Jianghai: Fourth-quarter ramp-up in AI capacitors meets expectations; scope for 2027 upgrades depends on capacity expansion
Citi expects fourth-quarter AI-related revenue of approximately 350 million yuan, double its third-quarter estimate, but profit to be broadly in line with its original forecast. Management has given higher sales volume and average selling price figures for 2027; capacity, customer qualification and price competition will determine whether the additional growth materializes.
Original source：Citi ResearchFirst published on Unhidea：Original source date：
Key takeaway
Citi maintains its buy rating and earnings forecasts: the fourth-quarter ramp-up mainly supports existing expectations, while additional growth potential in 2027 comes from higher sales volumes and average selling prices, contingent on capacity expansion and customer qualification.
How fast is the fourth-quarter ramp-up, and why has the earnings forecast not yet been raised?
Jianghai shipped approximately 2 million snap-in capacitors in October, compared with approximately 3.5 million in total in the third quarter; management maintains its target of monthly shipments of 3 million units by year-end. Assuming a gradual ramp-up, a unit price of 35–40 yuan and continued deliveries of electric double-layer capacitors, Citi estimates fourth-quarter AI-related revenue at approximately 350 million yuan, about twice its third-quarter estimate of 175 million yuan and meeting management's target of a monthly average above 100 million yuan.
The ramp-up is mainly delivering on existing earnings expectations. Assuming non-AI revenue and margins remain at third-quarter levels and incorporating the 3%–5% price increase already in its model, Citi expects fourth-quarter net profit of 315 million–345 million yuan, close to the approximately 340 million yuan implied by its original full-year forecast, and therefore maintains its earnings forecasts.
What is driving margin improvement, and which variable is most sensitive?
In the first three quarters of 2026, the group's gross margin rose 1.1 percentage points year on year to 25.6%; the supercapacitor gross margin rose 8.72 percentage points to 23.59%, the largest improvement, but remained below the group average. A recovery in supercapacitors' own profitability and their becoming a business with margins above the group average are two different stages.
The third-quarter price increase was only partially implemented; the largest customer began paying higher prices on 1 October, and Citi expects the improvement to accelerate in the fourth quarter. Profit is sensitive to the actual price increase: each additional 1 percentage point implemented adds approximately 11 million yuan to fourth-quarter net profit.
Where could 2027 upgrades come from?
Management's 2027 figures for snap-in capacitor shipments are 60 million–70 million units at an average price of approximately 60 yuan, above the 57 million units and 45 yuan in Citi's model. The gap reflects both volume and unit price; if achieved, the revenue uplift would exceed that from higher shipments alone.
Management expects sales of approximately 40 million electric double-layer capacitors (EDLCs), nearly twice Citi's forecast of 21 million; its figure for lithium-ion capacitors (LICs) is 2 million–3 million, versus Citi's 1 million. LICs are at an earlier stage, and Citi expects LICs and MLPCs to contribute little revenue before 2027.
Orders are plentiful, so why is delivery still a hurdle?
Orders have already exceeded capacity, and lead times have extended to as long as one and a half months. The existing three automated lines produce 1.5 million units per month, but only standard two-pin products; the highest-priced three- and four-pin products are still made by hand and aged in ovens. They account for less than 30% of snap-in capacitor shipments, and automation does not yet cover all high-priced products.
The company plans to add two automated lines before the end of 2026, raising monthly snap-in capacitor capacity from 3 million units at year-end to 10 million–12 million by the end of 2027; monthly EDLC capacity will rise from approximately 1 million to 3 million. Deliveries in 2027 depend on capacity expansion, while additional LIC and MLPC volumes also depend on customer qualification. Key milestones include commercial approval of snap-in capacitors by Delta and the results of Google's LIC rack tests.
What earnings and valuation underpin the 71 yuan target price?
Citi maintains its buy rating and 71 yuan target price, equivalent to 32.7 times forecast 2027 earnings, approximately 9% above the peer multiple of around 30 times; at the peer multiple, the target price would be 66–67 yuan. The premium is based on the AI business being expected to contribute nearly half of group gross profit in 2027, and ROE rising from 11% in 2025 to 24% in 2027.
This valuation is constrained by both volume and price: fewer rack deployments or fewer capacitors per rack than assumed would reduce snap-in capacitor sales; additional capacity from Japanese and second-tier Chinese manufacturers starting in 2027 could intensify price competition and affect the realization of management's higher average price expectation.
