First Applied Material

Business

Hangzhou First Applied Material (杭州福斯特应用材料股份有限公司) makes solar encapsulant films and back sheets, and has branched into photosensitive dry film and flexible copper-clad laminate for circuit boards, and aluminium-plastic film for batteries (2026 interim report, pp. 14, 15). It says it holds about half the world market for solar encapsulant film, more than the next three makers combined (pp. 15, 16), and names Jinko, LONGi and Trina among its customers (p. 16). It has film plants in Thailand and Vietnam (p. 15).

Results in the first half of 2026

• Revenue fell 12.20% to ¥6.99bn, but net profit attributable to shareholders rose 69.89% to ¥842m. Operating cash flow was ¥1.28bn, against an outflow of ¥889m a year earlier (p. 6).
• Film sales fell 11.97% to 1,220.2 million square metres, and film revenue fell 15.00% to ¥6.13bn (p. 14).
• Cost of sales fell 17.10%, faster than revenue, which the company puts down mainly to lower film volumes and lower purchase prices for its resin (p. 17). Its main-business gross margin rose to about 16.8% from about 11.8% (our calculation from p. 140).
• Encapsulant film earned a gross margin of about 17.0%. Overseas sales earned about 23.0% and sales in China about 13.7% (our calculations from p. 140).
• Photosensitive dry film sales rose 21.92% by area, with revenue of ¥389m (p. 15).

Why it earns more than its customers

Cheaper resin explains much of the improvement in the half (p. 17). Beyond that, the company says smaller film makers are leaving the market, its utilisation is well above the industry average, and its overseas business earns more than its domestic one (pp. 14, 15). It is selling more specialised products for new cell designs: light-converting film for heterojunction modules, "skin" film for back-contact modules without busbars, and butyl sealant for back-contact, heterojunction and reduced-silver TOPCon modules (pp. 14, 15).

Our view: the jump in First Applied's profit came largely from cheaper resin, which helped every film maker. Its lead shows in the level: in the same half its film margin was nearly three times HIUV's.

The company's own caveats

• Resin costs. EVA and POE pellets and other materials are more than 70% of production cost, and price rises from oil or foreign chemical makers cannot always be passed on quickly (p. 24).
• Technology. Perovskite, heterojunction and busbar-free designs need new films (p. 24).
• New businesses. High-end electronic materials face foreign incumbents and long qualification times (p. 24).
• Trade. Anti-dumping and countervailing cases and tariffs in Europe and the US, and policy risks at its overseas plants (p. 24).