Shares of companies in the textile industry, often viewed as a sunset sector, and those manufacturing textile machinery are typically not considered hot investment targets. However, one listed company specializing in traditional textile machinery like spinning and rapier looms has seen its stock price multiply several times this year. What is driving this surge?
The company in question is the established loom leader, Taitan Shares. Despite a downturn in industry demand leading to significant consecutive declines in its net profit attributable to shareholders for 2024 and 2025, the company managed to stage a temporary reversal in the first quarter of 2026, achieving year-on-year profit growth.
Nevertheless, in the capital markets, its stock price has continued to climb throughout the year, repeatedly reaching new highs. On June 16, the stock hit a fresh record high of 99.11 yuan. Since the beginning of 2026, its year-to-date gain has reached 537%, bringing its total market capitalization to 21.24 billion yuan. With industry demand waning and profits under pressure, what is fueling Taitan Shares' relentless stock price ascent?
From Struggling Workshop to Industry Leader
In June 1986, when 37-year-old Chen Qixin stood at the gate of the Xinchang County Metal Products Factory, the wheels of fate began to turn. This was a small hardware factory that could only produce capsule molds, with a history dating back to 1958. At the time, however, such small factories faced market-driven shocks, struggled to find buyers for their products, and were perpetually at risk of closure.
In this situation, Chen Qixin, who had worked for over a decade at the Xinchang County Arts & Crafts Bamboo Weaving Factory, Plastic Factory, and Textile Equipment General Factory, rising from workshop supervisor to deputy factory director, was seen as an ideal candidate to "put out the fire."
On his first day, Chen decided to "seek opportunities in the market." But the problem was immediate: the factory could barely survive, let alone afford market exploration. After discussions, the factory's staff pooled together about 2,500 yuan for business trips to scout the market.
This 2,500 yuan proved to be the factory's lifeline. After securing orders, the factory started by producing plastic parts for washing machines, then developed heat-setting plastic alloy tubes. These tubes could be used in the textile industry for processes like yarn winding and shaping, helping the metal products factory establish its major development direction in the textile sector.
During a visit to Guangdong, Chen saw an imported two-for-one twister, and its price was staggering—a single machine cost 700,000 yuan. Due to the high cost, most textile companies couldn't afford it, and domestic production was non-existent. This solidified Chen's determination to develop a domestically-produced two-for-one twister.
After years of difficult research and development, in July 1992, the factory successfully developed China's first domestically-produced two-for-one twister, breaking the foreign monopoly and even achieving exports overseas due to its high cost-performance ratio. Subsequently, the factory pressed on to develop the more technologically advanced rapier loom, successfully producing its first prototype by the end of 1996.
Amidst the continuous launch of new products, in August 1993, the Taitan Textile Machinery General Factory was established on the basis of the original factory. It completed its restructuring in 1997, officially giving birth to Taitan Shares. Chen Qixin transitioned from factory director to the actual controller of the joint-stock company.
However, the company's journey was not smooth sailing. Taitan Shares also faced setbacks, such as encountering the Asian financial crisis shortly after its restructuring, even reporting losses that year, but ultimately survived by collecting outstanding debts.
Chen Qixin once felt uncertain about the future of Taitan Shares. The textile industry was an extremely traditional sector, already facing doubts about being a "sunset industry" with no future, coupled with intense competition. Taitan Shares also considered pivoting to new industries like bioengineering, automotive engines, and video phones. However, after comprehensive consideration, it decided to stick with the loom products it knew and excelled at.
In 2002, Taitan Shares launched new rotor spinning frames and air-jet spinning frames, quickly gaining market attention and diversifying its previously single-product lineup. Through continuous innovation, Taitan Shares grew steadily, becoming a leader in China's loom industry.
In 2016, Taitan Shares began its push for a public listing. After a two-year IPO process, it was originally scheduled for a review meeting on May 22, 2018. However, on the eve of the meeting (the evening of May 21), it voluntarily withdrew its application materials. According to media reports, the company's board secretary cited reasons such as relatively small net profit scale and high accounts receivable, stating the withdrawal was for the company's better development. Three years later, Taitan Shares made another successful listing attempt.
In hindsight, the voluntary withdrawal before the 2018 review meeting might have been related to performance pressure. The textile industry is cyclical, and the performance of Taitan Shares, engaged in textile machinery, also tends to fluctuate cyclically. In 2016 and 2017, its net profit attributable to shareholders nearly doubled for two consecutive years, providing the confidence for its IPO push. However, by 2018, this profit declined instead of growing, with the drop further widening in 2019. Industry conditions improved in 2021, leading to an acceleration in its performance and the achievement of a historical high.
But not long after its listing, Taitan Shares once again faced performance pressure. In 2023, its net profit attributable to shareholders slightly decreased by 0.15% to 130 million yuan. It then experienced significant consecutive declines in 2024 and 2025, with profits of 88.7544 million yuan and 47.3483 million yuan, respectively.
Under this profit pressure, Taitan Shares began seeking new growth drivers, venturing into areas like solid-state battery electrolytes and textile robots. However, the recent explosion of AI has shifted market focus to the application of Taitan Shares' looms in the electronic fabric sector. Since March this year, its stock price has been on a continuous upward trajectory. As of June 16, Taitan Shares' latest market capitalization reached 21.24 billion yuan.
Riding the AI Wave
The fundamental reason for Taitan Shares' stock surge this year is the explosion in demand for electronic fabric driven by AI, which in turn has led to a supply shortage of electronic fabric looms. The electronic fabric loom products under development by Taitan Shares have attracted significant market attention.
Electronic fabric is one of the core base materials for PCBs. According to a research report, the demand for special thin fabrics like Low-Dk and Low-CTE has surged in recent years due to AI servers and high-speed application scenarios. Thinner electronic fabric leads to a significant drop in the output efficiency per loom, thereby driving demand for capacity expansion of electronic fabric looms.
In the niche segment of specialized electronic fabric looms, Japan's Toyota virtually monopolizes the entire existing market with its ultra-high stability and durability, and its products are also mainstream in China. However, the delivery cycle for Toyota loom equipment is as long as 18-24 months, creating a lag in supply-side response to downstream demand, potentially prolonging the shortage cycle for looms across the industry. With capacity constrained, electronic fabric prices have risen multiple times consecutively.
With imported electronic fabric loom capacity limited, domestic companies have begun accelerating the localization of electronic fabric looms. As an established loom leader, Taitan Shares has garnered significant attention.
As early as July 2025, investors inquired on an interactive platform whether Taitan Shares had any products that could be used for manufacturing glass fiber, electronic yarn, or electronic fabric. At the time, the company's board secretary responded that its rapier looms could weave not only various apparel and decorative fabrics but also light and medium-heavy industrial fibers and glass fibers.
However, Taitan Shares did not initially consider developing electronic fabric looms. When asked in December 2025 on an interactive platform whether its high-end spinning frames would consider entering the PCB field, the company responded that it "currently has no plans."
As time progressed, Taitan Shares' stance on electronic fabric looms changed. In a report by a financial website in March this year, a technical head from the company stated: "Domestically produced electronic fabric looms are not achieved overnight. Based on its technical route advantages, Taitan is striving to resolve the issue of availability for domestically produced high-end electronic fabric looms in the short term. In the medium to long term, the company's vision is to benchmark against Toyota and contribute to the supply chain security of domestic special electronic fabrics."
Taitan Shares' R&D efforts in the electronic fabric loom sector have also attracted attention from several international investment banks. In this year's first-quarter report, Goldman Sachs, Barclays Bank, and UBS Group appeared in the list of the company's top ten shareholders. Among them, Goldman Sachs International—Proprietary Funds held 0.39%, making it the fifth-largest shareholder, with Barclays and UBS ranking ninth and tenth, respectively.
Driven by capital markets, Taitan Shares' stock price has already experienced substantial appreciation. Data shows that as of the close on June 16, 2026, the company's static price-to-earnings ratio was as high as 448.63 times, and its trailing twelve-month P/E ratio was 434.58 times. If the subsequent development of its electronic fabric loom products falls short of expectations, it could significantly impact its stock price.
However, as of now, Taitan Shares' electronic fabric loom is still under development. The company has also stated on interactive platforms that the electronic fabric loom remains in the R&D phase, with no orders and no substantive breakthroughs. The project has a long R&D cycle, and the development of key core components faces considerable difficulty. There are risks of R&D failure, inability to achieve industrialization, and inability to generate profits. Related R&D progress and final outcomes carry significant uncertainty and will not affect the company's near-term operating performance.
Furthermore, the company has responded to previous rumors about providing samples, stating it has not conducted verification with sample-providing enterprises.
Currently, Taitan Shares' electronic fabric loom remains in the R&D stage, with considerable uncertainty. At the same time, other companies like Rifa Textile Machinery, Wanli Textile Machinery, Qingdao Century Haijia Machinery, Saurer Intelligent, Qingdao Jingtian Textile Machinery, and Sumec have also entered the electronic fabric loom field, with some reportedly having faster R&D progress than Taitan Shares.
Whether Taitan Shares can successfully develop an electronic fabric loom, gain a leading market position, and use high earnings growth to justify its current high valuation remains a point of keen observation.
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