Goldman Sachs Maintains Buy on Shengyi Technology: 1Q26 Profit Beat Consensus, AI CCL Upgrades Remain the Core Driver

Overview

This report is Goldman Sachs' review of Shengyi Technology's 1Q26 results. The company maintained strong year-over-year growth in revenue, gross margin, and net profit in 1Q26, with revenue at Rmb8.1bn, up 45% year over year and 4% quarter over quarter; gross margin at 28.1%, improving both year over year and quarter over quarter; and net profit at Rmb1.2bn, up 105% year over year and 30% quarter over quarter. Revenue came in below Goldman Sachs' earlier bullish expectations, suggesting that assumptions of rapid capacity expansion may have been somewhat aggressive, but profit performance was above market consensus expectations. Goldman Sachs maintains its Buy rating and 12-month target price of Rmb111.0.

Core views

The core view is that, in the short term, 1Q26 revenue did not reach Goldman Sachs' optimistic expectations, but product mix improvement, price increases, and expense control supported strong margin and earnings resilience; in the medium to long term, AI servers will drive higher PCB/CCL usage and specification upgrades, especially the rollout of M9 CCL in GPU AI server switch boards, compute boards, and mid-boards, which will support Shengyi Technology's revenue and earnings growth. Goldman Sachs leaves its 2027-2028E forecasts largely unchanged, only lowering 2026E revenue by 5% and 2026E net profit by 2%.

Analysis framework

The report uses three analytical threads: earnings comparison, earnings forecast revisions, and relative valuation. It first compares actual 1Q26 revenue, gross profit, operating profit, and net profit against historical quarters, Goldman Sachs forecasts, and market consensus; it then adjusts 2026E forecasts based on full 4Q25 results and 1Q26 outcomes; and finally derives the target P/E from the correlation between peer P/E and EPS growth, thereby maintaining the target price.

Methodology notes

• Earnings ForecastingQuarterly Results vs. Consensus Comparison

  Compare actual revenue, gross margin, operating profit, and net profit with Goldman Sachs forecasts, Bloomberg consensus, and historical quarters.

  This method is used to determine the sources of earnings beats or misses: in this case, revenue was below Goldman Sachs' forecast, but operating profit and net profit performed better relative to consensus expectations.

• Valuation methodsTarget P/E Method

  The 12-month target price is based on 31.0x 2027E P/E.

  Goldman Sachs says the target P/E is derived from the correlation between peer P/E and EPS growth, with reference to the company's 2028E EPS year-over-year growth; 31.0x is also close to the company's historical average plus one standard deviation P/E, reflecting its positive view on AI CCL product mix upgrades.

• Theme-driven AnalysisAI PCB/CCL TAM and Specification Upgrade Framework

  AI server shipments, rising ASIC mix, M9 CCL adoption, and customer expansion jointly drive demand.

  The report attributes 2026-2030E revenue growth to AI infrastructure ramp-up, CCL specification upgrades, higher SKU penetration, and expansion from GPU AI server customers to ASIC AI server customers.

Asset mapping & comparison

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

• Shengyi Technology (600183.SS)

  Research coverage target, an A-share PCB/CCL materials company benefiting from AI server-related demand.

  Strengths

  1Q26 gross margin improved both year over year and quarter over quarter, while net profit significantly exceeded consensus expectations; product mix upgrades, price increases, and expense control improved earnings quality; AI CCL migration provides a medium- to long-term growth driver.

  Weaknesses

  1Q26 revenue was below Goldman Sachs' previously bullish expectations, indicating that capacity or revenue ramp-up may be slower than expected; 2026E revenue and net profit forecasts were lowered.

  Comparison

  Compared with domestic and global peers, Goldman Sachs derives a 31.0x target P/E from the correlation between peer P/E and EPS growth, and believes this multiple reflects positive expectations for AI CCL upgrades.

  Risks

  AI infrastructure investment below expectations, customer allocation below expectations, and changes in technology roadmap.

Key data

• 1Q26 RevenueRmb8.141bnUp 45% year over year and 4% quarter over quarter; 15% below Goldman Sachs forecast and 2% below consensus expectations.
• 1Q26 Gross Margin28.1%Above 25.8% in 4Q25 and 24.6% in 1Q25, broadly in line with Goldman Sachs at 28.2% and consensus at 28.5%.
• 1Q26 Operating ProfitRmb1.441bnUp 106% year over year and 30% quarter over quarter; 6% above consensus expectations and 11% below Goldman Sachs forecast.
• 1Q26 Net ProfitRmb1.158bnUp 105% year over year and 30% quarter over quarter; 17% above consensus expectations and 9% below Goldman Sachs forecast.
• 2026E Revenue RevisionCut by 5% to Rmb37.995bnReflects weaker-than-expected 1Q26 revenue, though subsequent quarters are still supported by downstream demand.
• 2026E Net Profit RevisionCut by 2% to Rmb5.304bnGross margin forecast unchanged, while expense ratio is lowered to reflect control of selling and administrative expenses.
• 2026-2030E Revenue CAGRapproximately 29%The report says growth is driven by AI infrastructure ramp-up, CCL specification upgrades, SKU penetration, and customer expansion.
• 12-month Target PriceRmb111.0Based on 31.0x 2027E P/E, unchanged.

Impact & implications

From an investment perspective, the report positions Shengyi Technology as a beneficiary of the AI PCB/CCL upgrade cycle. Although the 1Q26 revenue pace fell short of Goldman Sachs' bullish expectations, gross margin improvement, lower expense ratios, and net profit beating consensus reinforced the product mix upgrade thesis. If AI server demand, ASIC penetration, and high-end CCL specification upgrades continue to materialize, the company's earnings growth and valuation premium should remain supported.

Risks

• AI infrastructure investment below expectations.
• Customer allocation or order share below expectations.
• Changes in technology direction lead the current PCB/CCL specification upgrade path to fall short of expectations.
• Revenue ramp-up is slower than Goldman Sachs' previous optimistic assumptions.
• Raw material costs continue to rise and cannot be fully offset through product mix and price increases.

What to watch

• Whether revenue growth rebounds quickly in subsequent quarters, to verify whether 1Q26 revenue missing Goldman Sachs' expectations was only a short-term timing issue.
• The pull from high-end CCL demand across GPU and ASIC AI server platforms, as well as progress in expanding ASIC AI server customers.
• The pace of M9 CCL adoption in switch boards, compute boards, and mid-boards.
• Whether gross margin can remain around 28% or continue improving toward the 30%+ forecast for 2027-2028E.
• Whether selling, administrative, and R&D expense ratios continue to remain effectively controlled.