Nomura maintains Buy on Victory Giant and lowers the target price to CNY389

Overview

Nomura published a company research report on Victory Giant. The core conclusion is to maintain a Buy rating while cutting earnings forecasts and the target price. The report believes market concerns about NVIDIA Rubin/Kyber rack delays, diversification of GPU customer supply chains, and HDI PCB share erosion are excessive. Victory Giant is still viewed as a leading supplier in AI PCB, and its HDI capacity, ASIC customer expansion, and 800G/1.6T optical module PCB demand are expected to support sustained growth in 2026-2028.

Core views

First, Rubin GPU is expected to continue ramping in the second half of 2026, which should drive PCB value chain upgrading and margin improvement. Second, although Rubin compute tray/HDI PCB may face more competition, the report sees this mainly as supply-chain diversification by AI customers under very tight supply conditions rather than a fundamental deterioration in Victory Giant's competitive position. Third, HDI capacity remains a strategic asset, with high technology barriers and shortages of materials and equipment limiting the number of potential challengers. Fourth, the entry of ASIC and optical module customers is expected to reduce dependence on a single GPU customer and support more balanced growth in AI/HPC business.

Analysis framework

The report uses company fundamental forecast revisions and a relative valuation framework, with emphasis on assessing HDI PCB ramp-up, AI/HPC revenue mix, customer share competition, gross margin changes, and valuation multiples. The target price is based on a FY27F EPS multiple of historical median P/E, while relative performance is judged against CSI300 as the benchmark index.

Methodology notes

• Valuation methodsP/E Multiple Method

  27x FY27F EPS

  A CNY389 target price is based on 27x FY27F EPS of CNY14.41, and the valuation multiple is in line with the company’s historical median P/E.

• Earnings ForecastRevenue and Earnings Forecast Revision

  FY26-28F Forecasts Revised Down

  Nomura revised FY26-28F revenue forecasts down by 7%-13% and earnings forecasts down by 7%-14%, mainly reflecting slower HDI PCB ramp-up and intensified PCB share competition among key AI customers.

• Industry AnalysisAI PCB Demand Driver Analysis

  HDI, ASIC, optical module PCB

  The report identifies Rubin GPU, ASIC customers, and 800G/1.6T optical module as key AI PCB demand drivers and evaluates their impact on revenue CAGR and customer mix.

Asset mapping & comparison

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

• Victory Giant / ShengHong Technology

  Core coverage target, AI PCB and HDI PCB supplier

  Strengths

  Leading position in AI PCB, strategic value of HDI capacity, Rubin GPU-related value upgrading, and ASIC and optical module customer expansion.

  Weaknesses

  Still has high dependence on key AI/GPU customers, and slower-than-expected HDI ramp-up may affect revenue and gross margin.

  Comparison

  The report believes that even with competition from vendors such as ZDT, Victory Giant still maintains a leading position given high technology barriers and tight supply conditions.

  Risks

  Supply-chain diversification, intensified competition, technology roadmap changes, slower AI PCB upgrades, and geopolitical risks.

• NVIDIA CORP / NVDA US

  Key GPU customer and source of AI PCB demand

  Strengths

  Rubin GPU production ramp-up is expected to drive HDI PCB demand and PCB value growth.

  Weaknesses

  Kyber rack or backplane delays have triggered market concerns about supply-chain pace.

  Comparison

  NVIDIA itself is not rated; the report mainly discusses its supply-chain demand impact on Victory Giant.

  Risks

  Customer supply-chain diversification may compress single-supplier share.

• ZDT / 4958 TT

  Potential competitor

  Strengths

  Could participate in Rubin compute tray/HDI PCB supply.

  Weaknesses

  The report notes that the industry still faces high technical barriers and shortages of materials and equipment.

  Comparison

  Seen as a supplier that may add share competition, but may not necessarily change Victory Giant's leading position.

  Risks

  If competition intensifies beyond expectations, Victory Giant's PCB wallet share could decline.

Key data

• RatingBuyNomura maintains a Buy rating.
• Target PriceCNY389.00Previous target price was CNY417.00; reduced this time.
• Current PriceCNY272.00Price date is 2026-07-10.
• Implied Upside+43.0%Calculated from target price relative to current price.
• Valuation Multiple27x FY27F P/EBased on FY27F EPS of CNY14.41.
• FY26-28F Revenue Forecast AdjustmentDown 7%-13%Mainly because HDI contribution to revenue may be lower.
• FY26-28F Earnings Forecast AdjustmentDown 7%-14%Changes in the HDI product mix lead to a 0.2-0.4 percentage point reduction in gross margin forecast.
• HDI Revenue CAGR82% CAGR, FY26-28FExpected to contribute 63% of total revenue in FY28F.
• AI/HPC Revenue CAGR77% CAGR, 2026F-2028FExpected to contribute 77% of total sales in FY28F.
• Market CapitalizationUSD35,003.7mnDisclosed in the report.
• 3-Month Average Daily TurnoverUSD2,365.7mnDisclosed in the report.

Impact & implications

The investment implication of this report is that although short-term market concerns and earnings forecast cuts are weighing on valuation, Nomura believes Victory Giant's strategic value in AI PCB, especially HDI capacity, has not changed. If Rubin GPU ramp-up, ASIC customer onboarding, and optical module PCB demand are realized, the company’s revenue mix and customer mix are expected to continue improving; however, if supply-chain diversification or technology-roadmap shifts exceed expectations, valuation recovery could be hindered.

Risks

• Supply-chain diversification for key customers and increased peer competition.
• Technology shifts such as CoWoP changes could alter the competitive landscape and threaten company market share.
• AI PCB market technology upgrade pace is slower than expected.
• Escalation of geopolitical tensions.
• HDI PCB ramp-up slower than expected, resulting in lower than forecast revenue contribution and gross margin.

What to watch

• Actual Rubin GPU ramp-up pace in the second half of 2026.
• Impact of Kyber rack or backplane delays on order pace.
• Changes in Victory Giant's PCB wallet share among key AI customers.
• HDI PCB capacity utilization, yield, and speed of new competitor entry.
• Progress of ASIC customer onboarding and realization of 800G/1.6T optical module PCB demand.
• Whether FY26-28F revenue, gross margin, and EPS forecasts continue to be revised.