Jianghai’s third-quarter revenue was flat sequentially and its gross margin recovered; Nomura Orient lowers its target price and upgrades its rating
Gradual implementation of price increases and an improved product mix lifted the gross margin, but foreign exchange losses and administrative expenses left profit for the first three quarters slightly below Nomura Orient’s expectations. The bank cut its 2026 earnings forecast and upgraded its rating from Neutral to Buy.
Original source：野村东方国际证券First published on Unhidea：Original source date：
Key takeaway
Jianghai’s gross margin improved, but expense pressure weakened near-term profit; Nomura Orient is optimistic about its AI-related business opportunities and sees substantial upside following the share-price pullback.
What changed in third-quarter results?
In the third quarter of 2026, Jianghai reported revenue of 1.769 billion yuan, up 24.3% year on year and just 0.1% quarter on quarter; net profit was 241 million yuan, up 36.6% year on year and 8.9% quarter on quarter.
The quarterly gross margin rose to 26.3%, up 2.7 percentage points year on year and 1.7 percentage points quarter on quarter. Nomura Orient attributed the recovery to gradually implemented price increases and an improved product mix.
Revenue for the first three quarters was 4.92 billion yuan, up 19.5% year on year; traditional businesses recovered moderately, while the revenue contribution from AI-related and other emerging applications grew. Net profit was 624 million yuan, up 16.7% year on year.
Why was profit still slightly below expectations despite the improved gross margin?
Nomura Orient said revenue for the first three quarters was broadly in line with its expectations, but earnings were slightly below forecast. The main reasons were foreign exchange losses that increased finance expenses and administrative expenses that were slightly higher than expected.
The finance expense ratio and administrative expense ratio for the first three quarters rose by 0.4 and 0.2 percentage points year on year, respectively, offsetting some of the benefit from the improved gross margin.
How did the bank adjust its earnings forecasts?
Nomura Orient maintained its revenue forecasts for 2026–2028 at 6.848 billion yuan, 8.29 billion yuan and 10.038 billion yuan, respectively. Taking price increases and the improved product mix into account, it raised its gross-margin forecasts for the three years by 1.1, 0.6 and 0.7 percentage points, respectively.
The bank also raised its expense-ratio assumptions, taking into account continued pressure from renminbi appreciation and higher-than-expected administrative expenses. Overall, it cut its 2026 net profit forecast by 4% to 910 million yuan and raised its forecasts for 2027 and 2028 by 1% and 2%, respectively, to 1.177 billion yuan and 1.437 billion yuan.
By product, the bank raised its 2026 gross-margin forecast for supercapacitors from 18.5% to 23%, and for aluminum electrolytic capacitors from 26.5% to 27.2%; its revenue forecasts for both products were unchanged.
Why was the rating upgraded despite the lower target price?
Nomura Orient shifted its valuation basis from 2026 to 2027 and reduced its target price-to-earnings multiple from 55 times to 35 times. Using forecast 2027 earnings per share of 1.38 yuan, it lowered its target price from 62 yuan to 48 yuan.
The bank believes the company’s leading position in capacitors and relatively comprehensive product portfolio put it in a better position than peers to benefit from AI-related opportunities. It therefore assigns a valuation above the comparable companies’ average 2027 price-to-earnings multiple of approximately 26 times. The company is expanding into AI data-center applications.
Nomura Orient believes the recent share-price pullback has largely reflected concerns about the sustainability of AI infrastructure investment and slower-than-expected capacity expansion. Compared with the 26 October 2026 closing price of 35.98 yuan, the 48 yuan target price implies 33.4% upside, so the bank upgraded its rating from Neutral to Buy.
Risks to this assessment include raw-material costs, downstream demand, foreign exchange losses, and the pace at which new capacity and demand ramp up.
