1H26 profit guidance is strong, AI PCB demand confirms an upward trend

Overview

This report focuses on Shengyi Electronics' 1H26 profit guidance and subsequent growth trend. The company released positive 1H26E guidance after market close on July 13, with both revenue and net profit increasing significantly. Nomura believes growth is mainly driven by strong AI PCB demand, incremental contribution from new capacity, faster ramp of new ASIC key customer products, and AI switch upgrade demand, and has consequently raised FY26-28 revenue and earnings forecasts.

Core views

The core view is that Shengyi Electronics has entered an upward cycle in AI-related PCB demand. The ramp-up of new products from key ASIC customers, including Trainium 3, is expected to support ASP and margin improvement in 2H26F. AI switch upgrades in overseas and Chinese markets are also expected to generate incremental demand. Although upstream material price increases will exert cost pressure, the improved product mix is expected to partially offset the margin impact. Customer concentration remains a key risk, but the company is advancing customer diversification through high-layer-count PCB and communication equipment / network switch capabilities.

Analysis framework

The report combines interpretation of profit guidance, analysis of business-level growth drivers, revision of earnings forecasts, relative valuation, and risk identification. Nomura revised FY26-28F revenue, gross margin, and earnings forecasts based on AI PCB, ASIC customer product upgrades, switch demand, capacity expansion, and raw material cost pressure, and valued using a historical median P/E multiple applied to 2027F EPS.

Methodology notes

• Valuation methodsPrice-to-earnings multiple method

  35x 2027F EPS

  Target price of CNY159 is based on 35x 2027F EPS of CNY4.55, with the multiple aligned with the company’s historical median P/E and benchmarked against FY26-28F earnings CAGR.

• Earnings ForecastEarnings forecast revision

  Upward revisions to revenue, gross margin, and earnings forecasts

  The report raised FY26-28F revenue forecasts by +7.0% to +15.0%, revised gross margins down by 0.1 to 0.8 percentage points to reflect raw material price increases, and ultimately raised earnings forecasts by +6.5% to +11.1%.

• Industry DemandAI infrastructure demand-driven

  ASIC and AI switches driving PCB content upgrading

  The report believes that rising token consumption from agentic workloads will continue to accelerate demand for ASIC chips and AI switches in overseas and Chinese markets through 2H26 and 2027.

Asset mapping & comparison

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

• Shengyi Electronics (688183.SS)

  Covered issue; beneficiary of AI PCB and high-end multilayer PCB

  Strengths

  Strong 1H26 profit guidance; key ASIC customers with increasing new-product shipments; AI switch upgrade demand; clear server business growth; strong technological foundation in high-layer-count PCB.

  Weaknesses

  High concentration of revenue from key global ASIC customers; upstream material price increases may pressure gross margins.

  Comparison

  Current stock price is roughly 27.9x FY27F EPS, while the target price uses 35x FY27F EPS, with the multiple consistent with the company’s historical median P/E.

  Risks

  Downstream demand for 5G, server, and auto-electronics PCB is weaker than expected; competition in high-end PCB intensifies; raw material cost pressure exceeds expectations.

• CSI300

  Valuation benchmark index

  Strengths

  Used as a benchmark for relative stock performance and valuation methodology in the report.

  Weaknesses

  Cannot directly reflect sentiment in the AI PCB sub-segment.

  Comparison

  In Nomura’s rating framework, Buy implies expected outperformance of the stock versus benchmark over the next 12 months.

  Risks

  Macroeconomic and index volatility may affect target price realization.

Key data

• 1H26E revenue guidanceCNY56.2bn-59.37bnup 49%-58% year-on-year.
• 1H26E net profit guidanceCNY10.82bn-11.37bnup 104%-114% year-on-year.
• Target priceCNY159.00based on 35x 2027F EPS of CNY4.55.
• Current priceCNY126.78price date is 14-Jul-2026.
• Implied upside+25.4%upside implied by target price versus current price.
• FY26F server business revenue contribution66%server business expected to be the company’s largest revenue driver.
• FY26-28F server business revenue CAGR28%driven by AI server PCB demand.
• FY26-28F revenue forecast revision+7.0% to +15.0%reflecting ASIC customer technology upgrades and capacity expansion.
• FY26-28F earnings forecast revision+6.5% to +11.1%higher volume offsets part of the cost pressure.
• Expected share of key global ASIC customersdecline from 50% in 2025 to 42% in FY28Freflecting progress in customer diversification.

Impact & implications

The investment implication for Shengyi Electronics is broadly positive: rising demand visibility over the medium term from AI servers, new ASIC products, and AI switch upgrades supports higher earnings estimates and a target price increase. For the value chain, high-end PCB content upgrades and high-layer-count PCB capability are key competitive variables; however, if downstream demand, competitive dynamics, or raw material prices do not meet expectations, achievement of the target price could be constrained.

Risks

• Downstream demand for 5G, server, and auto electronics PCB is weaker than expected.
• Competition in the high-end PCB market intensifies, putting margin pressure.
• Raw material cost pressure is higher than expected.
• Customer concentration in key global ASIC customers remains high, and if customer orders or new-product cycles do not materialize as expected, growth visibility will be impaired.

What to watch

• Shipment and ASP changes for Trainium 3-related PCB from key ASIC customers in 2H26F.
• Actual order pacing of overseas and Chinese AI switch upgrade demand.
• Actual contribution and growth delivery of server business and FY26-28F revenue growth.
• Changes in raw material prices and whether product mix improvement can offset margin pressure.
• Whether key global ASIC customer revenue share declines from 50% in 2025 to 42% in FY28F as expected.