CCL Prices Continue to Rise; Target Price Raised to 146.3 Yuan

Overview

Goldman Sachs released a research report noting that prices for mainstream and AI Copper Clad Laminate (CCL) products continue to rise, driven by sustained demand for AI-related M7+CCL and capacity spillover effects. The firm maintains a Buy rating on Shengyi Technology and has raised its 12-month target price by 14.8% to 146.3 yuan based on updated earnings forecasts and valuation multiples.

Core views

Clear industry pricing trend. Media reports indicate that peers have raised prices three times between March and May this year, reflecting tight supply and rising raw material costs (fiberglass cloth, copper foil). Although Shengyi Technology has not publicly announced its pricing plans, as an industry leader, its price trend is expected to remain solid this year, potentially lasting longer than initially anticipated at the beginning of the year. Strong demand-side drivers. High-end AI demand and capacity spillover from AI applications have led to robust downstream demand and tight supply of mainstream CCL. The average selling prices (ASP) for both AI and non-AI CCL are expected to rise. The new generation of AI server racks will be equipped with higher specifications, allowing Shengyi Technology to benefit from increased USD content and margin expansion. Earnings and valuation adjustments. Based on a more optimistic price outlook, revenue forecasts for 2026-28 are raised by 1%/5%/6%. Gross margins are slightly lowered as mainstream CCL (which has lower gross margins but larger price increases) sees more significant price hikes than high-end products. Overall net profit for 2026-28 is raised by 1%/4%/5%. Regarding valuation, the target price is raised to 146.3 yuan based on a 2027 expected P/E ratio of 38.7x (previously 35.0x). The target P/E is higher than the company's average +1 standard deviation, reflecting a positive view on the upgrade of the product mix towards AI CCL.

Analysis framework

The institution employs a top-down analysis, first confirming the industry pricing trend (peer actions, raw material costs), then analyzing demand-side factors (AI server upgrades, capacity spillover), and finally combining the company's position (industry leader, supply chain relationships) to derive adjustments to earnings forecasts. For valuation, the target multiple is determined by the correlation between comparable company P/E ratios and EPS growth, followed by mark-to-market adjustments as earnings forecasts are updated.

Methodology notes

• Valuation MethodPE/PEG valuation

  Determining valuation based on the correlation between target P/E multiple and EPS growth

  The report calculates the target price by multiplying the target Price-to-Earnings (P/E) ratio by the expected Earnings Per Share (EPS), and adjusts the P/E multiple based on a comparison of the company's EPS growth rate with peers, reflecting the alignment between growth and valuation.

• Industry/Sector Analysis FrameworkSupply and Demand Framework

  Rising raw material costs and tight supply drive price increases

  By analyzing upstream raw material costs (fiberglass cloth, copper foil) and industry capacity supply conditions, product price trends are assessed; tight supply combined with rising costs typically supports the logic for price increases.

• Company Fundamentals and Financial Framework

  Impact of product mix upgrades on profit margins

  Focuses on the drive for increased overall USD content and margin expansion resulting from a higher proportion of high-end products (such as AI CCL); even if mainstream products have lower gross margins, structural optimization can still improve overall earnings quality.

Asset mapping & comparison

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

• Shengyi Technology (600183.SS)

  Beneficiary (CCL price increases, AI demand)

  Strengths

  Industry leader, sales volume advantage, long-term relationships with upstream suppliers, cost management capabilities

  Weaknesses

  Lower gross margins on mainstream CCL

  Risks

  AI infrastructure investment below expectations, allocation below expectations, changes in technological direction

Key data

• Target Price146.3 yuanRaised by 14.8%
• 2026-28 Revenue Forecast Raised1%/5%/6%Based on more optimistic price outlook
• 2026-28 Net Profit Forecast Raised1%/4%/5%Overall earnings expectations improved
• 2027 Target P/E Ratio38.7xPreviously 35.0x, reflecting product mix upgrade
• 2028 EPS YoY Growth Expectation45%Previously 44%

Impact & implications

The report believes Shengyi Technology will benefit from increased USD content and margin expansion driven by the upgrade of its product mix towards AI CCL. The industry pricing trend may persist, benefiting the company's revenue and profit growth. As an industry leader, the company's advantages in sales volume and relationships with upstream suppliers help in better managing raw material costs.

Risks

• AI infrastructure investment below expectations
• Allocation below expectations
• Changes in technological direction

What to watch

• Continued trend of CCL price increases
• Progress of AI server rack upgrades