AI-Driven CCL Price Hikes Continue; Goldman Sachs Raises Shengyi Technology Target Price to 146.3 Yuan

Overview

This research report, issued by Goldman Sachs, centers on the view that Shengyi Technology (600183.SS) is benefiting from sustained growth in demand for AI-related high-end copper clad laminates (CCL) and supply tightness caused by industry capacity spillover. Although the company has not publicly announced price adjustment plans, given that peers have raised prices three consecutive times in the past three months and upstream raw material costs are rising, the institution expects the company's product prices to maintain a firm upward trend this year, potentially lasting longer than early-year expectations. Based on a more optimistic price outlook and the logic of product structure upgrading towards AI CCL, Goldman Sachs has raised its revenue and net profit forecasts for the company for 2026-2028 and increased its 12-month target price by 14.8% to 146.3 RMB, maintaining a "Buy" rating.

Core views

At the industry level, CCL pricing is in a continuous upward channel. Media reports indicate that due to sustained supply tightness and rising costs of raw materials such as glass cloth and copper foil, peers have raised prices three consecutive times in March, April, and May 2026. Although Shengyi Technology has not publicly issued a price adjustment notice, as an industry leader, it possesses scale advantages and long-term stable relationships with upstream suppliers, enabling better management of raw material costs. Meanwhile, robust downstream high-end AI demand, combined with capacity spillover effects caused by AI applications, has led to supply tightness even in mainstream copper clad laminates. Therefore, the institution expects average selling prices (ASP) for both AI-specific and non-AI CCLs to continue rising. Regarding company fundamentals and earnings forecasts, as next-generation AI server racks are equipped with higher-specification components, Shengyi Technology is poised to benefit through increased dollar content per unit and margin expansion. Based on a more aggressive price outlook, Goldman Sachs has raised its revenue forecasts for the company for 2026-2028 by 1%, 5%, and 6%, respectively. Notably, because the price increase magnitude for lower-margin mainstream CCLs is greater than for high-end products, the overall gross margin (GM) has been slightly revised downward. Overall, net profit forecasts for 2026-2028 have been raised by 1%, 4%, and 5%, respectively. In terms of valuation, combining updated earnings forecasts and refreshed valuation multiples, Goldman Sachs has raised its 12-month target price by 14.8% to 146.3 yuan. This target price is based on a 2027 price-to-earnings (P/E) ratio of 38.7x, an increase from the previous 35.0x. The setting of this target P/E references the correlation between peer P/E ratios and earnings per share (EPS) growth rates, derived based on the company's 2028 EPS year-over-year growth rate of 45% (previously 44%). The current target valuation multiple is higher than the company's historical average plus one standard deviation, reflecting the institution's positive view on the company's product structure upgrade towards AI copper clad laminates.

Analysis framework

This research report employs a typical "Volume-Price Split + Supply-Demand Transmission" analysis framework. It first verifies the degree of supply-side tightness using high-frequency industry data (frequency of peer price hikes, raw material costs), and then confirms structural incremental demand on the demand side by combining downstream AI server technology iterations (M7+ specifications, new-generation racks). In financial modeling, the institution did not simply extrapolate linearly but distinguished between the different price elasticity and gross margin contributions of "Mainstream CCL" and "High-End AI CCL," thereby rationally revising down gross margin assumptions while raising revenue, reflecting refined earnings quality analysis. Regarding valuation methodology, it adopts a PEG approach within relative valuation, determining reasonable multiples through the correlation between peer P/E and EPS growth rates, and dynamically adjusting based on the latest growth expectations (2028E EPS growth) rather than statically applying historical averages.

Methodology notes

• Industry/Sector Analysis FrameworkSupply-demand framework

  Capacity Push-out Effect

  Refers to the phenomenon where an explosion in demand in a specific segment (such as high-end AI copper clad laminates) leads to capacity saturation, causing a spillover effect that transmits to adjacent mainstream product lines, triggering supply tightness and price increases across all categories. The report uses this to explain why not only AI-specific materials but also mainstream CCL prices are strengthening simultaneously.

• Valuation MethodPE/PEG valuation

  Target Multiple Derivation Based on Correlation Between Peer P/E and EPS Growth

  Instead of directly using a fixed PE multiple, this method dynamically determines a reasonable PE by analyzing the matching relationship between valuation and growth of comparable companies, combined with the target's own future EPS growth expectations. This more accurately reflects the rationality of valuation premiums for companies in high-growth stages.

• Company Fundamentals and Financial FrameworkEarnings Quality Analysis

  Breakdown of Revenue and Gross Margin Changes by Product Line

  When forecasting performance, this distinguishes between the different price hike magnitudes and sales volume proportion changes of low-margin mainstream products and high-end AI products. Even if total revenue is raised, if low-margin products see larger price increases or their proportion rises, it can lead to a slight decline in comprehensive gross margin; this breakdown avoids blindly optimistic profit forecasts.

Asset mapping & comparison

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

• Shengyi Technology (600183.SS)

  Beneficiary: As a leader in the copper clad laminate industry, it directly benefits from AI M7+ demand and the industry-wide price hike cycle

  Strengths

  Significant scale advantages, long-term cooperative relationships with upstream suppliers, strong cost management capabilities; product structure is upgrading towards high-margin AI CCL

  Weaknesses

  Although the price hike magnitude for mainstream CCL is large, the low gross margin may slightly drag down the comprehensive gross margin

  Risks

  AI infrastructure investment falling short of expectations; capacity allocation lower than expected; risks of changes in technical routes

Key data

• Target Price Adjustment146.3 YuanRaised by 14.8% from previous, based on 2027E 38.7x P/E
• 2026-28E Revenue Forecast Adjustment+1% / +5% / +6%Based on a more aggressive price outlook
• 2026-28E Net Profit Forecast Adjustment+1% / +4% / +5%Net result after combining price hikes and gross margin structure changes
• 2028E EPS Growth Expectation45%Revised up from previous 44%, supporting higher valuation multiple
• Peer Price Hike Frequency3 timesConsecutive price hikes in the past three months (March, April, May)

Impact & implications

The report believes that the continuous rise in copper clad laminate prices directly benefits Shengyi Technology's revenue scale and profitability. In particular, the structural opportunities brought by AI server specification upgrades will enable the company to gain additional margin expansion space beyond the industry-wide price increases. For investors, this means that even if the company has not formally announced price adjustments, its actual operating environment is improving significantly, and there is still room for upward valuation repair to match its growth logic of transforming towards high-end AI products.

Risks

• AI infrastructure investment intensity lower than expected
• Company's share of capacity allocation lower than expected
• Changes in downstream technology development direction