AI PCB layer-count and application upgrades, combined with large-scale capacity expansion, lead Goldman Sachs to reiterate its Buy rating on Shengyi Technology

Overview

This report summarizes Goldman Sachs' discussions with Shengyi Technology's management at the 2026 Asia Leaders Conference, focusing on the ramp-up of next-generation AI PCB platforms, capacity expansion in China and Thailand, and copper-clad laminate costs. Goldman Sachs believes that specification upgrades, application expansion, and capacity investment will support medium-term growth, and reiterates its Buy rating and 12-month target price of Rmb550.

Core views

Goldman Sachs' core view is that Shengyi Technology is benefiting simultaneously from AI infrastructure expansion and rising per-unit value for AI PCBs. The report identifies six supporting factors: continued AI infrastructure ramp-up; migration of AI PCBs toward higher layer counts; greater use of PCBs in AI servers to replace some copper cables; expansion of the customer base into ASIC AI server PCBs; continued investment in R&D and capital expenditure; and highly automated production lines and warehouse management. On this basis, Goldman Sachs reiterates its Buy rating. At the product and customer level, the company is ramping up AI PCBs for next-generation GPU platforms in the second half of 2026. The new platforms impose higher requirements on transmission capabilities and PCB specifications, driving products toward higher layer counts. Growth therefore comes not only from increased shipment volumes but also from higher PCB value per device. In addition to GPU platforms, the company is expanding into new ASIC customers. It also plans to expand mSAP capacity for high-speed optical modules and CoWoP, broadening the application scope of AI-related PCBs. Management remains positive about the scaling and specification upgrades of AI PCBs. Capacity investment is critical to realizing the above growth. The company continues to expand HDI and MLPCB capacity in China and Southeast Asia while advancing capacity construction in Thailand. Management expects capital expenditure of approximately Rmb20bn in 2026, a substantial increase from Rmb6.6bn in 2025, and plans to continue expanding capacity in 2027. The near-term cost is already reflected in profitability: gross margin was 32.1% in the second quarter of 2026, below 34.5% in the first quarter, with management attributing the difference to the initial impact of capacity expansion and higher depreciation expenses. Regarding raw materials, management noted that supply constraints are driving up prices of non-AI copper-clad laminates. However, AI products are less sensitive to copper-clad laminate costs, and the company is also able to pass cost increases on to customers. The report therefore considers the direct pressure of raw-material price increases on AI product profitability to be relatively manageable, although the supply-demand balance and cost pass-through for non-AI copper-clad laminates remain worth monitoring. Goldman Sachs forecasts Shengyi Technology's revenue to increase from Rmb19,292.3mn in 2025 to Rmb32,911.2mn in 2026E, Rmb64,665.8mn in 2027E, and Rmb87,907.3mn in 2028E. EBITDA over the same period is projected at Rmb6,096.6mn, Rmb11,195.6mn, Rmb24,196.7mn, and Rmb31,788.2mn, respectively, while EPS is projected at Rmb4.98, Rmb10.00, Rmb20.84, and Rmb27.46. The forecast table shows P/E declining from 33.7x to 23.3x, 11.2x, and 8.5x, while net debt/EBITDA declines from 1.1x and 1.1x to 0.6x and 0.2x. Free cash flow yield shifts from -1.4% in 2025 and -1.0% in 2026E to 3.0% in 2027E and 7.8% in 2028E, reflecting the report's expectation that capacity investments will gradually translate into earnings and cash flow. On valuation, Goldman Sachs applies a 26.3x target P/E to its 2027E EPS to derive a 12-month target price of Rmb550. The target multiple is based on the relationship between peer P/E ratios and EPS growth, using the company's 2028E year-over-year EPS growth as the pricing basis. Based on the September 1, 2026 closing price of Rmb232.98, the report indicates upside of 136.1%. The report also assigns an M&A Rank of 3; under its M&A scoring framework, this corresponds to a relatively low acquisition probability of 0%-15% and is not factored into the target price. Explicit risks to this view include slower-than-expected growth in AI server shipments, slower-than-expected upgrades to server PCB specifications, and more intense-than-expected market competition.

Analysis framework

The report first uses discussions with management to confirm plans for new platforms, customers, and capacity, and then analyzes how higher PCB layer counts, application expansion, and copper-cable replacement increase demand and per-unit value. It subsequently assesses the impact of capacity-expansion depreciation and higher copper-clad laminate prices on near-term gross margin, combines company data, Goldman Sachs research forecasts, and FactSet data to formulate financial projections, and finally determines the target valuation based on the relationship between peer P/E ratios and EPS growth.

Methodology notes

• Valuation methodologyPE/PEG valuation

  Valuation based on the relationship between peer P/E ratios and EPS growth

  Goldman Sachs determines a 26.3x target P/E based on the relationship between peer P/E ratios and EPS growth and with reference to the company's 2028E year-over-year EPS growth, then applies it to 2027E EPS to derive a 12-month target price of Rmb550.

• Industry/sector analysis frameworkVolume-price decomposition

  Dual drivers from AI PCB shipment volume and per-unit value

  The report divides the growth thesis into volume expansion driven by the ramp-up of AI servers and new platforms, and higher per-unit value driven by increased PCB layer counts, greater usage, and application expansion.

• Industry/sector analysis frameworkUpstream-midstream-downstream value-chain transmission

  AI infrastructure demand transmitted to server PCB specifications, capacity, and raw materials

  Starting from demand for AI infrastructure and GPU and ASIC platforms, the report analyzes how it drives upgrades in PCB layer counts and usage while also assessing copper-clad laminate supply constraints, cost increases, and their pass-through to customers.

• Event-driven strategies and behavioral financeEvent-driven analysis

  Goldman Sachs M&A Rank

  This framework assesses the probability of a company becoming an acquisition target on a scale from 1 to 3. Shengyi Technology is ranked 3, corresponding to a relatively low probability of 0%-15%; therefore, M&A considerations are not included in the report's target price.

Asset mapping & comparison

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

• Shengyi Technology (300476.SZ)

  Expansion in AI infrastructure, next-generation GPU platforms, and ASIC customers drives AI PCB demand, while migration toward higher layer counts increases per-unit value.

  Strengths

  Continued investment in R&D and capital expenditure, highly automated production lines and warehouse management, and expansion of HDI, MLPCB, and mSAP capacity in China and Southeast Asia.

  Weaknesses

  The initial impact of capacity expansion and increased depreciation expenses reduced gross margin to 32.1% in 2Q26, below 34.5% in 1Q26.

  Comparison

  Goldman Sachs determines a 26.3x target P/E based on the relationship between peer P/E ratios and EPS growth; the report does not provide a detailed operating comparison with specific peers.

  Risks

  Slower-than-expected growth in AI server shipments or PCB specification upgrades, as well as more intense-than-expected market competition.

Key data

• Rating and target priceBuy; 12-month target price Rmb550.00Goldman Sachs reiterates its Buy rating
• Current price and upsideRmb232.98; 136.1%Price is the September 1, 2026 closing price
• Capital expenditureApproximately Rmb20bn in 2026E; Rmb6.6bn in 2025For AI PCB capacity expansion; management indicated that expansion will continue in 2027E
• Gross margin32.1% in 2Q26; 34.5% in 1Q26The quarter-over-quarter decline was mainly due to the initial impact of capacity expansion and increased depreciation expenses
• Revenue forecasts2025: Rmb19,292.3mn; 2026E: Rmb32,911.2mn; 2027E: Rmb64,665.8mn; 2028E: Rmb87,907.3mnGoldman Sachs forecasts
• EBITDA forecasts2025: Rmb6,096.6mn; 2026E: Rmb11,195.6mn; 2027E: Rmb24,196.7mn; 2028E: Rmb31,788.2mnGoldman Sachs forecasts
• EPS forecasts2025: Rmb4.98; 2026E: Rmb10.00; 2027E: Rmb20.84; 2028E: Rmb27.46The quarterly table separately lists Rmb1.80 for 6/26 and Rmb2.67 for 9/26E
• P/E2025: 33.7x; 2026E: 23.3x; 2027E: 11.2x; 2028E: 8.5xAs presented in the report's forecast table
• P/B2025: 8.8x; 2026E: 9.3x; 2027E: 6.2x; 2028E: 4.3xAs presented in the report's forecast table
• Dividend yield2025: 1.2%; 2026E: 1.7%; 2027E: 3.6%; 2028E: 4.8%As presented in the report's forecast table
• Net debt/EBITDA2025: 1.1x; 2026E: 1.1x; 2027E: 0.6x; 2028E: 0.2xExcluding leases; leases are excluded from net debt and enterprise value
• CROCI2025: 21.6%; 2026E: 45.1%; 2027E: 58.6%; 2028E: 56.6%As presented in the report's forecast table
• Free cash flow yield2025: -1.4%; 2026E: -1.0%; 2027E: 3.0%; 2028E: 7.8%As presented in the report's forecast table
• Valuation methodology26.3x target P/E × 2027E EPSThe target multiple is based on the relationship between peer P/E ratios and EPS growth, with reference to the company's 2028E year-over-year EPS growth
• Market capitalization and enterprise valueMarket capitalization Rmb202.8bn / US$30.2bn; enterprise value Rmb215.0bn / US$32.0bnAs listed in the report's table
• Three-month average daily trading valueRmb11.6bn / US$1.7bnAs listed in the report's table
• M&A Rank3Under the report's framework, this corresponds to a relatively low acquisition probability of 0%-15% and is not included in the target price
• Historical target price recordJanuary 20, 2026: Target price Rmb550.00; closing price Rmb261.50The target price in the historical table has not been adjusted for corporate actions

Impact & implications

The report believes that Shengyi Technology's growth will be jointly driven by AI PCB shipment volume and per-unit value, while capacity expansion in China, Thailand, and Southeast Asia will support future deliveries. Substantial capital expenditure and incremental depreciation may continue to pressure near-term gross margin, but Goldman Sachs forecasts that earnings, leverage, and free cash flow metrics will improve significantly from 2027E to 2028E. Meanwhile, the impact of higher copper-clad laminate prices on AI products is relatively manageable due to their lower sensitivity and the ability to pass costs on to customers.

Risks

• AI server shipment growth is slower than expected.
• AI server PCB specification upgrades are slower than expected.
• Market competition is more intense than expected.

What to watch

• Monitor the ramp-up progress of AI PCBs for next-generation GPU platforms in the second half of 2026 and changes in per-unit value resulting from higher layer counts.
• Monitor expansion among new ASIC customers and progress in related AI server PCB orders.
• Monitor the execution of approximately Rmb20bn in 2026 capital expenditure and the ramp-up of new capacity in China, Thailand, and Southeast Asia.
• Monitor whether gross margin can improve after the impact of capacity expansion and depreciation is absorbed.
• Monitor supply constraints and price changes for non-AI copper-clad laminates, as well as the company's ability to pass costs on to customers.
• Monitor the progress of mSAP capacity expansion related to high-speed optical modules and CoWoP.