AI demand drives higher CCL cycle; Goldman Sachs raises Shengyi Technology target price and maintains Buy

Overview

This report focuses on the upside in copper-clad laminate prices and product upgrade opportunities for Shengyi Technology driven by AI demand. Goldman Sachs believes that applications such as AI servers and switching equipment are increasing CCL consumption and pushing price increases from mainstream CCL into high-end AI CCL; meanwhile, the company's move toward high-end products such as M9 is likely to improve revenue growth and profitability.

Core views

The core views are: first, tight CCL supply and rising raw material costs are supporting the price trend, and Shengyi Technology, as a leading supplier, has relatively strong bargaining power over raw materials; second, the expansion of AI infrastructure and growth in demand for GPU and ASIC AI servers will drive higher usage and value per unit of high-end CCL; third, the company is penetrating into more SKUs, including switching tray CCL, backplane and compute tray applications, while expanding domestic and overseas GPU and ASIC server customers; fourth, although price increases for mainstream CCL slightly lower the gross margin structure, Goldman Sachs still raised revenue and net profit forecasts.

Analysis framework

The report uses a combination of fundamental forecast revisions and relative valuation: it first adjusts revenue, gross profit and net profit forecasts based on AI server demand, CCL price trends, product specification upgrades and customer expansion, and then derives the target P/E multiple from the correlation between peer P/Es and EPS growth, using that to calculate the 12-month target price.

Methodology notes

• Valuation methodsTarget P/E method

  Calculate the 12-month target price using 35.0x 2027E P/E

  The target P/E comes from the correlation between peer P/Es and EPS growth, and also references the company's 2028E EPS growth; 35x is above the company's historical average plus one standard deviation P/E, reflecting a positive view on AI CCL product mix upgrades.

• Fundamental forecastEarnings forecast revisions

  Updates to revenue, gross profit and net profit forecasts

  Under more optimistic price assumptions, Goldman Sachs raised 2026E-2028E revenue forecasts by 1%/2%/3%, respectively, and net profit forecasts by 1%/2%/2%, respectively; gross margins were slightly lowered because mainstream CCL price increases account for a relatively larger share.

• Research toolGS Factor Profile

  Comparison of growth, financial returns, valuation and composite factors

  Goldman Sachs' factor framework compares the company with the market and industry peers, using metrics such as sales growth, EBITDA growth, EPS growth, ROE, ROCE, CROCI and valuation multiples to form percentile rankings.

Asset mapping & comparison

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

• Shengyi Technology (600183.SS)

  Covered company; beneficiary in the AI CCL and PCB materials chain

  Strengths

  Leading supplier position, bargaining power over raw materials, opportunities in migration to M9 high-end products, and potential expansion from GPU servers to ASIC server customers.

  Weaknesses

  Although price increases for mainstream CCL expand revenue, its gross margin is lower than that of high-end products, which may create some structural pressure on overall gross margin.

  Comparison

  The target P/E of 35x is above the company's historical average plus one standard deviation, reflecting Goldman Sachs' more positive product upgrade expectations versus the historical valuation range.

  Risks

  AI infrastructure investment falling short of expectations, customer allocation falling short of expectations, and changes in technology routes.

• AI server and switching equipment industry chain

  Demand driver

  Strengths

  AI chips, GPU servers, ASIC servers and switching equipment increase CCL consumption and drive specification upgrades.

  Weaknesses

  Demand pace depends on global AI infrastructure capital expenditure and customer adoption speed.

  Comparison

  High-end M9 CCL has higher specifications and greater value per unit than mainstream CCL.

  Risks

  A slowdown in AI hardware investment or changes in technology solutions could weaken demand for CCL upgrades.

Key data

• 12-month target priceRmb127.4Raised by 14.8% from the previous target price.
• Current priceRmb98.19Current price shown on the report cover page and snapshot.
• Implied upside29.7%Based on the Rmb127.4 target price and Rmb98.19 current price.
• Target valuation multiple35.0x 2027E P/EPreviously 31.0x.
• 2026E revenue forecastRmb38,387mnRaised by 1% versus the prior forecast.
• 2027E revenue forecastRmb57,131mnRaised by 2% versus the prior forecast.
• 2028E revenue forecastRmb79,527mnRaised by 3% versus the prior forecast.
• 2026E-2030E revenue CAGR31% CAGRDriven by migration to AI CCL and upgrades to high-end products.
• 2026E net profit forecastRmb5,353mnRaised by 1% versus the prior forecast.
• 2027E net profit forecastRmb8,718mnRaised by 2% versus the prior forecast.
• 2028E net profit forecastRmb12,550mnRaised by 2% versus the prior forecast.
• 1Q26 gross margin28.1%Above 25.8% in 4Q25, reflecting price increases and higher high-end product capacity allocation.

Impact & implications

If Goldman Sachs' view is realized, Shengyi Technology will benefit from AI hardware capital expenditure, upgrades in servers and switching equipment, and higher value per unit in high-end CCL, which could increase revenue and profit leverage; the higher target price and valuation multiple also suggest that the market may re-rate the value of its AI PCB materials chain. However, this logic depends on continued favorable development in AI infrastructure investment, product allocation and technology routes.

Risks

• AI infrastructure investment falling short of expectations.
• Customer or product allocation falling short of expectations.
• Changes in technology direction, weakening the existing logic for CCL specification upgrades.
• Raw material costs continue to rise but price pass-through is insufficient, which may压制 profit margins.
• Goldman Sachs discloses that it has an investment banking relationship and shareholding-related disclosures with Shengyi Technology; investors should pay attention to potential conflicts of interest.

What to watch

• Whether the upward trend in CCL prices continues to spread from mainstream products to high-end AI CCL.
• Progress in Shengyi Technology's M9 high-end product rollout and capacity allocation changes.
• Demand for GPU and ASIC AI servers, AI chip shipments and the pace of global AI infrastructure investment.
• The company's penetration progress in more SKUs such as switching trays, backplanes and compute trays.
• Whether 2026E-2028E revenue, net profit and gross margin forecasts are achieved.
• The sustainability of the target P/E relative to peer EPS growth and the historical valuation range.