Shengyi Electronics upgraded to Buy, target price raised to CNY146

Overview

This report is Nomura's earnings review and rating revision on Shengyi Electronics (688183.SS). The company delivered strong revenue and earnings growth in FY25, but its 4Q25 quarter-on-quarter performance was dragged down by the product transition period of a key global AI customer. Nomura believes this headwind will continue into 1Q26F, but early signs may already be emerging of product upgrades at a key ASIC customer. Combined with capacity expansion in high-layer count PCBs and accelerating development of China's AI chips, growth momentum is expected to strengthen in 2H26.

Core views

The core view is that Shengyi Electronics is in a short-term phase of product transition and cost pressure, but stands to benefit in the medium term from demand for AI servers, switches, and domestic AI chips. Nomura expects the normalized revenue CAGR of a key global ASIC customer to be about 20% in FY26-28F, potentially contributing 42% of total revenue in FY28F; revenue CAGR from a key domestic AI chip customer is expected to be about 41%, potentially contributing 24% of total revenue in FY28F, driving PCB segment revenue CAGR to about 29%.

Analysis framework

The report forms its investment rating and target price by combining a review of FY25 and 4Q25 results, revisions to FY26-28F earnings forecasts, assessments of AI PCB customer demand, segment revenue and gross margin assumptions, comparisons with market consensus expectations, and a P/E valuation method based on 2027F EPS.

Methodology notes

• Valuation methodsforward p/e multiple

  Target P/E valuation based on 2027F EPS

  Nomura derives the target price of CNY146 using 35x 2027F EPS of CNY4.17. This multiple is close to the company's historical median P/E and is supported by FY26-28F earnings CAGR of 34%.

• Earnings forecastearnings forecast revision

  Raised FY26-27F revenue and earnings forecasts

  Revenue forecasts were raised by 1.6%-8.2% and earnings forecasts by 2.0%-12.1%, mainly reflecting potentially stronger demand from global and domestic AI PCB customers; at the same time, some gross margin assumptions were lowered to reflect raw material cost pressure.

• Industry demandcustomer platform upgrade cycle

  AI server and switch platform upgrade cycle

  The report believes that platform upgrades among global AI server and switch customers may accelerate from 2Q26F or mid-2026, thereby increasing the value content of the company's AI PCB products.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Shengyi Electronics (688183.SS)

  Covered company; A-share PCB manufacturer; subsidiary of Shengyi Technology

  Strengths

  Benefits from global AI server and switch platform upgrades as well as domestic AI chip development; high-layer count PCB capacity expansion should help enhance growth momentum; strong FY25 earnings growth.

  Weaknesses

  In the short term, affected by the product transition period of key customers, lower utilization, and rising raw material costs; customer concentration risk is relatively high.

  Comparison

  Compared with WIND consensus expectations, Nomura's FY26F revenue and earnings forecasts are 1% lower, but its FY27F revenue and earnings forecasts are 1% and 6% higher, respectively.

  Risks

  AI PCB demand below expectations, intensifying competition in high-end PCBs, and higher-than-expected raw material cost pressure.

• CSI 300

  Benchmark for valuation and rating performance

  Strengths

  Serves as the reference benchmark for target price and rating relative performance in the report.

  Weaknesses

  Does not represent the company's fundamental drivers.

  Comparison

  Under Nomura's rating system, Buy means expected to outperform the benchmark over the next 12 months.

  Risks

  Market and macro trends may affect achievement of the target price.

Key data

• Rating changeUpgraded from Neutral to BuyNomura upgraded the rating and raised the target price from CNY99 to CNY146.
• Target priceCNY146.00Based on 35x 2027F EPS of CNY4.17.
• Current priceCNY110.22Closing price on April 24, 2026.
• Implied upside+32.5%Calculated from the target price relative to the current price.
• FY25 revenue and earnings growthRevenue +103% y-y; earnings +344% y-yThe company delivered significant growth in FY25.
• 4Q25 quarter-on-quarter performanceRevenue -12.9% q-q; earnings -38.6% q-qNomura believes this was mainly affected by the product transition period of a key global AI customer.
• FY27F EPSCNY4.17Used for target price valuation.
• FY26-28F earnings CAGR34%Supports the target P/E assumption.
• Revenue CAGR from key global ASIC customerAbout 20%Nomura expects normalized revenue CAGR in FY26-28F, with potential contribution of 42% of total revenue in FY28F.
• Revenue CAGR from key domestic AI chip customerAbout 41%Potentially contributing 24% of total revenue in FY28F.

Impact & implications

If Nomura's view plays out, the investment thesis for Shengyi Electronics will shift from short-term transition pressure to medium-term growth driven by AI PCB demand and rising product value content. The higher target price and rating upgrade reflect stronger confidence in earnings growth from 2H26 through 2028, though in the short term investors still need to watch the impact of customer concentration, raw material costs, and industry capacity expansion competition on margins.

Risks

• PCB demand from downstream sectors such as 5G, servers, and automotive electronics may come in below expectations.
• Competition in high-layer count PCB and high-end PCB markets may intensify, leading to margin pressure.
• Shortages of key raw materials such as fiberglass or rising costs could compress profitability if they cannot be passed on to end customers in a timely manner.
• Concentration risk among key customers may increase short-term volatility in revenue and earnings.
• Achievement of the target price may be affected by macro market trends, industry cycles, and company earnings deviating from forecasts.

What to watch

• Whether product upgrades by key global ASIC customers begin to drive order recovery in 2Q26F or mid-2026.
• The rollout progress and utilization changes of Shengyi Electronics' new high-layer count PCB capacity.
• Demand growth from domestic AI chip customers, especially the development of AI chips compatible with the Huawei Ascend NPU ecosystem.
• Prices of raw materials such as fiberglass and the degree of supply tightness.
• Whether actual FY26-27F revenue, earnings, and gross margin meet the upgraded forecasts.