AI demand drives copper-clad laminate price increases; Goldman raises Shengyi Technology target price to Rmb127.4 and maintains Buy

Overview

This is a Goldman Sachs company research report on Shengyi Technology (600183.SS). The core conclusion is that the expansion of AI infrastructure is driving higher demand for copper-clad laminate (CCL) and product-spec upgrades. Combined with rising copper and glass-fiber costs and tight industry supply, this supports continued CCL price increases. Goldman believes Shengyi Technology has technological leadership and bargaining power over raw materials, and that the product mix shift toward high-end AI CCL will drive revenue and margin improvement.

Core views

The report's key views are: first, applications such as AI servers and switching equipment are consuming large amounts of CCL, supporting price increases in both mainstream CCL and high-end AI CCL; second, Shengyi Technology's push toward M9 and other high-end products should help it maintain technological advantages and face relatively moderate competition; third, SKU penetration across different parts of GPU AI servers, ASIC AI servers and switches will expand the company's revenue sources; fourth, although Goldman slightly lowered gross margin assumptions to reflect a larger share of mainstream CCL price increases, overall revenue and net profit forecasts were still raised.

Analysis framework

The report analyzes the issue using industry checks, AI server demand forecasts, the CCL product-spec upgrade path, customer and SKU expansion, and a relative valuation approach. On valuation, Goldman derives the 12-month target price using a 35.0x target P/E on 2027E EPS, and references the relationship between peer P/E and EPS growth as well as the premium supported by the company's product-mix upgrades.

Methodology notes

• Valuation methodsTarget P/E method

  Derive the 12-month target price of Rmb127.4 using 35.0x 2027E P/E.

  Goldman says the target P/E is derived from the relationship between peer P/Es and EPS growth, and is based on the company's 2028E EPS YoY growth; the target multiple is above the company's historical average plus one standard deviation, reflecting a positive view on AI CCL product-mix upgrades.

• earnings_revisionEarnings estimate revision

  Adjust 2026-28E revenue, gross margin and net profit forecasts based on CCL prices and product mix changes.

  Under a more constructive price outlook, Goldman raises revenue and net profit forecasts; however, because mainstream CCL price increases are larger and its gross margin is lower than that of high-end products, the gross margin assumption is slightly trimmed.

• industry_demandAI infrastructure demand-driven analysis

  Demand for AI chips, servers and switching equipment drives CCL consumption and specification upgrades.

  The report uses global AI server volume forecasts, AI chip demand, higher ASIC mix, and customer expansion across GPU and ASIC servers to explain Shengyi Technology's CCL demand growth.

Asset mapping & comparison

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

• Shengyi Technology (600183.SS) stock

  The report directly covers the stock, maintaining a Buy rating and raising the target price.

  Strengths

  AI-related CCL demand growth, progress in M9 high-end products, strong technological advantages, bargaining power over raw materials, product-mix upgrades, and customer/SKU expansion.

  Weaknesses

  Mainstream CCL price increases contribute more, but have lower margins, leading to a slight downward revision in gross margin assumptions; the current valuation is already above the historical average plus one standard deviation.

  Comparison

  The target P/E is 35.0x, above the company's historical average plus one standard deviation; the peer scatter plot shows a positive but not very strong relationship between P/E and EPS growth.

  Risks

  AI infrastructure investment below expectations, customer allocation or market share below expectations, and changes in technology pathways.

• AI servers/PCB materials industry chain

  Shengyi Technology's CCL products are driven by demand from AI servers, switches and high-end PCB applications.

  Strengths

  Higher AI chip volumes and a rising ASIC mix increase material usage and demand for specification upgrades.

  Weaknesses

  Demand is highly dependent on the pace of AI capex and server technology pathways.

  Comparison

  The report highlights an expansion path from GPU AI servers to ASIC AI servers, and from switch trays to mid-boards/compute trays.

  Risks

  Slower AI investment, changes in technology direction, or intensified supply competition could weaken demand and price support.

Key data

• RatingBuyGoldman Sachs maintained its Buy rating.
• 12-month target priceRmb127.4Raised by 14.8% from the prior target price.
• Current priceRmb98.19The Shengyi Technology price listed in the report disclosure.
• Implied upsideabout 29.8%Estimated based on the Rmb127.4 target price and the Rmb98.19 current price.
• Valuation multiple35.0x 2027E P/EPreviously 31.0x.
• Revenue growth forecast2026-30E revenue CAGR of 31%Driven by AI infrastructure expansion, CCL spec upgrades, SKU penetration and customer expansion.
• Revenue estimate revision2026E/2027E/2028E raised by 1%/2%/3% respectivelyReflects a more constructive CCL price outlook.
• Net profit estimate revision2026E/2027E/2028E raised by 1%/2%/2% respectivelyHigher revenue offsets the slight downward revision to gross margin assumptions.
• 1Q26 gross margin28.1%Above 4Q25's 25.8%, which the report believes reflects the impact of price increases and higher high-end product allocation.
• AI chip demand17m/22m/28m units for 2026E/2027E/2028EBased on Goldman Sachs' global AI server volume assumptions.
• ASIC share of AI chips43%/50%/55% for 2026E/2027E/2028EA rising ASIC mix supports the demand logic for expanding from GPU AI servers to ASIC AI servers.

Impact & implications

If the report's view proves correct, Shengyi Technology will benefit from three tailwinds: AI infrastructure investment, rising CCL prices and upgrades to higher-end products. Both revenue growth and valuation could be supported. For investors, the key implication is that the company is not only a traditional PCB materials supplier, but may also benefit from growth in high-end copper-clad laminate demand within the AI server hardware upgrade chain.

Risks

• AI infrastructure investment comes in below expectations.
• Shengyi Technology's allocation in customers, capacity or orders falls short of expectations.
• AI server, PCB or CCL technology pathways change.
• If higher raw material costs cannot be fully passed through, margins could be compressed.
• The target valuation multiple is already relatively high, so any downward revision in growth expectations could pressure the valuation.

What to watch

• Whether CCL price increases continue to spread from mainstream products to high-end AI CCL.
• The pace at which demand for AI servers, switching equipment and ASIC servers is realized.
• Progress on Shengyi Technology's M9 and other high-end CCL products, and the pace of customer certification.
• The company's penetration from switch-tray CCL into more SKUs such as mid-boards and compute trays.
• Whether quarterly gross margins can be maintained or further improved.
• Changes in copper, glass fiber and other raw material costs, and the company's ability to pass through prices.