AI Slides Volume, Goldman Sachs Raises Chuanhu Target Price to 7,664 TWD

Overview

This is a company research report by Goldman Sachs on King Slide (Chuanhu), a Taiwan-based server slide manufacturer. The report starts with the company's April revenue significantly exceeding expectations, reiterating its bullish stance on King Slide's leadership position in the AI server slide market. It believes that accelerating AI server volume combined with demand for general servers will support sustained high growth and maintain profitability. Based on upgraded earnings forecasts and higher valuation multiples, Goldman Sachs maintains a Buy rating and raises the 12-month target price from TWD 4,386 to TWD 7,664.

Core views

Operating Performance: King Slide’s April revenue reached TWD 2.6 billion, up 35% quarter-over-quarter and 79% year-over-year, surpassing Goldman Sachs' prior estimate by 16%. Goldman Sachs attributes this strong performance to volume increases in AI server slides and general-purpose server slides, reinforcing the company’s leading position in the AI server slide market. In terms of profitability, 1Q26 gross margin improved to 77.7%, higher than 76.0% in 2025, thanks to automation and cost control; the company continues to expand capacity to seize growth opportunities. Competitive Advantages: The report emphasizes several aspects of the company’s moat – a complete product architecture covering rack, baseboard, and ASIC, approximately 3,700 approved patents as of May 2026, diversified customer base, and strong customization capabilities. These are seen as key factors enabling the company to maintain its leading market share and benefit from rising dollar content per server. Recent & Quarterly Outlook: Goldman Sachs expects revenue for May and June 2026 to grow by 68% and 33% year-over-year respectively, though sequential declines are expected due to high baselines and model transitions, resulting in a strong 60% year-over-year and 24% quarter-over-quarter increase in Q2 2026. The report expects revenue to rebound sequentially starting in July, driven by accelerated rack-level AI server volume, rising dollar content, and new production capacity. Earnings Forecast Revisions: Goldman Sachs has raised net profit forecasts for 2026–2028 by 5%, 15%, and 26% respectively, primarily due to higher revenues and gross margins. The three revenue upgrade drivers are increased volumes in rack-level AI server slides, baseboard-level AI server slides, and general-purpose server slides, underpinned by larger TAM and shipment assumptions, and the company benefiting from higher dollar content; gross margin revisions reflect an upgrade in product mix towards premium solutions and improved cost control through scale. The report also notes that its 2026 earnings forecast aligns closely with market consensus, but the 2027 forecast exceeds Bloomberg consensus by around 23%, mainly due to a more optimistic view on rack-level AI server slide sales.

Analysis framework

The core analytical framework of Goldman Sachs is 'high-frequency operational data validation + earnings revision + valuation multiple increase'. Step one involves using monthly revenue—a high-frequency metric—to confirm the trend of increasing AI server slide volumes, comparing it against its own projections (actual figures exceeded estimates by 16%), thereby confirming growth momentum. Step two applies stronger shipments and product structure upgrades to the financial model, revising revenue, gross margin, and net profit forecasts for 2026–2028 and comparing them with Bloomberg consensus to highlight its more optimistic perspective. Step three employs near-term P/E valuation methodology. Valuation Benchmarking: The report derives a target P/E of 30x (previously 20x) for 2027 by applying the company’s high-end PEG value of 0.8x multiplied by an average net profit growth rate of ~37% over 2027–2028, then multiplying by 2027 EPS to arrive at the target price of TWD 7,664. This approach reflects that companies growing faster can command higher valuations. This "growth-for-multiple" logic is common among high-growth stocks.

Methodology notes

• Valuation MethodPE/PEG valuation

  Deriving Target P/E from PEG (Price-to-Earnings to Earnings Growth Ratio): Target P/E = PEG × Earnings Growth Rate

  In this report, Goldman Sachs takes the company’s high-end PEG of 0.8x, multiplies it by an estimated average net profit growth rate of ~37% for 2027–2028, arriving at a target P/E of ~30x, which is then multiplied by 2027 EPS to derive the target price. Its meaning is that faster-growing companies can be valued at higher P/E ratios, combining both ‘how expensive’ and ‘how fast it grows’ in one measure, avoiding the misinterpretation of high P/E as overpriced.

• Valuation MethodPE/PEG valuation

  Historical P/E Range as Reasonableness Check

  The report compares the derived 30x target P/E to the historical P/E range since 2019 to confirm it falls within past norms. This is a form of "valuation anchor": using the stock’s own historical valuation ranges to judge whether current multiples are reasonable, helping readers assess the reasonableness of the target price.

• Industry/Industry Analysis FrameworkVolume-price decomposition

  Dollar Content Rise Driving Growth

  The report repeatedly emphasizes that as AI servers evolve, the dollar content of slides per server is increasing. This follows the "volume-price decomposition" approach: revenue growth comes not just from increased shipments, but also from unit product value/unit price improvement; when products shift toward premium solutions, even unchanged shipment volumes can improve revenue and gross margins due to higher pricing.

Asset mapping & comparison

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

• King Slide (Chuanhu, 2059.TW)

  As a leading supplier of AI server slides, directly benefits from increased rack-level/baseboard-level AI server slide volumes, general-purpose server demand, and rising dollar content

  Strengths

  Complete product architecture covering rack/baseboard/ASIC, ~3,700 approved patents, diversified customer base, high customization capability, high gross margin (77.7% in 1Q26) with continuous improvements via automation and cost control

  Risks

  Increased competition from new entrants, slower-than-expected AI server growth, weaker-than-expected general-purpose server shipment growth

Key data

• April RevenueTWD 2.6 BillionQuarter-over-quarter +35%, Year-over-year +79%, exceeding Goldman Sachs forecast by 16%
• 1Q26 Gross Margin77.7%Higher than full-year 2025 gross margin of 76.0%
• Approved PatentsApprox. 3,700As of May 2026, reflecting technical and customization barriers
• Net Profit Forecast Revision2026/27/28 Upward by 5%/15%/26%Driven by higher revenue and gross margin
• Revenue Forecast (New)2026E 284.06B/2027E 407.97B/2028E 503.06B (TWD)Upgraded by 6%/11%/20% compared to previous estimates
• 2027 Earnings vs ConsensusAbout 23% HigherMainly due to more optimistic revenue outlook on rack-level AI server slides
• Target P/E30x 2027 EPSRaised from 20x, based on PEG 0.8x × ~37% net profit growth
• Target PriceTWD 7,664Raised from previous TWD 4,386; Current price is TWD 5,350, implying ~43.3% upside

Impact & implications

The report believes that the acceleration in AI server slide volume and the move toward a higher-end product structure will support King Slide’s continued high growth and high gross margins in the coming years, with earnings realization outpacing market consensus, especially in 2027. Based on this, Goldman Sachs maintains a Buy rating and significantly raises its target price, viewing the company as structurally positioned to benefit from rising demand for AI data center slides, leveraging its leading market share and customization capabilities. All of the above are views expressed in the research report.

Risks

• Increased competition from new entrants
• Slower-than-expected AI server growth
• Weaker-than-expected general-purpose server shipment growth

What to watch

• Monthly revenue trends from May, June, and July (model transition and rack-level AI server volume rhythm)
• Progress in capacity expansion and rising dollar content
• Continuity of gross margin and product structure premiumization