Maintain Buy on Shengyi Technology, target price raised to CNY95

Overview

This report is Nomura's earnings review and valuation update on Shengyi Technology. It says the company's FY25 and 4Q25 results were driven by strong demand for AI PCB and CCL, while product mix improvement lifted gross margin. Looking ahead, capex from global and domestic AI customers, higher-layer-count PCB upgrades for ASIC customers, and the company's more aggressive expansion plans for high-end CCL and PCB are viewed as the main growth drivers.

Core views

The core view is that Shengyi Technology, as the world's second-largest CCL manufacturer, has the opportunity to expand its share in the AI server, network switch, and high-end PCB value chain. The Dongguan high-end CCL project is expected to ease capacity bottlenecks and help the company secure more orders in the global AI CCL market; meanwhile, subsidiary Shengyi Electronics (688183 CH) is expected to benefit from high-end HLC PCB product upgrades by global ASIC customers. Nomura therefore maintains Buy and raises the target price from CNY86 to CNY95.

Analysis framework

The report uses earnings review, business-segment revenue forecasting, gross margin and earnings forecast revisions, comparison with consensus expectations, and the P/E multiple valuation method for analysis. The upward revisions to earnings forecasts mainly reflect improved demand outlook for AI CCL/PCB, higher penetration of high-end products, and product mix improvement.

Methodology notes

• Valuation methodsP/E multiple method

  Target price is based on 2027F EPS and the historical median P/E

  Nomura calculates the target price of CNY95 using 32x 2027F EPS of CNY2.98, a multiple in line with the company's historical median P/E; the previous method used a 40x multiple.

• Forecast revisionSegment revenue and gross margin forecasts

  Assess growth by CCL & Prepreg and PCB segments

  The report separately estimates FY26-28F revenue CAGR, revenue mix, and gross margin improvement for CCL & Prepreg and PCB to reflect demand driven by AI servers, switches, and high-end PCB upgrades.

• Relative comparisonComparison between Nomura forecasts and WIND consensus expectations

  Compare proprietary forecasts with market consensus expectations

  The report notes that Nomura's FY26-27F revenue and earnings forecasts are about 3-4% and 5-9% below WIND consensus expectations, respectively, due to relatively conservative assumptions on the company's global CCL/PCB expansion.

Asset mapping & comparison

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

• Shengyi Technology (600183.SS)

  Primary covered name; the world's second-largest CCL manufacturer, also participating in PCB manufacturing through its subsidiary

  Strengths

  Benefits from demand for AI servers, network switches, and upgrades in high-end CCL and PCB; new high-end CCL capacity is expected to ease bottlenecks; product mix improvement supports gross margin expansion.

  Weaknesses

  Phase 1 of the expansion project is expected to begin production in 2028E, so near-term delivery still depends on the pace of capacity construction and customer ramp-up; Nomura's forecasts remain below WIND consensus expectations.

  Comparison

  Nomura's FY26-27F revenue and earnings forecasts are below WIND consensus expectations, reflecting relatively conservative global expansion assumptions.

  Risks

  Demand for downstream 5G, server, and automotive electronics PCB may fall short of expectations; intensified competition in the CCL market may pressure gross margin.

• Shengyi Electronics (688183 CH)

  Subsidiary of Shengyi Technology; beneficiary asset of the high-end PCB business

  Strengths

  Expected to benefit from global ASIC customers adopting high-end HLC PCB, as well as AI PCB demand and the product upgrade cycle accelerating from 2Q26F or mid-2026.

  Weaknesses

  Business is more directly exposed to the high-end PCB demand cycle, customer product transitions, and raw material cost fluctuations.

  Comparison

  The report assigns Buy to Shengyi Electronics and discloses a target price of CNY146, based on 35x 2027F EPS of CNY4.17.

  Risks

  Intensified competition in high-end PCB, downstream demand below expectations, and raw material cost pressure above expectations.

Key data

• Rating and target priceBuy；CNY95The target price was raised from CNY86 to CNY95, implying 30.8% upside.
• Current share priceCNY72.63As of 24-Apr-2026.
• FY25 resultsRevenue YoY +39%; earnings saw strong YoY growthThe main body of the report discloses two earnings YoY growth figures for FY25, 92% and 143%; 4Q25 earnings YoY growth is disclosed as 143%.
• 4Q25 gross marginYoY +3.7 percentage points; QoQ -2.4 percentage pointsMainly driven by product mix improvement and higher CCL/PCB utilization.
• High-end CCL capacity expansionMaximum investment of CNY5.2bn; about 48mn sqm of added annual capacityThe added capacity is equivalent to about 30% of total FY25 capacity. Phase 1 is expected to begin production in 2028E, and at full utilization the company estimates it could contribute CNY9.3bn in revenue.
• CCL & Prepreg forecastFY26-28F revenue CAGR 22%; FY28F revenue mix 56%Gross margin is expected to rise from 23.9% in FY25 to 28.9% in FY28F.
• PCB forecastFY26-28F revenue CAGR 39%; FY28F revenue mix 37%Gross margin is expected to rise from 28.6% in FY25 to 33.1% in FY28F.
• Earnings forecast revisionFY26-27F revenue raised by 1.2-2.3%; earnings raised by 0.3-2.2%Mainly reflects improved demand outlook for the AI CCL/PCB market.
• Valuation parameters32x 2027F EPS CNY2.98Target price CNY95 is based on rolling forward to 2027F EPS.
• Market dataMarket Cap USD23,126.0mn；ADT USD451.1mnDisclosed on the report cover page.

Impact & implications

The report's investment implication for Shengyi Technology is positive: AI data center demand and high-end product upgrades could extend the company's growth cycle, while new capacity may help ease the supply-demand gap and raise penetration in the global AI CCL/PCB market. If capacity expansion, product upgrades, and gross margin improvement materialize, the target price increase will be supported by both earnings and valuation; however, if downstream demand or the competitive environment worsens, both margins and valuation could come under pressure.

Risks

• Downstream PCB demand from 5G, servers, automotive electronics, and other sectors may come in below expectations.
• Competition in the CCL market may be more intense than expected, putting pressure on gross margin.
• Intensified competition in the high-end PCB market may compress the subsidiary's margins.
• Raw material cost pressure may be higher than expected.
• The production ramp-up schedule, customer onboarding, and capacity utilization of expansion projects may fall short of expectations.

What to watch

• Construction progress of the Dongguan high-end CCL project, the Phase 1 production schedule in 2028E, and realization of revenue at full utilization.
• Whether high-end HLC PCB product upgrades for global ASIC customers accelerate as scheduled in 2Q26F or mid-2026.
• Sustainability of demand for AI servers and network switches, as well as capex intensity from domestic and overseas AI customers.
• Changes in revenue mix, gross margin, and capacity utilization for the CCL & Prepreg and PCB segments.
• Whether the gap between Nomura forecasts and WIND consensus expectations narrows or widens.