AI PCB earnings resilience continues to lead, while the hot CCL rebound still awaits sustainability verification

Overview

This report is Jefferies' update on the preliminary 1H26 results of key local Chinese PCB/CCL companies. Its core view is that PCB companies with high AI exposure and a higher proportion of high-end products continue to deliver strong year-over-year net profit growth and sequential improvement, while traditional or non-AI-related companies still face supply-demand pressure. Overall earnings at CCL companies have rebounded significantly, particularly among low-end players recovering from a low base, but the sustainability of the upcycle still depends on the continuation of supply-demand conditions, raw material prices and order-driven demand.

Core views

First, the earnings quality of AI PCB companies continues to outperform that of non-AI companies. WUS, Shennan and SYE all performed strongly, demonstrating earnings resilience supported by AI demand, capacity expansion and high-end products. Second, both WUS and Sytech exceeded sell-side and buy-side expectations: WUS was driven by AI-related demand and its Thailand plant reaching breakeven in Q2, while Sytech benefited from a recovery in CCL conditions. Third, the rebound in low-end CCL is driven more by a low base, higher utilization, rising ASPs, cost pass-through and tight traditional CCL supply, and its sustainability still needs to be verified. Fourth, if leading solutions such as M9/10, PTFE and CoWoP achieve commercial breakthroughs over the next few quarters, investor confidence in a sustained structural increase in PCB/CCL dollar content will strengthen.

Analysis framework

The report uses a cross-sectional comparison of preliminary 1H26 results, assessing company performance based on AI exposure, high-end product capabilities, PCB versus CCL business characteristics, sell-side and buy-side expectation gaps, and year-over-year and sequential net profit changes. For PCB companies, it focuses on AI orders, capacity expansion, material cost impacts and the profitability of overseas plants; for CCL companies, it focuses on utilization, ASPs, raw material price pass-through, tight supply and progress in high-end material upgrades.

Methodology notes

• Earnings comparisonComparison of preview results with consensus expectations

  Compare Q2 net profit previews with sell-side and buy-side consensus expectations

  Used to assess whether companies exceeded expectations and identify the sources of outperformance; for example, both WUS and Sytech were materially above sell-side expectations.

• Industry segmentationSegmentation by AI exposure and product premiumization

  Distinguish earnings quality among companies based on AI-related demand, high-end PCB/CCL products and traditional non-AI businesses

  The report believes AI PCB companies benefit from strong orders and capacity expansion, while non-AI companies remain under pressure.

• Technology roadmapTracking next-generation material/specification upgrades

  Track the commercialization of leading solutions such as M9/10, PTFE and CoWoP

  These material and specification upgrades will determine whether PCB/CCL dollar content can continue to increase structurally over the next several years.

Asset mapping & comparison

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

• WUS Printed Circuit (002463 CH)

  One of the core beneficiaries of AI PCB, with a disclosed BUY rating

  Strengths

  Q2 net profit was approximately Rmb1.7bn, 10% above sell-side consensus; AI demand was strong, and the Thailand plant reached breakeven in Q2.

  Weaknesses

  Continued growth depends on AI orders, capacity expansion and high-end material upgrades.

  Comparison

  Compared with non-AI PCB companies, it has stronger earnings quality and growth momentum.

  Risks

  A slowdown in AI demand, rising material costs and weaker-than-expected ramp-up at overseas plants.

• Shennan / SYE

  PCB companies with high AI exposure whose results outperformed non-AI companies

  Strengths

  Q2 net profit exceeded sell-side expectations and at least met buy-side expectations; benefited from high-end products and AI-related demand.

  Weaknesses

  The report does not provide specific net profit figures; subsequent official results are required for confirmation.

  Comparison

  Along with WUS, they belong to the strong AI PCB group and significantly outperform companies with limited AI exposure such as Redboard.

  Risks

  Order timing, capacity expansion and progress in material specification upgrades falling short of expectations.

• Sytech / Shengyi Technology Co Ltd (600183 CH)

  Leading local high-end CCL company and a disclosed BUY-rated name in the report

  Strengths

  Q2 net profit was approximately Rmb2bn, 40% above sell-side consensus; its 1H25 net margin was already above 10%, reflecting a stronger earnings base.

  Weaknesses

  Current AI exposure remains limited, and its headline growth rate may not exceed that of low-end CCL companies with low bases.

  Comparison

  Compared with low-end CCL companies, it has stronger earnings quality and a higher-end positioning, although low-end companies offer greater near-term elasticity.

  Risks

  Changes in traditional CCL supply and demand, failure of raw material price pass-through and slower-than-expected commercialization of high-end materials.

• Redboard

  Example of a PCB company with relatively low AI exposure

  Strengths

  Has mSAP/SAP-related product capabilities.

  Weaknesses

  Q2 adjusted net profit declined significantly year over year and sequentially, with limited AI exposure.

  Comparison

  Significantly weaker than AI PCB companies such as WUS, Shennan and SYE.

  Risks

  Persistent supply-demand pressure, insufficient AI-related orders and weaker-than-expected earnings recovery.

• Traditional/low-end CCL companies

  Beneficiaries of the cyclical earnings rebound

  Strengths

  Benefited from higher utilization, rising ASPs, pass-through of upstream material price increases, tight traditional CCL supply and replenishment orders amid low inventories.

  Weaknesses

  The rebound stems from a low base and temporary supply-demand improvement, and its sustainability has not yet been verified.

  Comparison

  Near-term profit elasticity may be stronger than that of high-end leaders, but long-term structural growth certainty is weaker than that of high-end/AI material pathways.

  Risks

  Falling raw material prices or inability to pass through costs, slowing downstream demand and price pressure caused by recovering supply.

Key data

• WUS Q2 net profitApproximately Rmb1.7bn (midpoint)10% above sell-side consensus and also above the buy-side expectation of below Rmb1.6bn.
• Sytech Q2 net profitApproximately Rmb2bn40% above sell-side consensus; the report believes it was also above some aggressive buy-side expectations.
• Low-end CCL 1H25 net margin baseAll below 5%Part of the current high growth of low-end CCL companies comes from a low base.
• Sytech 1H25 net marginAbove 10%As a leading local high-end CCL manufacturer, its base is materially higher than that of low-end players.
• Investment recommendation publication time2026-07-13 11:56 A.M.The report discloses identical times for Recommendation Published and Distributed.
• Disclosed covered namesAvary Holding 002938 CH CNY98.47 BUY; Delton Technology 001389 CH CNY175.26 BUY; Shengyi Technology 600183 CH CNY149.39 BUY; WUS Printed Circuit 002463 CH CNY129.44 BUYFrom Other Companies Mentioned in This Report.

Impact & implications

For investment implications, the report favors PCB/CCL names with clearer AI-related and premiumization paths rather than simply chasing the cyclical rebound in low-end CCL. In the short term, the market may continue to reward better-than-expected net profit and the realization of AI orders; in the medium term, the supply-chain maturity and commercialization progress of next-generation solutions such as M9/10, PTFE and CoWoP will need to be verified.

Risks

• The sustainability of the low-end CCL earnings rebound has not yet been verified.
• Supply-demand pressure in traditional PCB/CCL may persist.
• The supply chains for next-generation materials such as M9/10, PTFE and CoWoP remain immature, and commercialization may progress more slowly than expected.
• A slowdown in AI-related orders or capacity expansion would affect the earnings sustainability of PCB companies with high AI exposure.
• Rising material costs, failure of ASP pass-through or raw material price volatility could compress margins.
• The report is for general research purposes and does not constitute investment advice for any individual investor.

What to watch

• Whether AI PCB companies continue to outperform non-AI companies in earnings quality in 2H26.
• Profit contribution and capacity ramp-up at the WUS Thailand plant after reaching breakeven.
• ASP, utilization and raw material price pass-through at Sytech and other CCL companies.
• Whether tight traditional CCL supply persists and whether replenishment orders convert into genuine end-market demand.
• Commercial breakthroughs for leading material solutions such as M9/10, PTFE and CoWoP over the next several quarters.
• Whether there are discrepancies between the official 1H26 financial results and the previews.