Sinocera Functional Material (300285.SZ) Earnings Review: 3Q26 revenue beat tempered by softer margins and one-offs; AI materials shipments set to begin in 4Q; Neutral

Sinocera reported 3Q26 results: net profit of Rmb183mn (+16% yoy) came in 5% below GSe, as revenue rose 39% yoy to Rmb1.57bn and beat GSe by 19% (SDI Limited, consolidated from July, contributed c.Rmb100mn), but softer gross margin (36.8%, -0.1ppt yoy, 0.5ppt below GSe) and higher SG&A left EBIT of Rmb222mn (+24% yoy) broadly in line (+1% vs. GSe). Management attributed the gap between revenue and profit growth mainly to one-off items: FX losses, share-based compensation and expenses relating to the SDI acquisition; excluding these, 9M26 recurring net profit growth would have been close to 40% yoy versus c.12% reported. Revenue growth was driven by robust demand for traditional MLCC powder and customer restocking prompted by rare earth export controls, particularly dental zirconia powder;