Summary of CCTC (300408 CH) Equity Research Report Company Overview - **Company**: CCTC (300408 CH) - **Industry**: Electronic Equipment & Instruments - **Market Cap**: CNY 81,604 million (USD 11,454 million) [7][16] Key Insights MLCC Sector Dynamics - The MLCC (multi-layer ceramic capacitors) sector is entering a new upcycle, with prices for high-end MLCCs on the rise due to strong demand from AI servers and automotive sectors, while supply increases remain limited [3][12] - Unlike previous cycles focused on commodity MLCCs, this cycle emphasizes high-end products, benefiting leading Japanese and Korean manufacturers [3][12] - CCTC is expected to gain market share in the commodity MLCC segment due to: 1. Utilization rates at leading manufacturers exceeding 90%, shifting capacity to high-end applications, thus reducing commodity supply [3][12] 2. CCTC's expansion into high-capacity MLCC offerings, contributing over 50% of its MLCC sales in 1H25 [3][12] SOFC Product Demand - Demand for Solid Oxide Fuel Cell (SOFC) products is increasing, driven by data centers' need for clean energy [4][12] - CCTC's share price rose 31% over the past three months, outperforming the Wind passive components index [4][12] - Key customer Bloom Energy plans to double its fuel cell manufacturing capacity to 2GW by 2026, potentially generating RMB 1.4 billion in orders for CCTC's SOFC electrolyte [4][12] Financial Performance and Estimates - CCTC reported record-high quarterly revenue of RMB 2,316 million (up 24% year-on-year) and net profit of RMB 704 million (up 19% year-on-year) [27] - Revised 2025-26 net profit estimates down by 3% and up by 1%, respectively, reflecting lower MLCC revenue estimates offset by higher SOFC revenue [5][27] - Target price raised to RMB 54.00 from RMB 45.40, implying a 27% upside from the current share price [5][12] Financial Projections - **Revenue Estimates**: - 2025: RMB 9,258 million - 2026: RMB 11,184 million - 2027: RMB 13,975 million [13][27] - **Net Profit Estimates**: - 2025: RMB 2,780 million - 2026: RMB 3,469 million - 2027: RMB 4,312 million [13][27] Valuation Metrics - Expected net profit CAGR of 25% from 2025 to 2027 [5][12] - Average PEG multiple for the A-share passive component sector is 1.3x, leading to a target PE multiple of 32x [5][12] Risks and Considerations - Weaker-than-expected recovery in MLCC demand and price rebound [32] - Potential for lower market share gains in high-end MLCC if competitors reduce prices [32] - Risk of lower gross margins due to expansion of new capacities [32] Conclusion - CCTC is positioned to benefit from the evolving dynamics in the MLCC and SOFC markets, with a strong outlook for revenue growth and market share expansion. The revised target price reflects confidence in the company's ability to capitalize on these trends while managing associated risks.

Core Viewpoint - The recent decline in the "new consumption" sector, represented by Pop Mart and its peers, has raised concerns about valuation, IP lifecycle, and market sustainability, following a rapid price drop in collectibles and stocks within a short period [1][2][3]. Group 1: Market Performance - Pop Mart's stock price fell significantly, closing at 239.6 HKD per share on June 20, down 3.62% for the day, with a trading volume nearing 10 billion HKD and a net sell-off of 617 million HKD by southbound funds, marking the highest net sell-off since May 12, 2025 [4]. - Over a week, Pop Mart's stock has declined over 15% from its peak of 283.4 HKD per share on June 12, resulting in a market capitalization loss exceeding 50 billion HKD from its high of 380 billion HKD [5]. - The collectible Labubu's price in the secondary market plummeted by over 50%, with some non-hidden variants dropping nearly 60% [6]. Group 2: Valuation Concerns - The "new consumption trio" has seen significant price corrections, with declines of approximately 19% for Lao Pu Gold, 17% for Mixue Group, and 15% for Pop Mart from their respective peaks [2]. - As of June 20, Lao Pu Gold had a year-to-date increase of 243.75% with a dynamic P/E ratio of 89.2, while Pop Mart's increase was 168.36% with a P/E of 95.3, and Mixue Group's increase was 153.83% with a P/E of 40.7 [8]. - Comparatively, traditional consumer giants like Kweichow Moutai have a P/E of 20.2, and international companies like Disney and Hasbro have P/Es of 23.7 and 22.3, respectively, indicating that the new consumption sector may be overvalued [8]. Group 3: Diverging Opinions Among Fund Managers - Optimistic fund managers believe new consumption has high growth potential and cash flow, while cautious managers warn of overvaluation and potential bubbles, suggesting that the current market correction serves as a valuable "stress test" [3][10]. - Some fund managers argue that the current high valuations are unsustainable, especially when comparing the market capitalizations of Pop Mart and Lao Pu Gold to established companies like Hasbro and Chow Tai Fook [9]. - Conversely, other fund managers maintain a positive outlook, citing the potential for continued growth in the new consumption sector, particularly in emotional consumption and overseas expansion [10][11]. Group 4: Investment Framework Evolution - The investment framework for new consumption is evolving, with traditional metrics like P/E ratios being challenged by the importance of emotional value, user engagement, and IP longevity [12]. - Analysts emphasize the need for a deeper understanding of target demographics and consumer behavior, moving away from a channel-focused approach to a more nuanced analysis of product appeal and consumer needs [13][14].