Nomura maintains Buy on Zhen Ding Technology Holding; AI substrates and AI PCB/HDI drive stronger growth

Overview

This is a company research and rating revision report by Nomura on Zhen Ding Technology Holding (4958.TW). The core conclusion is that tight supply of AI substrates, AI PCB/HDI, and optical module boards will drive ZDT into a stronger growth cycle while improving its order visibility, pricing power, and gross margin. The report maintains a Buy rating and raises the target price to TWD720.

Core views

Nomura raises its 2026/27/28F earnings forecasts by 5.3%/10.2%/15.9% and its 2027/28F sales forecasts by 4-5%. The report believes ZDT's projects in MediaTek AI ASIC, Google, AWS, and NVIDIA-related AI server boards, VR200 Bianca HDI boards, and Google switch boards are likely to contribute more revenue starting from 2H26F. AI-related products have higher gross margins than the company average, so the report raises its 2027/28F gross margin assumptions by 0.4/1.2 percentage points to 24.5%/26.6%.

Analysis framework

The report adopts a bottom-up segment forecasting approach combined with relative valuation: it first assesses supply-demand tightness, customer projects, and capacity expansion in businesses such as AI substrates, PCB/HDI, optical module boards, and mSAP, then reflects these into revenue, EPS, and gross margin forecasts, and finally derives the target price using 2028F EPS and a target P/E multiple.

Methodology notes

• Valuation methodsTarget P/E multiple method

  28x 2028F EPS

  The target price of TWD720 is based on 28x 2028F EPS of TWD25.71; 28x is near the high end of the historical 8-29x range and is used to reflect improved win rates and order visibility in AI-related projects.

• Earnings forecastSegment forecast revisions

  AI substrates, AI PCB/HDI, and optical module boards drive upward revisions to revenue and gross margin

  The report raises 2027/28F sales forecasts by 4-5% and increases 2027/28F gross margin forecasts to 24.5%/26.6%, on the grounds that AI-related products have higher gross margins than the company average and tight industry supply strengthens pricing power.

• Rating systemRelative return rating

  A Buy rating indicates expected outperformance versus the benchmark over the next 12 months

  Nomura's stock ratings use a relative rating system, where Buy means the analyst expects the stock to outperform a specified benchmark over the next 12 months; the benchmark in this report is the Taiwan TAIEX Index.

Asset mapping & comparison

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

• Zhen Ding Technology Holding (4958.TW)

  Covered stock and direct beneficiary of demand for AI substrates, AI PCB/HDI, and optical module boards.

  Strengths

  The world's largest FPCB maker; solid progress in AI-related projects; mSAP experience and automated production lines support yield improvement; tight industry supply enhances order visibility and pricing power.

  Weaknesses

  2026E capex has been raised significantly, putting pressure on short-term free cash flow; the company still has exposure to Apple iPhone and iPad end demand.

  Comparison

  Target P/E is raised to 28x, near the high end of the historical 8-29x range, reflecting AI demand-driven re-rating of PCB/CCL and substrate companies.

  Risks

  Apple end demand weaker than expected, lower-than-expected contribution from 5G smartphone content growth, slower-than-expected manufacturing efficiency improvement, and greater-than-expected ASP pressure.

• MediaTek (2454.TW)

  ZDT has entered its Google-oriented AI ASIC supply chain, making it part of the AI substrate demand ecosystem.

  Strengths

  The report states ZDT's penetration progress in MediaTek AI ASIC is in line with expectations.

  Weaknesses

  The report does not analyze MediaTek's own financials or valuation.

  Comparison

  MediaTek is listed as a Buy-rated related company in the report, but is not the main covered stock in this report.

  Risks

  If AI ASIC project timing or customer demand changes, it may affect conversion of ZDT-related substrate orders.

• NVIDIA CORP (US.NVDA)

  ZDT is mentioned in NVIDIA-related AI ASIC and AI server board projects, making it part of the AI server demand ecosystem.

  Strengths

  The report believes related projects are progressing normally, and AI server board contributions are likely to increase after new model launches in 2H26F.

  Weaknesses

  The report does not provide coverage ratings or valuation analysis for NVIDIA itself.

  Comparison

  NVIDIA is a key end-ecosystem participant in the AI server demand chain, and this report focuses on its impact on ZDT's orders and gross margin.

  Risks

  If the launch of new AI server models, supply chain qualification, or demand timing slows, it may affect contributions from ZDT-related businesses.

Key data

• RatingBuyMaintain Buy rating.
• Target priceTWD720.00Raised from TWD510.00.
• Closing priceTWD580.00As of June 26, 2026.
• Implied upside+24.1%Calculated based on the target price and closing price.
• 2026/27/28F earnings forecast revision5.3% / 10.2% / 15.9%Reflects tight supply and stronger demand for AI substrates, PCB, and HDI.
• FY26F revenueTWD224,018mnNew forecast; up 22.7% year on year.
• FY27F revenueTWD267,273mnNew forecast; up 19.3% year on year.
• FY28F revenueTWD300,409mnNew forecast; up 12.4% year on year.
• FY28F FD normalised EPSTWD25.71Valuation basis for the target price.
• Gross margin forecast23.3% / 24.5% / 26.6%For 2026F/2027F/2028F, respectively.
• 2026E capex guidanceTWD80bn+Raised from TWD50bn+ in March.
• Market capitalizationUSD19,632.6mnDisclosed in the report table.

Impact & implications

If the report's view proves correct, ZDT could be further re-rated from a traditional FPCB leader into a supplier of AI substrates, AI PCB/HDI, and high-end server boards. Higher capex, long-term supply agreements, and high-margin AI projects may improve medium- to long-term growth visibility, but valuation has already been revised up to the high end of the historical range, so follow-up verification is needed on order conversion, capacity ramp-up, gross margin expansion, and free cash flow pressure.

Risks

• Apple iPhone and iPad end demand is weaker than expected.
• Contribution from content growth driven by 5G smartphone migration is lower than expected.
• Manufacturing efficiency improves more slowly than expected.
• ASP pressure is higher than expected.
• High capex may create pressure on free cash flow and the balance sheet.
• Target P/E has already been revised up to the high end of the historical range; if AI orders or gross margin delivery falls short, valuation re-rating may be constrained.

What to watch

• Whether 2026E IC substrate sales can achieve growth of more than 70%.
• Whether server and optical communication sales can achieve the target of doubling in 2026E/2027F.
• Progress of Leading(禮鼎)'s HKEX listing application and its impact on capex, financing, and valuation.
• The mass production and contribution timeline after 2H26F for MediaTek, Google, AWS, and NVIDIA-related AI server board projects.
• Ramp-up progress after 3Q26F for VR200 Bianca HDI boards and Google switch boards.
• Whether gross margin can reach 24.5% and 26.6% in 2027F and 2028F, respectively.
• Whether long-term supply agreements for AI substrates extend beyond 2028F and even to 2030F, thereby enhancing order visibility.