Yantai Jereh - A (002353.SZ): First Take: 3Q26 margin expansion drives profit +14% q/q; AIDC revenue visibility building; stay OW

Jereh's 3Q26 results are likely to be taken slightly positively by the market, in our view, as the company reported a net profit of Rmb691mn, up 22% y/y. 3Q revenue was flat q/q, but profitability stood out, as gross margin expanded to 33% (vs. 29% in 2Q26 and 33% in 3Q25). The result may have been supported by: (1) a higher mix of high-margin AIDC equipment deliveries as production ramped; and (2) lower impairments. The key drag was still FX, with a 9M FX loss of Rmb373mn vs. an FX gain of Rmb25mn last year (recurring 3Q net profit Rmb776mn, up 28% y/y). 3Q recurring net margin was 18% vs. 16%/17% in 2Q26/3Q25. AIDC power equipment order book stepped up: per channel tracking, 3Q AIDC new orders were Rmb10.2bn, dominated by the July Power Systems order of US$1.465bn, following 1Q/2Q AIDC new orders of Rmb2.0bn/Rmb4.5bn. Contract liabilities were up 263% ytd, inventory up 40%, and prepayments up 297% ytd. The key upside catalyst remains AIDC power equipment new orders, with a US market