Sunlord Electronics, a globally leading platform company in chip inductors and high-end electronic components, has formed a product matrix centered on inductors, extending into other magnetic components, tantalum capacitors, ceramic substrates, precision ceramics, and sensors. As AI significantly increases demands on passive components for high-frequency decoupling/filtering, voltage/ current stabilization, and energy storage, the company's AI inductors have rapidly penetrated overseas computing-power customers under this opportunity, while tantalum capacitors are gaining customer certifications. These may become two growth engines of the future AI market. In 1H26, the company achieved revenue of RMB3,859mn (+19.67% YoY), gross margin of 33.59% (-3.09pp YoY), and attributable NP of RMB447mn (-7.98% YoY). Due to rising metal raw material prices, the company's profitability came under pressure in 1H26, but 2Q26 gross margin improved 1.88pp QoQ to 34.41%, with profitability showing robust marginal recovery as price pass-through takes effect. AI-related product orders and capacity may ramp up in 2H26. We expect the company to see continued revenue mix optimization and accelerated earnings growth. We set a target price of RMB74.59 and maintain a BUY.
1H26: Auto business boosted revenue growth
By application, 1) signal processing revenue was RMB1,401mn (+20.46% YoY), accounting for 36.30%. 2) Power management revenue was RMB1,282mn (+11.50% YoY), accounting for 33.23%. 3) Auto electronics/energy storage revenue was RMB881mn (+37.40% YoY), accounting for 22.84%. 4) Ceramics, PCB and others revenue was RMB294mn (+8.96% YoY), accounting for 7.63%. The company continues to rapidly penetrate emerging markets such as auto electronics and energy storage, contributing core revenue increments, while traditional markets such as consumer electronics maintain steady growth. In 1H26, as AI passive component supply tightened, the pace of product adoption in the AI segment accelerated. We believe revenue contribution from the AI business could increase after 2H26.
Earnings forecasts and valuation
We forecast 2026/2027/2028 revenue of RMB8,520/10,550/12,570mn, +26.3/ 23.9/19.2% YoY, with gross margins of 35.4/37.7/38.5%. Benefiting from easing cost pressures and product mix optimization, we forecast attributable NP of RMB1,160/1,670/2,140mn, +13.3/44.5/27.8% YoY. We are positive on the company's multi-category AI layout spanning inductors, tantalum capacitors, ceramic substrates, and packages. We assign a 52x 2026E PE (in line with the peer average on Wind consensus), deriving a target price of RMB74.59. Maintain BUY.
Risks: slower-than-expected AI customer adoption, raw material price increases.