applied, with superior technology and balance sheets, will be the primary beneficiaries of this restoration. The expected repair in PV industry sentiment will likely drive a re-rating of the Company’s valuation multiple.

Risks / Headwinds

While the outlook is positive, investors must consider the following risks:

1. Downstream Demand Uncertainty

• Global Solar Installation Slowdown: If global economic conditions deteriorate, or if subsidy policies in key markets (US, Europe, India) are reduced, the demand for PV modules could fall short of expectations. This would directly impact film shipment volumes.
• Inventory Build-up: If module manufacturers accumulate excess inventory, they may reduce procurement from film suppliers, pressuring prices and volumes.

2. International Trade and Geopolitical Risks

• Tariffs and Trade Barriers: Escalating trade tensions, particularly between China and the US/EU, could lead to higher tariffs on Chinese solar components. While the Thailand factory mitigates some of this risk, significant restrictions on Chinese-owned facilities abroad could hinder export potential.
• Supply Chain Decoupling: Efforts by Western countries to decouple their solar supply chains from China could limit First Applied’s access to certain high-margin international markets.

3. Raw Material Price Volatility

• EVA/POE Resin Prices: The profitability of the film business is sensitive to the spread between film prices and raw material costs. If EVA/POE resin prices rise sharply and the Company cannot pass these costs onto customers quickly enough, margins could compress. Conversely, if resin prices fall rapidly, inventory write-downs could occur.

4. New Material Commercialization Risks

• Photosensitive Dry Film Adoption: The transition to high-end packaging substrates is technically challenging. Any delays in product qualification, yield issues, or failure to meet the stringent reliability standards of AI chip manufacturers could slow down the growth of this second curve.
• Competition in Electronic Materials: International incumbents (e.g., Hitachi Chemical, DuPont) may respond with aggressive pricing or technological advancements to defend their market share.

5. Exchange Rate Fluctuations

• As the Company expands its overseas sales and production, fluctuations in the RMB exchange rate against the USD and other currencies could impact reported earnings and competitiveness.

Rating / Sector Outlook

Sector Outlook: Cautiously Optimistic with Structural Alpha

The broader PV sector is currently in a bottoming-out phase. While beta returns (market-wide gains) may be limited in the short term due to overcapacity, alpha opportunities exist for companies with:
1. Dominant Market Share: Ability to dictate pricing and maintain utilization.
2. Technological Moats: Products required for next-gen technologies (TOPCon, HJT, BC).
3. Diversification: Exposure to non-solar high-growth sectors (like electronic materials).

First Applied fits all three criteria. The sector is moving from a phase of "capacity expansion" to "quality and efficiency competition." In this environment, leaders gain share, and margins stabilize. We expect the PV film industry to see a gradual recovery in profitability starting in late 2025 and accelerating in 2026.

Simultaneously, the electronic materials sector, driven by AI and semiconductor localization, offers a high-growth backdrop. The convergence of these two trends makes First Applied a unique hybrid play: a stable, cash-generating solar leader with a high-growth tech optionality.

Valuation Analysis

We have adjusted our earnings estimates to reflect the latest operational data and macroeconomic assumptions.

Source: Company Reports, Guojin Securities Institute Estimates

Valuation Methodology

We employ a combination of Relative Valuation (P/E) and Discounted Cash Flow (DCF) analysis.

1. Relative Valuation:

   • Historically, First Applied has traded at a P/E multiple ranging from 20x to 35x, reflecting its status as a high-quality growth stock in the new energy sector.
   • Currently, the stock trades at ~37.8x 2025E earnings. While this appears elevated, it is important to note that 2025 is a trough year for earnings.
   • Looking forward to 2026, the P/E drops to 22.6x, and to 15.5x for 2027. Given the projected 67% earnings growth in 2026 and 45% in 2027, the current valuation is reasonable, especially considering the high visibility of the earnings recovery.
   • Compared to peers in the PV auxiliary materials sector, First Applied commands a premium due to its superior balance sheet, market share, and diversification into electronic materials. A target P/E of 25-30x on 2026 earnings is justified.

2. DCF Analysis:

   • Assuming a WACC of 8.5% and a terminal growth rate of 2.5%, our DCF model supports a fair value range consistent with the relative valuation approach. The strong free cash flow generation expected from 2026 onwards, driven by lower capex intensity and higher margins, supports a higher intrinsic value.

Price Target Implication

Based on a 2026E EPS of CNY 0.699 and a target P/E multiple of 25x-28x (reflecting the growth premium and sector recovery), the implied price target range is CNY 17.5 – CNY 19.5. This represents an upside potential of 11% - 23% from the current price of CNY 15.76, excluding potential dividend yields. Considering the strong momentum in electronic materials, the upper end of this range is achievable.

Investment View

Core Investment Logic

1. The "Survivor Takes All" Dynamic in PV Films
The PV film industry is a classic example of a fragmented market consolidating around a dominant leader. First Applied’s strategy of maintaining profitability while competitors lose money is creating a widening gap in financial health. As the cycle turns, First Applied will emerge with a larger market share, stronger customer stickiness, and a cleaner competitive landscape. The "anti-involution" trend is not just a slogan; it is a financial reality that favors the strongest balance sheet.

2. Margin Inflection Point is Near
The Q3 2025 results mark the bottom of the margin cycle. The three price hikes in Aug-Sep, driven by raw material costs, signal a shift in pricing power. With the Thailand capacity coming online and high-margin differentiated products (for XBC/HJT) gaining traction, the gross margin trajectory is set to improve sequentially. Investors should look for margin expansion in Q4 2025 and Q1 2026 as a key catalyst.

3. Electronic Materials: A Re-rating Catalyst
The market often values solar companies with low multiples due to perceived cyclicality. However, First Applied is increasingly an electronic materials company. The photosensitive dry film business, with its exposure to AI and semiconductors, deserves a higher valuation multiple. As this business scales and proves its profitability, it will act as a re-rating catalyst, pulling the overall company valuation closer to that of high-tech material suppliers rather than traditional solar manufacturers.

4. Financial Safety Margin
In an uncertain macro environment, First Applied’s zero-debt status and CNY 8 billion cash pile provide an unparalleled safety margin. This allows the Company to:
* Continue R&D spending while peers cut back.
* Offer flexible payment terms to secure key customers.
* Pursue strategic M&A if opportunities arise.
This financial flexibility reduces downside risk and enhances upside optionality.

Strategic Recommendations for Institutional Investors

• Accumulate on Weakness: Given the cyclical nature of the stock, any short-term weakness driven by broader market sentiment or temporary solar sector news should be viewed as a buying opportunity. The fundamental trend is upward.
• Monitor Key Metrics:
  • Quarterly Gross Margin: Look for sequential improvement from the 8.89% base in Q3.
  • Dry Film Volume: Track the monthly/quarterly shipment data for photosensitive dry film. Breaking through the 60-70 million sqm/quarter barrier would signal accelerating adoption.
  • Thailand Utilization: Monitor the ramp-up rate of the Thailand Phase II plant.
• Long-Term Hold: First Applied is a core holding for exposure to both the green energy transition and the semiconductor supply chain localization in China. It offers a balanced risk-reward profile with limited downside (due to financial strength) and significant upside (due to earnings recovery and new business growth).

Conclusion

First Applied Material (603806.SH) stands at a pivotal juncture. The cyclical headwinds in the solar industry are waning, and the structural advantages of the market leader are becoming more pronounced. Simultaneously, the successful incubation of the electronic materials business provides a powerful new growth engine.

We believe the market has not fully priced in the magnitude of the earnings recovery expected in 2026-2027, nor the long-term value creation potential of the photosensitive dry film segment. With a robust balance sheet, optimized competitive landscape, and clear growth visibility, First Applied is well-positioned to deliver superior risk-adjusted returns.

We maintain our BUY rating.

Appendix: Detailed Financial Analysis & Forecasts

A. Income Statement Analysis (2022-2027E)

Analysis:
* Revenue Trajectory: The decline in 2024-2025 reflects the industry downturn. The recovery begins in 2026, driven by volume growth in both PV films and electronic materials.
* Margin Expansion: Gross margins are expected to bottom in 2025 (12.2%) and expand significantly to 18.3% by 2027. This is driven by:
1. Higher ASPs for PV films due to consolidated competition.
2. Higher margin contribution from electronic materials.
3. Economies of scale in the Thailand plant.
* Operating Leverage: As revenue grows in 2026-2027, fixed costs (admin, R&D) will be spread over a larger base, improving operating margins. R&D expense remains robust (3% of sales), ensuring technological leadership.

B. Balance Sheet Strength (2022-2027E)

Analysis:
* Deleveraging Trend: The Company has systematically reduced its debt load, moving from CNY 1.3bn short-term debt in 2022 to near-zero in 2025.
* Asset Quality: Current assets constitute ~75% of total assets, indicating high liquidity. Inventory levels are managed efficiently, preventing significant write-down risks.
* Equity Growth: Retained earnings continue to build shareholders' equity, supporting organic growth without the need for external equity financing.

C. Cash Flow Analysis (2022-2027E)

Analysis:
* 2024 Anomaly: The high operating cash flow in 2024 (CNY 4.39bn) was likely due to working capital adjustments (e.g., drawing down inventory or extending payables).
* Normalization: OCF normalizes in 2025-2027, tracking closely with net profit plus depreciation.
* Capex Cycle: Capital expenditures remain significant (CNY 600-850mn/year) to support the Thailand expansion and electronic materials capacity. However, these investments are self-funded through operating cash flow, preserving the zero-debt status.
* Free Cash Flow: By 2026-2027, as capex stabilizes and earnings grow, Free Cash Flow (OCF - Capex) will become strongly positive, enabling potential dividend increases or share buybacks.

D. Key Financial Ratios & Efficiency Metrics

Analysis:
* Return Metrics: ROE and ROIC bottom in 2025 and recover strongly in 2026-2027, mirroring the profit recovery. The 12.7% ROE in 2027 is attractive for a manufacturing firm.
* Working Capital Efficiency: Inventory turnover has improved (from 68 to 55 days), indicating better demand forecasting and production planning. Receivables days have increased slightly (to 90 days), which may reflect longer payment terms offered to strategic customers, but remains manageable given the strong cash position. Payables days are stable, showing consistent supplier relationships.

Deep Dive: The Photosensitive Dry Film Business

To fully appreciate the investment case, it is essential to understand the specifics of the electronic materials segment.

1. What is Photosensitive Dry Film?

Photosensitive dry film is a key material in the PCB manufacturing process. It is used in the photolithography step to define the circuit patterns on the copper-clad laminate.
* Process: The film is laminated onto the board, exposed to UV light through a mask, and then developed. The exposed (or unexposed, depending on type) areas harden, protecting the copper underneath during etching.
* Importance: The resolution and quality of the dry film directly determine the precision of the circuit lines. As electronics become smaller and more powerful (e.g., smartphones, AI chips), the demand for high-resolution dry film increases.

2. Market Size and Competition

• Global Market: The global PCB dry film market is valued at several billion USD, growing at a steady pace alongside the electronics industry.
• Competitive Landscape: Historically dominated by Japanese companies (Hitachi Chemical, now Showa Denko; Asahi Kasei) and Korean companies (Dongjin Semichem). These players have held tight control over high-end segments.
• First Applied’s Entry: First Applied entered this market with a strategy of "import substitution." Starting with mid-range PCB applications, it has gradually moved up the value chain.

3. The AI and Packaging Substrate Opportunity

• Packaging Substrates: These are specialized PCBs used to connect semiconductor chips to the main board. They require extremely fine line widths and spacing.
• AI Servers: NVIDIA’s H100/B200 and other AI accelerators use advanced packaging (CoWoS, etc.) which relies on high-quality substrates. The dry film used here must have exceptional thermal stability and resolution.
• First Applied’s Progress: The Company has reportedly qualified its products with major PCB makers for packaging substrate applications. This is a significant technical milestone.
• Margin Profile: Dry film for packaging substrates can command gross margins of 30-40%, significantly higher than the 10-15% typical for standard PV films or low-end PCB films. As this mix increases, it will lift the blended margin of the entire electronic materials division.

4. Growth Projections for Electronic Materials

While specific revenue breakdowns are not always disclosed in detail, we estimate:
* 2024: Electronic materials revenue ~CNY 1-1.5 billion.
* 2025E: ~CNY 1.8-2.0 billion (driven by volume growth in standard PCB).
* 2026E: ~CNY 2.5-3.0 billion (driven by entry into packaging substrates).
* 2027E: ~CNY 3.5-4.0 billion.
* Profit Contribution: By 2027, this segment could contribute CNY 300-500 million in net profit, representing 15-20% of the Company’s total earnings, up from single digits today.

Deep Dive: PV Film Technology Trends

1. POE vs. EVA

• EVA (Ethylene Vinyl Acetate): The traditional material. Lower cost, but prone to PID (Potential Induced Degradation) and water vapor transmission.
• POE (Polyolefin Elastomer): Superior barrier properties, essential for N-type cells (TOPCon, HJT) which are more sensitive to moisture. Higher cost.
• Trend: The industry is shifting towards POE and EPE (EVA-POE-EVA co-extruded) films as N-type cells gain market share. First Applied is a leader in POE/EPE formulation, allowing it to capture the premium segment of the market.

2. Thin-Film and Perovskite

• Perovskite: A promising next-gen technology. However, perovskite cells are highly sensitive to moisture and oxygen. Encapsulation is the biggest hurdle to commercialization.
• First Applied’s Role: The Company is working closely with perovskite developers to create custom encapsulation solutions. Success here would position First Applied as a critical enabler of the next solar revolution, creating a long-term moat.

Management and Corporate Governance

First Applied is known for its prudent and professional management team.
* Focus on Core Competencies: The Company has resisted the temptation to diversify into unrelated fields, sticking to polymer material science.
* R&D Culture: Consistent R&D spending (3-3.5% of revenue) ensures technological leadership.
* Shareholder Alignment: The Company has a history of paying dividends, although the payout ratio may fluctuate with earnings. The recent low dividend in 2025 (estimated) is likely due to the desire to retain cash for strategic investments during the downturn, which is a prudent move.

Final Investment Checklist

Before initiating or adding to a position, investors should verify:
1. Q4 2025 Margin Data: Confirm the sequential improvement in gross margin from 8.89%.
2. Thailand Plant Utilization: Check for updates on the ramp-up of the 250mn sqm capacity.
3. Dry Film Client Wins: Look for announcements of new qualifications in the packaging substrate space.
4. Industry Pricing: Monitor weekly PV film prices to ensure the price hikes are holding.

Disclaimer:
This report is based on information available as of October 30, 2025. It is intended for institutional investors and should not be considered as personal investment advice. Please consult with a financial advisor before making any investment decisions. The views expressed herein are subject to change without notice. Guojin Securities does not guarantee the accuracy or completeness of the information contained in this report.

Analyst Contact:
* Yao Yao: yaoy@gjzq.com.cn
* Zhang Jiawen: zhangjiawen@gjzq.com.cn

Guojin Securities Research Institute
* Shanghai: 5th Floor, Zizhu International Building, 1088 Fangdian Road, Pudong New Area.
* Beijing: 8th Floor South, News Building, 26 Jiannei Street, Dongcheng District.
* Shenzhen: Room 1806, 18th Floor, Huanggang Business Center, 2028 Jintian Road, Futian District.