J.P. Morgan is bullish on Shandong Sinocera: AI-grade MLCC powder capacity expansion and price pass-through support a target price increase to Rmb136

Overview

This report covers Shandong Sinocera-A (300285.SZ / 300285 CH). The core view is that, as a leading platform-based functional ceramic materials company in China, it is upgrading from standard MLCC powders toward high-end powders for AI servers, automotive applications, and other areas. The report believes that although the stock price has already risen sharply since May 27, 2026, most investors have still not fully participated, and subsequent ramp-up of high-end capacity, MLCC price pass-through, and potential PCB ceramic substrate orders in 2027 may continue to act as catalysts.

Core views

J.P. Morgan's main bullish logic on Shandong Sinocera includes: the company is China's leading MLCC powder player, with core hydrothermal barium titanate technology and mass-production capability for 50-100 nm high-end powders; MLCC usage per AI server rack is about 15 times that of traditional servers, and together with automotive electronics demand, this is driving up prices for high-end MLCCs and powders; the company has expanded its customer base to Samsung, Fenghua, Yageo, and others, and through Sinocera Saichuang is expanding into new materials opportunities such as ceramic substrates, RF packaging, and TEC.

Analysis framework

The report uses upward revisions to earnings forecasts, assumptions on product mix and gross margin, validation through orders and contract liabilities, and a relative valuation framework based on P/E. In valuation, the Dec-27 target price of Rmb136 is based on 93x one-year forward P/E, corresponding to 88x/72x 2027/28E P/E, and is compared with valuations of peers in ceramics, MLCC, and related materials.

Methodology notes

• Valuation methodsOne-year forward P/E valuation

  Derive the target price using revised 2028E EPS and 93x one-year forward P/E.

  The report raises the target price to Rmb136, reflecting the positive impact of AI-related business, product mix upgrades, and volume growth in high-end MLCC powders, while also acknowledging that this multiple is at a historical high.

• Earnings forecastEPS and gross profit mix revision

  Reflect fundamental improvement by raising FY27/28E EPS and the gross profit contribution from MLCC powders.

  FY27/28E EPS is raised to Rmb1.20/Rmb1.46, and the MLCC powder business is expected to account for 25%/28% of total gross profit by FY27/28, while the gross margin of the electronic materials segment may return to the historical high of about 50%.

• Industry chain validationCross-validation of price, capacity, and order signals

  Use downstream price increases, high-end capacity launches, contract liabilities, and customer onboarding to validate strong demand.

  The report cites 10-35% price increases in high-end MLCCs, 10-15% price increases in powders, contract liabilities of Rmb56mn in 4Q25, and the still-elevated Rmb40mn in 1Q26 as partial validation of orders and pricing elasticity.

Asset mapping & comparison

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

• Shandong Sinocera- A（300285.SZ / 300285 CH）

  The report's covered name; J.P. Morgan maintains Overweight and raises the target price.

  Strengths

  China's leading MLCC powder player, with high-end hydrothermal barium titanate technology and mass-production capability for 50-100 nm powders; demand from AI servers, automotive electronics, and semiconductor materials creates room for product upgrades.

  Weaknesses

  The stock price has already risen sharply, and the current valuation is at a historical high; the market still has significant divergence over the sustainability of volume growth and price increases in high-end powders.

  Comparison

  Sinocera is up about 261% year-to-date, lower than the average gain of about 315% for some pure-play MLCC components and PCB chain names; the report's target price implies 2027/28E P/E of 88x/72x, lower than the market estimate for peers of about 99x/82x.

  Risks

  MLCC demand growth falls short of expectations, slower delivery of dental and aerospace business orders, and slower volume ramp-up in solid-state electrolytes and spherical silica powder.

• MLCC and AI server electronic materials industry chain

  As an upstream powder supplier, Shandong Sinocera benefits from downstream high-end MLCC price increases and demand from AI servers.

  Strengths

  MLCC usage per AI server rack is about 15 times that of traditional servers, and high-capacitance powders command significantly higher prices and gross margins than standard consumer-grade powders.

  Weaknesses

  Price pass-through depends on the persistence of downstream vendors' price increases and the bargaining power of upstream powder suppliers.

  Comparison

  Compared with standard consumer-grade powders at Rmb60k-70k/ton and about 33% gross margin, AI server high-capacitance powders are priced above Rmb100k/ton with gross margins of 45-50%.

  Risks

  If AI server demand, growth in automotive electronics, or global supply constraints are weaker than expected, pricing elasticity and capacity utilization may come under pressure.

Key data

• Current priceRmb98.82As of 2026-07-01.
• Target priceRmb136.00Dec-27 target price; previous target price was Rmb60.40.
• Implied upsideapproximately 37.6%Estimated based on the target price of Rmb136.00 and the current price of Rmb98.82.
• FY27/28E EPSRmb1.20 / Rmb1.46Raised by about 21%/29-30% versus previous forecasts, respectively.
• MLCC powder capacity10,000 tons of standard capacity; 5,000 tons of target high-end capacityOf the high-end capacity, 2,000 tons had already come online by the end of 2025, with the remaining 3,000 tons expected by the end of 2026.
• 2025 MLCC powder outputapproximately 7,000 tonsThe report says this was in line with market expectations.
• High-end MLCC price increase10-35%Murata and Samsung Electro-mechanics raised high-end MLCC prices in March-May 2026.
• Dielectric powder price increase10-15%Upstream dielectric powder prices rose in line with downstream MLCC price increases.
• AI server powder price and gross marginAbove Rmb100k/ton; gross margin 45-50%Standard consumer-grade powder is about Rmb60k-70k/ton with gross margin of about 33%; automotive-grade powder is about Rmb80k-90k/ton.
• Contract liabilitiesRmb56mn in 4Q25, Rmb40mn in 1Q26Up 216% quarter-on-quarter in 4Q25, partially validating strong orders.
• FY27/28 MLCC powder gross profit contribution25% / 28%Previous forecast was 16% / 18%.

Impact & implications

If the report's judgment plays out, Shandong Sinocera's investment thesis would further shift from that of a traditional functional ceramics platform company to a scarce upstream play on AI servers and high-end electronic materials. Prices, capacity utilization, and customer qualification progress for high-end MLCC powders will determine whether earnings upgrades can continue; opportunities in ceramic substrates, RF packaging, TEC, and PCB-related areas provide a second growth curve. However, current valuation and stock price gains are already high, so continued validation through orders, gross margins, and capacity ramp-up will be needed.

Risks

• MLCC demand growth is slower than expected.
• Delivery of new orders in the dental and aerospace businesses is slower than expected.
• Volume ramp-up in solid-state electrolytes and spherical silica powder is slower than expected.
• Current valuation is at a historical high; if earnings upgrades or order validation fall short, the stock price may face a pullback.

What to watch

• Whether the remaining 3,000 tons of high-end MLCC powder capacity can be launched on schedule by the end of 2026 and ramp smoothly.
• Progress in large-scale and stable supply to major customers such as Samsung, Fenghua, and Yageo.
• Whether price increases in high-end MLCCs and dielectric powders continue, and whether those prices can be passed through to Shandong Sinocera's earnings.
• Whether contract liabilities, orders, and capacity utilization can continue to validate demand strength.
• Testing progress on PCB ceramic substrates with major customers, and whether substantive new orders emerge in 2027.
• Whether the gross margin of the electronic materials segment can reach the historical high of about 50%.