Victory Giant 1Q26 results in line with expectations, with rising capex supporting AI PCB growth

Overview

This report is Goldman Sachs' review of Victory Giant (300476.SZ)'s 1Q26 results. The report believes that the company's 1Q26 revenue, operating profit, and net profit were overall in line with expectations, and that improving expense ratios indicate enhanced operating efficiency. Although gross margin was below expectations, it improved both YoY and QoQ, reflecting that the upgrade trend in the AI PCB product mix is still progressing. Goldman Sachs maintains its Buy rating and Rmb550 target price.

Core views

The core view is that Victory Giant continues to benefit from global AI infrastructure buildout, higher per-unit value driven by increased AI PCB layer counts and complexity, the trend of AI servers replacing copper cables with PCBs, customer expansion in ASIC AI server PCB, investment in R&D and capex, and highly automated production lines and warehouse management capabilities. The company's continued capex increase in 1Q26 is seen as important support for capacity expansion and future growth.

Analysis framework

The report mainly uses earnings comparison, earnings forecast updates, and a relative valuation framework for analysis: it first compares actual 1Q26 revenue, gross profit, operating profit, net profit, and margins with historical quarters, Goldman Sachs forecasts, and Bloomberg consensus expectations; it then makes slight adjustments to quarterly 2026E revenue forecasts based on 1Q26 results and the pace of capacity ramp-up; finally, it calculates the 12-month target price using 2027E EPS and a target P/E of 26.3x derived from the correlation between peers' P/E multiples and EPS growth.

Methodology notes

• Earnings analysisQuarterly earnings snapshot

  Comparison of actual results with history, forecasts, and consensus expectations

  The report compares 1Q26 revenue, gross profit, operating profit, net profit, and margins versus 1Q25, 4Q25, Goldman Sachs forecasts, and Bloomberg consensus expectations to assess whether results met expectations.

• Valuation methodsTarget P/E valuation

  2027E EPS multiplied by target P/E

  Goldman Sachs continues to use a target P/E of 26.3x applied to 2027E EPS to derive the 12-month target price of Rmb550; this multiple comes from the correlation between peers' forward P/E and EPS growth.

• Factor frameworkGS Factor Profile

  Comparison of growth, financial returns, valuation multiples, and composite percentiles

  The Goldman Sachs Factor Profile compares the stock with the market and industry peers across growth, financial returns, valuation multiples, and composite metrics to provide investment context.

Asset mapping & comparison

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

• Victory Giant (300476.SZ)

  Covered company in the report; Goldman Sachs maintains a Buy rating.

  Strengths

  AI PCB product mix upgrades, automated production lines and warehouse management, mass-production capabilities, capex investment, and customer expansion are viewed as core strengths.

  Weaknesses

  1Q26 gross margin was below Goldman Sachs and Bloomberg consensus expectations, and future capacity ramp-up may bring execution pressure.

  Comparison

  The target P/E is 26.3x, derived from the correlation between peers' forward P/E and EPS growth, and is near the level of the company's forward P/E at around one standard deviation above its average.

  Risks

  AI server shipment ramp-up is slower than expected, AI server PCB specification upgrades are slower than expected, and market competition is stronger than expected.

Key data

• 1Q26 revenueRmb5.519bnUp 28% YoY and 7% QoQ, broadly in line with Goldman Sachs forecasts and Bloomberg consensus expectations.
• 1Q26 net profitRmb1.288bnUp 40% YoY and 21% QoQ, 1% below Goldman Sachs forecasts and 7% below consensus expectations.
• 1Q26 gross margin34.5%Below Goldman Sachs forecast of 36.1% and consensus expectation of 37.6%, but improved YoY and QoQ.
• 1Q26 expense ratio6.4%Below 7.2% in 1Q25 and 8.1% in 4Q25, showing improved operating efficiency amid shipment ramp-up.
• 1Q26 capexRmb3,574mHigher than Rmb730m in 1Q25 and Rmb2,963m in 4Q25, reflecting investment in capacity expansion.
• 12-month target priceRmb550Based on 2027E EPS and a target P/E of 26.3x; target price maintained unchanged.

Impact & implications

The report's investment implication for Victory Giant is positive overall: in the short term, 1Q26 results were in line with expectations and expense ratios improved; in the medium to long term, demand for AI server PCB, specification upgrades, customer expansion, and capacity investment support growth. Rising capex reflects both the company's confidence in order visibility and means future capacity release, yield, and ramp-up pace will be key validation points.

Risks

• AI server shipment ramp-up is slower than expected.
• AI server PCB specification upgrades are slower than expected.
• Market competition is more intense than expected.
• There are execution risks in capacity utilization, yield, and order delivery following capex expansion.

What to watch

• The pace of AI server PCB orders and shipment ramp-up in subsequent quarters.
• Changes in AI PCB layer count increases and demand for HDI and MLPCB.
• Progress of new capacity deployment, yield, and automation efficiency.
• Whether gross margin can continue to improve along with product mix upgrades.
• Progress in expanding ASIC AI server PCB customers.