Goldman Sachs Maintains Buy Rating on Shenghong Technology with Target Price of RMB 550

Overview

This report is based on Goldman Sachs' management interview during its research trip focused on Chinese tech stocks. Goldman Sachs maintains a 'Buy' rating on Shenghong Technology, believing the company is benefiting from the ongoing shift in the AI PCB industry. Management remains optimistic about the growth trajectory of its AI PCB business, supported by strong end-demand from GPU and ASIC AI servers, timely capacity expansion, and robust R&D capabilities. The report notes that Shenghong Technology stands to benefit further from global AI infrastructure build-out, value uplift from higher-specification PCBs, and its strategic expansion into optical modules and advanced packaging segments.

Core views

Demand Side: Management observes strong end-demand for AI PCBs—not only from global leading GPU and ASIC AI server customers but also from domestic AI server clients whose PCB demand has exceeded expectations, primarily driven by the expansion of the local AI ecosystem. Large-scale manufacturing capability is viewed as a critical factor for deeper client penetration. Supply and Competition: Shenghong Technology collaborates closely with customers through its strong R&D capabilities to co-develop cutting-edge AI PCBs and ensures timely mass production of new technologies via proactive capacity expansion, thereby capturing rising end-demand. Beyond traditional AI server PCBs, the company is actively expanding into optical modules and advanced packaging PCBs, creating additional upside potential for future growth. Valuation Logic: Goldman Sachs applies a target P/E multiple of 26.3x to its 2027E EPS to derive a 12-month target price of RMB 550. This target P/E is derived by analyzing the historical correlation between peer companies’ P/E multiples and their EPS growth rates, and then applying Shenghong’s projected 2028 EPS growth rate.

Analysis framework

Goldman Sachs employs a combined top-down and bottom-up analytical approach. First, it confirms the macro trend of accelerated global AI infrastructure development. Second, through micro-level management interviews, it validates the company’s competitive advantages in specific products (GPU/ASIC server PCBs), customer base (global + domestic), and technology roadmap (optical modules/advanced packaging). Finally, it integrates financial forecasts with a peer comparison methodology to determine the valuation multiple and derive the target price.

Methodology notes

• Valuation MethodPE/PEG valuation

  Target PE derived from peer P/E vs. EPS growth correlation

  Rather than using a fixed industry-average P/E, the report analyzes the historical relationship between peers’ P/E multiples and their EPS growth rates. Based on Shenghong Technology’s expected 2028 EPS growth rate, a justified target P/E of 26.3x is derived. This approach incorporates growth sustainability into valuation, offering a more dynamic perspective than static P/E.

• Industry/Market Analysis FrameworkSupply-demand framework

  AI server demand drives both volume and value uplift for PCBs

  The report highlights dual drivers from AI servers for PCBs: (1) increased 'volume'—higher PCB content per server replacing some copper cables—and (2) higher 'value'—more complex, high-layer-count PCBs increasing dollar content per unit. This reflects a classic structural demand shift within a supply-demand framework, generating sector-wide tailwinds.

Asset mapping & comparison

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

• Shenghong Technology (300476.SS)

  Direct beneficiary as a core AI server PCB supplier

  Strengths

  Strong R&D capabilities, timely capacity expansion, highly automated production lines and warehouse management, diversified customer base (global + domestic)

  Risks

  Slower-than-expected ramp-up in AI server shipments, slower-than-expected PCB specification upgrades, intensified market competition

Key data

• 12-Month Target PriceRMB 550Calculated based on 2027E EPS and 26.3x target P/E
• Current Share PriceRMB 334.20As of May 20, 2026 closing price
• Implied Upside64.6%Potential upside from current price to target price
• Target P/E Multiple26.3xApplied to 2027E EPS

Impact & implications

The report concludes that Shenghong Technology has successfully positioned itself in the high-growth AI PCB segment through proactive capacity deployment and R&D investment. As AI server specifications continue to evolve and the domestic AI ecosystem expands, the company is well-placed to maintain its share among global key accounts while capturing incremental domestic market opportunities. Furthermore, its expansion into optical modules and advanced packaging will raise its growth ceiling and reinforce its leadership in high-end PCB manufacturing.

Risks

• Slower-than-expected ramp-up in AI server shipments
• Slower-than-expected upgrade pace of AI server PCB specifications
• Market competition intensifying beyond expectations