Price increases are the core catalyst for China’s chemical new materials sector in 2H26

Overview

This report focuses on China’s chemical new materials sector, especially the MLCC value chain, electronic specialty gases, and wet electronic chemicals. UBS believes that share prices of related companies have risen sharply year-to-date, already reflecting market expectations for AI servers, the storage cycle, and price increases; after the recent share price pullback, more attention should be paid to names with higher price increase visibility and relatively lower valuations.

Core views

The core view is that supply and demand for high-capacitance MLCCs will remain tight in 2H26, with strong orders and high capacity utilization for upstream MLCC materials, which may continue to have room for price increases; WF6 may still have upside due to lower tungsten powder exports and raw material shortages at overseas capacity; electronic-grade HF, high-purity sulfuric acid, hydrogen peroxide, and ITO and molybdenum targets are supported by raw material costs and recovering semiconductor demand. Based on this, UBS raised earnings forecasts, growth assumptions, and target prices for related companies, and favors Jiemei, Guanggang Gas, Capchem, and Dongyue Group.

Analysis framework

The report adopts a top-down industry supply-demand and price catalyst analysis, combined with channel checks, UBS Evidence Lab inventory monitoring, raw material price and export data, company earnings forecast revisions, DCF/PE/PEG valuation comparisons, and the Thesis Map framework, to assess the probability of price increase realization across different sub-industries and the re-rating potential of individual stocks.

Methodology notes

• Industry supply-demand analysisPrice increase visibility ranking

  Ranking by product supply-demand tightness, cost support, and demand visibility

  The report ranks price increase visibility from high to low as MLCC materials, MLCC, WF6, semiconductor wet electronic chemicals, and helium, to screen for sub-industries with stronger catalysts in 2H26.

• Valuation methodologyDCF, PE, and PEG

  Target price and valuation multiple revisions

  The report applies DCF or PE frameworks to companies such as Guanggang Gas, Jinhong Gas, Jiemei, Sinocera, and Longhua, and calculates PEG using 2027E PE and 2027-29E EPS or net profit CAGR to reflect changes in long-term growth expectations.

• Research frameworkUBS Research Thesis Map

  Key questions, evidence, market pricing, and bull/bear scenarios

  The report uses the Thesis Map to break down the core questions, supporting evidence, what the market has already priced in, and upside/downside target price scenarios for companies such as Jiemei, Sinocera, and Guanggang Gas.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Jiemei

  Beneficiary in MLCC release films and electronic carrier tapes

  Strengths

  There is significant room for domestic substitution in MLCC release films, with the report estimating the related global TAM at over Rmb10bn; the company has over 50% global revenue share in paper carrier tape and has already achieved mass supply to MLCC manufacturers in mainland China and Taiwan.

  Weaknesses

  The release film business is still in the growth and customer onboarding stage, making it sensitive to order delivery, ASP, and capacity utilization.

  Comparison

  The report believes its 2027E PE is below the average level of the MLCC value chain, while its 2026-28E EPS growth is close to the peer average.

  Risks

  MLCC demand falling short of expectations, release film price increases below expectations, and slower-than-expected onboarding of overseas customers.

• Guanggang Gas

  Beneficiary in electronic bulk carrier gases and electronic gases

  Strengths

  The company is a major EBG supplier to China’s main storage manufacturers, with an approximately 41% domestic market share by new project caliber in 2024 and high customer stickiness; preliminary H126 results were better than expected.

  Weaknesses

  After valuation re-rating, PEG has risen, requiring stronger delivery on new project wins and profit growth.

  Comparison

  The target price was raised from Rmb42 to Rmb66, with the new target price implying 117x 2027E PE and 40% 2027-29E EPS CAGR.

  Risks

  New project ramp-up falling short of expectations, helium price declines, and weaker-than-expected semiconductor demand recovery.

• Capchem

  Beneficiary in electronic materials and battery chemicals

  Strengths

  Growth in electrolyte/LiPF6 sales, improvement in unit profitability, domestic substitution of fluorinated fluids, and rising penetration of supercapacitor chemicals may all provide support.

  Weaknesses

  Some businesses are tied to the lithium battery materials cycle, and the recovery pace of the core business still needs verification.

  Comparison

  The report maintains the target price at Rmb122 and believes there is still valuation upside relative to electronic materials peers.

  Risks

  Electrolyte price competition, slower-than-expected PFAS substitution progress, and downstream demand volatility.

• Dongyue Group

  Potential beneficiary in fluorochemicals, refrigerants, and electronic-grade PTFE

  Strengths

  Refrigerant profitability may remain at high levels, silicon materials and fluoropolymers have cyclical improvement potential, and the application of electronic-grade PTFE in AI orthogonal backplanes presents a potential re-rating factor.

  Weaknesses

  AI-related applications of electronic-grade PTFE are still in the testing stage and are expected to contribute only about 3-5% in 2028.

  Comparison

  The report maintains the target price at HK$29.70 and believes it trades at a discount relative to fluorochemical material peers.

  Risks

  Unfavorable downstream material system iteration, refrigerant demand volatility, and slower-than-expected commercialization of electronic-grade PTFE.

• Sinocera

  Beneficiary in MLCC ceramic powder and advanced ceramic materials

  Strengths

  Plans to launch 2kt of new MLCC powder capacity in 2026, targeting automotive-grade and AI server downstream demand; areas such as commercial aerospace, solid-state batteries, and high-frequency high-speed copper-clad laminates offer long-term upside.

  Weaknesses

  Valuation mainly depends on the realization of multiple emerging downstream markets, while product mix improvement and price increases still need verification.

  Comparison

  The target price was raised from Rmb65 to Rmb93, and the report says its 2027E PE is below the average of comparable semiconductor material companies.

  Risks

  MLCC powder sales volume or ASP falling short of expectations, slow ramp-up of new capacity, and lower-than-expected contribution from new businesses such as commercial aerospace.

• WF6产业链

  Electronic specialty gas price increase chain

  Strengths

  Low Chinese tungsten powder exports have led to raw material shortages for overseas WF6 capacity, and 5N-grade WF6 prices have risen sharply year-to-date.

  Weaknesses

  The price driver depends heavily on tungsten powder exports and tungsten powder prices, and the uptrend has already slowed since May.

  Comparison

  The report believes WF6 price increase visibility is lower than MLCC and MLCC materials, but higher than wet electronic chemicals and helium.

  Risks

  Recovery in China’s tungsten powder exports, decline in tungsten powder prices, and weaker-than-expected semiconductor demand.

Key data

• Price increase visibility rankingMLCC materials > MLCC > WF6 > semiconductor wet electronic chemicals > heliumUsed to judge the relative strength of potential catalysts in 2H26.
• WF6 priceRmb945/kg升至Rmb1,800/kgThe price of 5N-grade WF6 has nearly doubled year-to-date, mainly due to lower tungsten powder exports from China.
• Global WF6 capacity distributionJapan about 22%, South Korea about 24%The report estimates that Japan and South Korea together account for about 46% of global capacity; if tungsten powder exports remain low, overseas capacity may face raw material constraints.
• China tungsten mine output shareabout 80%USGS data show that China accounted for nearly 80% of global tungsten mine output in 2025.
• Expected helium price rangeRmb200-300/cubic meterThe report expects overall domestic helium prices in China to remain stable in 2H26, with limited upside and downside.
• China EG-HF market sizeabout Rmb4.25bnEstimated market size of electronic-grade hydrofluoric acid in China in 2025.
• China EG-HF exportsup 33% YoY in the first five months of 2026Export ASP in May rose 19% MoM, indicating strong overseas demand.
• Sulfur, indium, and molybdenum price changesSulfur prices have more than doubled year-to-date, while indium/molybdenum are up about 70%/30%, respectivelyRising costs may support prices of high-purity sulfuric acid, ITO, and molybdenum targets.
• Guanggang Gas target priceRmb42上调至Rmb662026-28E earnings forecasts were raised by 6-15%, with WACC in DCF unchanged at 9.7%.
• Jinhong Gas target priceRmb37上调至Rmb532027-29E earnings forecasts were raised by 10-15%.
• Three-Circle target priceRmb159上调至Rmb160Reflects expected revenue growth in the PKG business and MLCC price increases.
• Jiemei target priceRmb86上调至Rmb1042026-29E net profit forecasts were raised by 2-9%, and the medium-term growth assumption was raised from 14.2% to 15.0%.
• Sinocera target priceRmb65上调至Rmb932026-28E earnings forecasts were raised by 8-15%, and the medium-term growth assumption was raised from 17.0% to 19.0%.
• Longhua target priceRmb14.20上调至Rmb172026-28E earnings forecasts were raised by 6-17%.
• Dongyue target priceMaintained at HK$29.70Positive on refrigerants, silicon materials, fluoropolymers, and potential AI applications of electronic-grade PTFE.
• Capchem target priceMaintained at Rmb122Positive on potential gains from price increases in electrolyte/LiPF6, fluorinated fluids, supercapacitor chemicals, and VC.

Impact & implications

If price increases materialize in 2H26, earnings leverage and valuation support for companies in MLCC materials, electronic specialty gases, and wet electronic chemicals may strengthen; however, as related share prices have already risen sharply year-to-date, subsequent performance will depend more on actual implementation of price increases, continued AI capex expectations, and improving semiconductor demand.

Risks

• Changes in AI capex expectations may affect valuations of MLCC and semiconductor materials.
• Consumer electronics demand remains uncertain and may weaken the sustainability of MLCC price increases.
• Price volatility in raw materials such as tungsten powder, sulfur, indium, and molybdenum may alter the cost support logic.
• If China’s tungsten powder exports recover, upside for WF6 prices may narrow.
• If helium supply constraints ease, price upside elasticity will be limited.
• A weaker-than-expected recovery in semiconductor and storage demand will affect demand for electronic specialty gases and wet electronic chemicals.
• Related companies’ share prices have already risen sharply year-to-date; if realized price increases fall short of expectations, there is a risk of valuation pullback.

What to watch

• Execution of MLCC price increases and changes in supply-demand for high-capacitance MLCCs in 2H26.
• Orders, capacity utilization, and release film ASP changes at MLCC material suppliers.
• China’s tungsten powder export volume, tungsten powder prices, and WF6 price trends.
• Transmission of sulfur prices to anhydrous hydrofluoric acid and electronic-grade HF prices.
• China EG-HF export growth, export ASP, and progress in overseas semiconductor customer qualification.
• Cost pass-through ability of high-purity sulfuric acid, hydrogen peroxide, ITO targets, and molybdenum targets.
• Whether demand for AI servers, DDR5, NAND, and HBM continues to support upstream material shipments.
• Guanggang Gas new project wins, project ramp-up, and helium price changes.