Rapid growth in IC packaging substrates, but PCB margins weigh on earnings recovery

Overview

The report reviews Fastprint's 1H26 results. Its core view is that revenue growth was in line with expectations and IC packaging substrates became the main driver, but margin pressure in traditional PCB and semiconductor test boards caused net profit to miss expectations. Nomura therefore raised its revenue forecasts and lowered its earnings forecasts, but maintained its Buy rating and raised the target price based on packaging substrate growth, the first-mover advantage in FC-BGA, and higher peer valuations.

Core views

Fastprint announced its 1H26 results after market close on August 20, 2026. First-half revenue increased 17.9% YoY to CNY4.04bn, gross margin rose 2.5 percentage points YoY to 20.95%, and net profit increased 283.3% YoY to CNY110mn. 2Q26 revenue was CNY2.22bn, up 20.2% YoY and 22.1% QoQ; net profit was CNY92mn, up 371.5% YoY and 389.5% QoQ. Revenue was broadly in line with Nomura's forecast, but net profit was below expectations, mainly not because of demand or revenue scale, but because the recovery in overall gross margin was slower than expected. By business segment, IC packaging substrates were the strongest source of growth. In 1H26, revenue from this business increased 67.3% YoY to CNY1.21bn, accounting for 29.9% of total revenue; gross margin improved by 24.81 percentage points YoY to -0.36%, better than Nomura's expectations. The report attributes the improvement to strong memory demand driving rapid growth in CSP substrate sales, as well as product price increases helping pass through cost pressure. Although the business's gross margin remains close to breakeven, its rising revenue contribution and substantial margin recovery indicate its increasing importance to the company's growth and earnings mix. The traditional PCB business was the main drag. In 1H26, revenue increased only 2.2% YoY, while gross margin declined 0.8 percentage points to 25.6%, both weaker than Nomura's expectations. The report believes the main reasons were weaker-than-expected revenue growth at subsidiary Yixing Silicon Valley Electronics and higher raw material costs. Semiconductor test board revenue increased 10.5% YoY to CNY120mn, but gross margin declined 15.6 percentage points to 23.5%. Therefore, despite the rapid improvement in packaging substrates, margin pressure in PCB and test boards continued to slow the recovery in the company's overall gross margin and net profit. Based on stronger-than-expected packaging substrate revenue growth, Nomura raised its 2026/27 revenue forecasts by 5% and 9%, respectively, to CNY8.919bn and CNY9.888bn, from CNY8.526bn and CNY9.050bn. Meanwhile, considering weaker margins in PCB and semiconductor test boards, Nomura lowered its gross margin forecasts for the same periods by 1.0 and 1.1 percentage points, respectively, and cut its net profit forecasts by 10% and 23% to CNY349mn and CNY512mn. The report introduces its 2028 forecasts for the first time, projecting revenue of CNY12.061bn and net profit of CNY719mn; fully diluted normalized EPS for 2026-28 is expected to be CNY0.21, CNY0.30, and CNY0.42, respectively. The company's business mix is an important basis for Nomura's positive view. Fastprint is one of the few Chinese suppliers covering packaging substrates, PCB, and semiconductor test boards. It holds a leading position in PCB prototyping and small-batch production and entered the IC packaging substrate market in 2012. Its products include traditional high-layer-count PCB, rigid-flex boards, HDI, SLP, ATF semiconductor test boards, and CSP and FC-BGA packaging substrates. The report believes that IC packaging substrates remain in a rapid growth phase and that the company has a first-mover advantage in FC-BGA substrates, although its 2026-28 revenue CAGR is still expected to be below the peer average. For valuation, Nomura continues to use the P/S method. Based on Wind consensus estimates, peers' average 2026E P/S has increased from 5.0x previously to 7.6x. Considering that Fastprint's expected revenue growth is below that of peers, but its packaging substrate business is growing rapidly and its FC-BGA positioning is relatively advanced, the report assigns it a 7.4x 2026F P/S, a slight discount to the peer average. Applying this multiple to 2026F sales per share of CNY5.2 (previously CNY5.0) yields a target price of CNY39, up from the previous target price of CNY25; relative to the share price of CNY33.24 on August 24, 2026, this implies 17.3% upside. The stock currently trades at 6.3x 2026F P/S, and the report maintains its Buy rating. The financial model also forecasts that free cash flow will turn from -CNY911mn in FY25 to CNY571mn in FY26F, followed by CNY36mn and CNY394mn in FY27F and FY28F, respectively. Net debt to EBITDA is expected to decline from 4.39x in FY25 to 2.50x, 2.14x, and 1.63x in FY26F, FY27F, and FY28F, respectively. Regarding ESG, the company's carbon emissions per unit of output value declined 11.59% in 2025 from 2024, exceeding its target.

Analysis framework

Nomura first compares 1H26 and 2Q26 revenue, gross margin, and net profit with YoY and QoQ figures and its previous forecasts, and then breaks down revenue and margins across IC packaging substrates, traditional PCB, and semiconductor test boards to identify the source of the earnings miss. Based on this analysis, the report raises its revenue forecasts and lowers its gross margin and net profit forecasts, then determines the target multiple and target price by considering peer P/S valuations, the company's relative growth rate, and its competitive position in packaging substrates and FC-BGA.

Methodology notes

• Valuation methodPS valuation

  Peer P/S valuation

  The report derives a CNY39 target price by multiplying 2026F sales per share of CNY5.2 by a target P/S of 7.4x. The 7.4x multiple represents a slight discount to the peer average of 7.6x, reflecting the company's expected revenue growth below that of peers; high growth in packaging substrates and the first-mover advantage in FC-BGA support a valuation close to the industry average.

Asset mapping & comparison

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

• Shenzhen Fastprint Circuit Tech (002436 CH)

  The company covered by the report; IC packaging substrates contribute the majority of growth, while margins in PCB and test boards weigh on the overall earnings recovery.

  Strengths

  Its products cover packaging substrates, PCB, and semiconductor test boards; it leads in PCB prototyping and small-batch production; it entered China's IC packaging substrate market relatively early and has a first-mover advantage in FC-BGA substrates.

  Weaknesses

  Traditional PCB revenue growth is relatively weak, while gross margins in PCB and semiconductor test boards are below expectations; its 2026-28 revenue CAGR is expected to be below the peer average.

  Comparison

  The target 2026F P/S is 7.4x, a slight discount to the peer average of 7.6x; the stock currently trades at 6.3x 2026F P/S.

  Risks

  Raw material price volatility, weaker-than-expected downstream demand, delays in new capacity ramp-up, and intensifying industry competition.

Key data

• 1H26 revenueCNY4.04bnUp 17.9% YoY, broadly in line with Nomura's forecast
• 1H26 gross margin20.95%Up 2.5 percentage points YoY, but recovery was slower than expected
• 1H26 net profitCNY110mnUp 283.3% YoY, but below Nomura's expectations
• 2Q26 revenueCNY2.22bnUp 20.2% YoY and 22.1% QoQ
• 2Q26 net profitCNY92mnUp 371.5% YoY and 389.5% QoQ
• 1H26 IC packaging substrate revenueCNY1.21bnUp 67.3% YoY, accounting for 29.9% of total revenue
• 1H26 IC packaging substrate gross margin-0.36%Improved by 24.81 percentage points YoY, better than expected
• 1H26 traditional PCB performanceRevenue +2.2% YoY; gross margin 25.6%Gross margin declined 0.8 percentage points YoY, below expectations
• 1H26 semiconductor test board performanceRevenue CNY120mn; gross margin 23.5%Revenue increased 10.5% YoY, while gross margin declined 15.6 percentage points YoY
• 2026/27 revenue forecast revisions+5% / +9%New forecasts are CNY8.919bn and CNY9.888bn, respectively
• 2026/27 net profit forecast revisions-10% / -23%New forecasts are CNY349mn and CNY512mn, respectively
• New 2028 forecastsRevenue CNY12.061bn; net profit CNY719mnThe report introduces its 2028 forecasts for the first time
• Target P/S7.4x 2026FPeers' average 2026E P/S is 7.6x, previously 5.0x
• Target price and upsideCNY39; +17.3%Target price raised from CNY25, based on a price of CNY33.24
• 2025 carbon emissions per unit of output value-11.59%Down from 2024 and exceeding the company's target

Impact & implications

The report believes that Fastprint's growth focus is shifting further toward IC packaging substrates, but cost and margin pressure in traditional PCB and semiconductor test boards is limiting near-term earnings delivery. Improved revenue expectations are insufficient to offset lower margin assumptions, resulting in reduced 2026/27 net profit forecasts; however, higher industry valuations, strong packaging substrate growth, and the first-mover advantage in FC-BGA continue to support a higher target price.

Risks

• Raw material price volatility could further compress margins.
• Weaker-than-expected downstream demand could affect revenue growth.
• Delays in new capacity ramp-up could postpone growth delivery in businesses such as packaging substrates.
• Intensifying industry competition could affect pricing, market share, and profitability.

What to watch

• Whether CSP capacity expansion is faster than expected.
• Whether the ramp-up in FC-BGA shipments is stronger than expected.
• Whether progress in AI products is better than expected.