Three-Circle Group (300408.SZ): Strong MLCC momentum drives earnings growth

3Q26 results beat our expectations. In 9M26, revenue increased 76.7% y-y to CNY11,503mn, gross margin expanded 6.0pp y-y to 48.5%, and net profit rose 97.4% y-y to CNY3,865mn. In 3Q26, revenue increased 115.3% y-y and 35.7% q-q to CNY5,079mn, gross margin expanded 10.3pp y-y and 8.8pp q-q to 53.7%, and net profit surged 168.0% y-y and 69.4% q-q to CNY1,933mn. Both 3Q26 revenue and net profit exceeded our previous expectations, which we attribute mainly to two factors. First, stronger industry momentum and growing demand drove higher-than-expected increases in shipment volumes and average selling prices for certain core products. Second, operating leverage became more pronounced as revenue expanded; the selling expense ratio declined 0.5pp y-y and the administrative expense ratio fell 1.6pp y-y. We raise our 2026-28F revenue forecasts by 17%/24%/24% to CNY16.05bn/CNY22.49bn/CNY27.72bn, raise net profit forecasts by 27% to CNY5.45bn/CNY8.24bn/CNY9.5bn, and roll forward our valuation base