(Yicai) July 16 -- Shares of China Jushi plunged by the exchange-imposed daily trading limit after the fiberglass giant said it plans to invest CNY2.4 billion (USD354.7 million) to further expand its production capacity of electronic cloth, a raw material for printed circuit boards.

Jushi [SHA: 600176] closed 10 percent down at CNY47.71 (USD7.05) today. Due to surging product demand, the stock jumped 357 percent this year as of June 26, when it hit a new record-high of CNY77.20. It then entered a phase of correction and has dropped over 38 percent since.

Junshi will increase its production capacity of electronic cloth by 250 million meters at its base in Tongxiang, using the surplus electronic yarn from its existing production lines as raw material, the company announced yesterday. The project is expected to have a pre-tax return on investment of 13.3 percent once completed and put into operation in one and a half years.

The capacity expansion aims to better meet the increasing demand from downstream PCB customers for electronic cloth against the backdrop of rapidly growing demand for artificial intelligence computing power, facilitate the company's business transformation and upgrading, and improve its industrial layout, Junshi noted.

This is the second capacity expansion plan Jushi has unveiled in two months. On May 14, it announced it would spend CNY4.4 billion to build a new production line with an annual output of 50,000 tons of electronic yarn and 320 million meters of electronic cloth at its Huai'an base. Construction will last one and a half years.

Electronic cloth is one of the main raw materials for PCBs. Jushi is China's largest supplier of electronic cloth, with sales of nearly 1.1 billion meters last year, seizing a 35 percent to 40 percent share of the domestic market.

In March, Jushi's first electronic cloth factory at its Huai'an base was completed and put into operation. It has a designed annual production capacity of 390 million meters of electronic cloth and 100,000 tons of electronic yarn, making it the largest electronic fiberglass production line in the world.

Junshi released its semiannual earnings forecast on June 14. The firm expects its net profit to have expanded 65 percent to 85 percent to between CNY2.8 billion and CNY3.1 billion in the six months ended June 30 from a year earlier.

Editor: Futura Costaglione