SG Micro (300661): SG Micro’s AI data-center, optical-module and industrial expansion supports higher forecasts, but Goldman Sachs maintains Neutral on valuation.

Overview

This earnings review examines SG Micro’s expansion in PMIC and signal-chain products. Goldman Sachs sees AI data centers, optical modules, industrial recovery, robotics and broader automotive exposure supporting market-share gains and growth, but maintains Neutral because it considers valuation fair.

Core views

Goldman Sachs remains constructive on SG Micro’s product expansion. Its central growth case rests on rising demand from AI data centers and optical modules, where an expanding PMIC and signal-chain portfolio is expected to lift dollar content. The institution also expects a recovery in industrial demand, with product expansion across industrial automation, energy and robotics, and broader automotive product and customer coverage. These channels are expected to improve the sales mix, reduce relative dependence on consumer electronics, support market-share gains and sustain revenue growth. The report incorporates a strong 2Q26 result. Revenue of Rmb1,497mn was 25% above Goldman Sachs’ forecast, up 36% quarter on quarter and 45% year on year. Gross profit was Rmb779mn, 27% above forecast and up 48% year on year; operating income of Rmb315mn was 63% above forecast and up 99% year on year. Net income reached Rmb297mn, 58% above the institution’s forecast and 110% above 2Q25. Reported EPS was Rmb0.20 in the result snapshot, 24% below the forecasted Rmb0.26, while the earnings table presents Rmb0.44 for 2Q26. Following the results, Goldman Sachs raises its 2026E-28E revenue forecasts by 10%/13%/18% to Rmb5,651mn/Rmb7,639mn/Rmb10,259mn. The revisions mainly reflect higher analog-IC revenue from AI data centers and optical modules and stronger industrial demand. Net-income estimates rise 1%/13%/22% to Rmb899mn/Rmb1,619mn/Rmb2,346mn. Gross-margin and operating-expense-ratio assumptions are largely unchanged. Because of the higher share count after SG Micro’s H-share issuance, EPS estimates change by -8%/+3%/+11% to Rmb1.33/Rmb2.39/Rmb3.47 for 2026E-28E. The longer-term model projects revenue growth of 45% in 2026E, 35% in 2027E and 34% in 2028E. Signal-chain revenue is projected to grow faster than PMIC revenue over this period: Rmb2,378mn in 2026E, Rmb3,723mn in 2027E and Rmb5,281mn in 2028E, versus PMIC revenue of Rmb3,190mn, Rmb3,815mn and Rmb4,855mn. The model forecasts operating margin improving from 17.7% in 2026E to 20.7% in 2027E and 24.7% in 2028E, with net margin rising from 15.9% to 21.2% and 22.9%. Goldman Sachs raises its 12-month target price to Rmb157 from Rmb143 and maintains Neutral. It uses a discounted 2030E P/E methodology to reflect long-term growth opportunities and maintain consistency with its China semiconductor coverage. The 37.4x target P/E is based on the relationship between peers’ P/E multiples, forward earnings growth and operating-profit margin; it reflects SG Micro’s estimated average 2030-31 EPS growth of 24% and operating margin of 25%. Applying the multiple to 2030E EPS and discounting back to 2027E using an unchanged 10.2% cost of equity produces the Rmb157 target. The target equates to 61x 2027E P/E and the report characterizes this valuation as fair.

Analysis framework

The report first incorporates the 2Q26 earnings outcome, then revises revenue, profit and EPS forecasts based on end-market demand and product expansion. It models PMIC and signal-chain growth, margin progression and earnings through 2031, then values the company using a peer-informed target P/E applied to 2030E EPS and discounted back using a 10.2% cost of equity.

Methodology notes

• Valuation methodsP/E and PEG Valuation

  Discounted 2030E P/E valuation using a peer-based relationship between P/E, earnings growth and operating margin.

  Goldman Sachs sets a 37.4x target P/E from peer growth and profitability relationships, applies it to 2030E EPS, and discounts the result back to 2027E at a 10.2% cost of equity to derive the target price.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  End-market demand transmission from AI data centers, optical modules, industrial automation, energy, robotics and automotive applications to PMIC and signal-chain demand.

  The report links expansion in these downstream applications to greater product content, analog-IC revenue and market-share gains for SG Micro.

Asset mapping & comparison

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

• SG Micro (300661.SZ)

  Primary covered company; expected to benefit from AI data-center, optical-module, industrial, robotics and automotive demand.

  Strengths

  Expanding PMIC and signal-chain portfolio, expected higher dollar content, market-share gains and reduced relative consumer-electronics exposure.

  Weaknesses

  EPS dilution in 2026E from the higher share count following the H-share issuance.

  Comparison

  The 37.4x target P/E is benchmarked against peers’ P/E, forward earnings growth and operating margin relationships.

  Risks

  Smartphone and consumer-electronics demand, product-launch and market-expansion execution, and domestic-peer competition.

• Silan (600460.SH)

  Peer in the SG Micro comparison table.

  Comparison

  2027E P/E of 40.4x; 2027-28E EPS growth of 35%; 2027-28E operating margin of 16%.

• CR Micro (688396.SH)

  Peer in the SG Micro comparison table.

  Comparison

  2027E P/E of 53.9x; 2027-28E EPS growth of 31%; 2027-28E operating margin of 21%.

• 3Peak (688536.SH)

  Peer in the SG Micro comparison table.

  Comparison

  2027E P/E of 25.8x; 2027-28E EPS growth of 47%; 2027-28E operating margin of 23%.

• Maxscend (300782.SZ)

  Peer in the SG Micro comparison table.

  Comparison

  2027E P/E of 26.1x; 2027-28E EPS growth of 66%; 2027-28E operating margin of 16%.

Key data

• 2Q26 revenueRmb1,497mn25% above Goldman Sachs forecast; up 36% quarter on quarter and 45% year on year.
• 2Q26 net incomeRmb297mn58% above Goldman Sachs forecast; up 140% quarter on quarter and 110% year on year.
• 2026E-28E revenue revision+10% / +13% / +18%Revised to Rmb5,651mn / Rmb7,639mn / Rmb10,259mn.
• 2026E-28E net-income revision+1% / +13% / +22%Revised to Rmb899mn / Rmb1,619mn / Rmb2,346mn.
• 2026E-28E EPS revision-8% / +3% / +11%Revised to Rmb1.33 / Rmb2.39 / Rmb3.47 following the H-share issuance.
• Target priceRmb157Raised from Rmb143; 28.2% upside versus Rmb122.45 as of 23 September 2026.
• Target valuation37.4x 2030E P/EDiscounted back to 2027E using a 10.2% cost of equity.

Impact & implications

The report argues that SG Micro’s exposure to AI data centers, optical modules and recovering industrial markets can broaden its revenue base and improve mix, helping sustain higher revenue and earnings growth. However, Goldman Sachs’ Neutral rating indicates that these prospects are already balanced by its valuation assessment.

Risks

• Smartphone and consumer-electronics demand may be stronger or weaker than expected.
• New-product launches and expansion into new markets may progress faster or slower than expected.
• Competition from domestic peers may be less or more severe than expected.