CGS has released a research report stating that within China's MLCC industry chain, Dali Kepu (301566.SZ) focuses on RF microwave MLCCs, while Hongming Electronics (301682.SZ) specializes in special-purpose MLCCs, both demonstrating strong profitability. Weirong Technology leads in the micro and high-capacitance segments. Guoci Materials (300285.SZ) holds a leading position in electronic ceramic materials technology, continuously iterating new technologies. The domestic MLCC supply chain presents a diverse and flourishing landscape. The high-end MLCC market is dominated by Japanese and Korean companies, indicating substantial room for import substitution. With surging demand for MLCCs driven by AI servers and new energy vehicles, domestic MLCC companies are poised to benefit during this industry upcycle.
Core Viewpoints from CGS
Domestic MLCC Firms Advance in Technology and Market Share
Key companies in China's MLCC industry chain include Sanhuan Group, Fenghua Advanced Technology, Hongming Electronics, Dali Kepu, Weirong Technology, and Guoci Materials. Sanhuan Group is a leading enterprise in domestic electronic components, electronic and ceramic materials, and communication devices. Fenghua Advanced Technology is a frontrunner in the high-end electronic components sector. Hongming Electronics is the leading domestic producer of special-purpose MLCCs. Dali Kepu is the top domestic manufacturer of RF microwave MLCCs; Weirong Technology leads in micro, high-capacitance, and high-end MLCCs; Guoci Materials is the foremost domestic producer of electronic ceramic materials. These domestic MLCC companies are continuously enhancing their technology and market share, having collectively reached a 10.4% market share, and are expected to benefit from the ongoing MLCC upcycle.
Industry Averages Show Low Diluted ROE and Gearing Ratios
In terms of revenue and profit for 2025, Sanhuan Group led the domestic industry with revenue of 9.007 billion yuan, while Fenghua Advanced Technology followed with revenue of 5.756 billion yuan. Sanhuan Group also ranked first with net profit attributable to shareholders of 2.618 billion yuan and adjusted net profit of 2.249 billion yuan. Hongming Electronics held the second position with a net profit attributable to shareholders of 319 million yuan and an adjusted net profit of 311 million yuan. The average asset-liability ratio for listed domestic MLCC companies in 2025 was 19.29%, with an average diluted ROE of 8.45%. Among major MLCC firms in 2025, Dali Kepu had the lowest asset-liability ratio at just 4.45%.
Microwave and Special-Purpose MLCC Firms Command Higher Gross Margins
The average gross margin for listed domestic MLCC companies in 2025 was approximately 40.13%, with an average net margin of about 22.03%. Dali Kepu ranked first in both gross margin (66.17%) and net margin (43.92%), while Hongming Electronics ranked second in gross margin (47.02%). Dali Kepu specializes in RF microwave MLCCs, primarily for civilian industrial and military markets where customers prioritize performance over price sensitivity. Additionally, its high proportion of export sales, which carry higher gross margins, contributes to its overall elevated margin. Hongming Electronics serves clients in defense sectors like aerospace and weaponry, resulting in generally high gross margins for its electronic components. Weirong Technology's main business gross margin (27.58%) was lower than Sanhuan Group's (42.14%), mainly because Weirong Technology focuses solely on MLCC products, whereas Sanhuan Group's electronic components business also includes multilayer ceramic chip inductors and fixed resistors. Furthermore, Sanhuan Group's larger overall revenue scale yields more significant economies of scale. Weirong Technology's gross margin was higher than Fenghua Advanced Technology's (17.75%), partly because Fenghua's electronic component business includes products like resistors, inductors, and filters. Also, distribution sales account for over 50% of Fenghua's revenue, and these sales have lower gross margins, dragging down the company's overall margin. MLCC companies outside Mainland China hold the major market share with relatively larger revenue and profit scales, but their overall gross and net margins are lower than those of domestic firms.
Risk Factors to Consider
Potential risks include weaker-than-expected demand for AI servers; a decline in new energy vehicle sales; a slower-than-expected recovery in consumer electronics; slower progress in import substitution; and risks associated with delayed accounts receivable collection.
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