Key takeaway

In 1Q26, the company recorded revenue of RMB410mn, up 64.02% YoY, and net profit attributable to shareholders of the parent company of the listed companyRMB71.6263mn, up 49.64% YoY, both reaching record highs. Under the AI wave, demand for high-end MLCC grows rapidly, driving a surge in demand for ultrafine nickel powder. Nickel powder of 120nm and below has high industry barriers, and the company is a global leader. Meanwhile, the expectation of copper replacing silver in photovoltaics is becoming reality, with industrialization expected to land in 2026. The company’s photovoltaic copper powder is expected to become the second earnings growth driver. The company plans to further expand capacity with 640 tons of ultrafine powder and 800 tons of high-performance ultrafine copper powder to address the supply shortage of nickel powder and copper powder.

Event

1Q revenue up 64.02% YoY, net profit attributable to shareholders of the parent company up 49.64% YoY. Boqian New Materials released its 1Q26 report. During the reporting period, the company recorded operating revenue of RMB410mn, up 64.02% YoY; net profit attributable to shareholders of the parent company of the listed company was RMB71.63mn, up 49.64% YoY; net profit attributable to shareholders of the parent company after deducting non-recurring items was RMB68.1543mn, up 63.99% YoY; basic earnings per share was RMB0.27.

Quick Take

Both volume and price increased, with revenue and profit in 1Q both reaching record highs. The company newly built and put into operation a cumulative 1,800 tons of nickel powder capacity (calculated based on raw powder) in 4Q25 and 1Q26. Meanwhile, surging demand for AI servers drove rapid growth in demand for 120nm nickel powder, and the company’s product mix continued to improve. Gross margin in 1Q was 29.93%, down 2.45pcts YoY and down 5.07pcts QoQ. The slight decline in gross margin was mainly due to seasonal impact from the Spring Festival in 1Q, exchange rate fluctuations, and the ramp-up phase of newly commissioned production lines with efficiency gradually improving. As the new production lines gradually reach full capacity and efficiency improves, and with AI-driven demand further optimizing the shipment mix, the company’s profitability is expected to recover and move to a higher level.

Industry prosperity continues to rise, the company expands capacity again, planning to build an additional 640 tons of ultrafine powder and 800 tons of high-performance ultrafine copper powder. The company’s PVD process powders have outstanding performance advantages, featuring ultra-high purity, low oxygen and impurities, good sphericity, excellent fluidity, and strong dispersibility. When used for coating, they enable uniform and dense coating layers with strong adhesion that does not peel off. Demand is surging in high-growth tracks such as ultrafine nickel powder for high-end MLCC used in AI servers, silver-coated copper for photovoltaics, and copper replacing silver in photovoltaics. Based on the 1,800 tons of ultrafine nickel powder capacity newly built last year, the company will add another 640 tons of ultrafine powder and 800 tons of highperformance ultrafine copper powder this year, increasing powder capacity by a total of 1,440 tons to meet the surging AI- driven MLCC nickel powder and photovoltaic copper powder demand.

Launch H-share listing preparation to accelerate international capital strategy. The company has initiated preparation for overseas share issuance (H shares) and listing on the Hong Kong Stock Exchange, aiming to accelerate overseas business development, build an international capital operation platform, optimize capital structure, expand diversified financing channels, and enhance overall competitiveness. This move is expected to further deepen its binding with samsung electro-mechanics, consolidate its position in the global supply chain, and further strengthen its global leadership position.

Earnings forecast and investment recommendation:AI demand is driving rapid growth in demand for fine nano nickel powder. the company’s newly built capacity is gradually being released, achieving both volume and price increases and opening up growth space for its core business; meanwhile, the copper powder business for photovoltaics continues to expand, and with the advancement of low- silver and silver- free trends, the company’s copper powder business has broad future potential. Assuming copper powder industrialization gradually materializes in 2026 and achieves 100GW-level BC cell substitution by 2028, we estimate the company’s revenue at RMB2.87bn/RMB4.62bn/RMB6.28bn in 2026–2028, and net profit attributable to shareholders of the parent company at RMB0.77bn/RMB1.43bn/RMB2.04bn, corresponding to PE of 42x/22x/16x. We maintain a "buy" rating.

Risks:1. The downstream sector of the company covers consumer electronics. If the downstream recovery is slower than expected and the mlcc consumption is weaker than expected, it will affect the company's performance. 2. The company's business is relatively concentrated in the top five customers. If the production and operation of the major customers fluctuate, it will affect the company's product shipments in the short term. 3. The company's raw materials include nickel, copper, silver and other metals, and the metal prices are linked to the global economic conditions, the fed's policies, and geopolitical factors. If the metal price fluctuates greatly, it may affect the company's raw material costs and thereby weighing on its GPM, affecting the company's performance; 4. The company’s newly built nano nickel powder production lines, silver-coated copper powder, nano-silicon powder and other products are all future growth drivers. If capacity construction or ramp-up is slower than expected, it will affect the company's performance.