Summary of Conference Call Notes Industry Overview - **Industry**: China PCB Sector - **Key Focus**: AI demand and its impact on PCB (Printed Circuit Board) and CCL (Copper Clad Laminate) sectors Core Insights 1. **AI Demand**: AI remains the most significant driver of demand in the PCB sector, particularly for High Density Interconnect (HDI) and High Layer Count (HLC) PCBs, with strong order visibility extending into Q3 and Q425 [2][3] 2. **Midplane Adoption**: Discussions indicate a potential shift towards midplane designs replacing copper cables in future AI systems, with clearer visibility expected by Q425 [2] 3. **Material Preferences**: M9-grade high-speed CCL is anticipated for midplane PCBs, while interest in PTFE is declining due to its thermal expansion issues and processing challenges [2] 4. **Capacity Expansion**: Chinese PCB manufacturers are experiencing extended lead times for critical equipment due to aggressive capacity expansions, which are reportedly on schedule as orders were placed in advance [2] Company-Specific Insights Shennan Circuit 1. **Growth Drivers**: AI has significantly contributed to Shennan's growth in 1H25, particularly in data and wire communication sectors [3] 2. **Capacity Management**: Shennan is cautious about capacity expansion, having resolved bottlenecks in drilling and electroplating, with new capacity expected to come online in late 2026 [3] 3. **Order Visibility**: Demand for BT substrates from domestic memory customers is strong, but Shennan is conservative about the sustainability of BT orders into 2026 due to potential double bookings [3] Dongshan 1. **Earnings Pressure**: Dongshan anticipates pressure on earnings for 2025 due to limited growth in smartphone FPC content and losses from a disposal of a loss-making LED business [4] 2. **Consolidation Benefits**: The consolidation of Source Photonics and GMD is expected to enhance profitability through debt restructuring and operational synergies, with benefits starting in 2026 [4] Victory Giant (VGT) 1. **Capacity Expansion**: VGT is aggressively expanding capacity with plans for 15k sqm/month HDI and 50k sqm/month HLC in Huizhou and Thailand, driven by demand from a major North American AI customer [5] 2. **Production Utilization**: Current capacity is fully allocated, but production utilization may be slightly affected as the company transitions to next-gen products [5] Risks and Considerations 1. **Global AI Deployment**: Risks include slower-than-expected AI deployment both globally and in China, which could impact demand [7] 2. **CAPEX Plans**: Weaker-than-expected capital expenditure plans from hyperscalers for IDCs and servers could pose risks to the PCB sector [7] 3. **Tariffs and Regulations**: Higher-than-expected tariffs and tightening environmental regulations in China could adversely affect demand for consumer electronics and automobiles [7] Valuation and Risk Statements - **Shennan Circuit**: Valuation based on sum-of-the-parts method; risks include slower server demand and pricing pressures [8] - **Dongshan**: Valuation based on target PE multiple; risks include ASP cuts and iPhone procurement challenges [8] Conclusion The China PCB sector is poised for growth driven by AI demand, with specific companies like Shennan and Dongshan navigating challenges and opportunities through strategic capacity management and consolidation efforts. However, external risks related to global deployment of AI and regulatory changes remain critical factors to monitor.

New Stock Issuance - Fushun Special Steel (600399) has a tender offer period from August 12, 2025, to September 10, 2025[1] - KaiPu Cloud (688228) reported severe abnormal fluctuations on August 30, 2025[1] - Xinhua Jin (600735) announced on August 30, 2025, regarding its stock activities[1] Trading Alerts - JiShi Media (601929) issued a notice on August 30, 2025, regarding trading activities[1] - XianDao Intelligent (300450) and DeChuang Environmental (603177) both reported updates on September 2, 2025[1] - Huahai Pharmaceutical (600521) and *ST HuiCheng (002168) also provided trading updates on September 2, 2025[1] Abnormal Fluctuations - Several companies, including Changjiang Materials (001296) and WanBangDe (002082), reported abnormal fluctuations on August 28, 2025[3] - Longjing Technology (301396) and Jinli Yongci (300748) also noted significant trading irregularities on August 27, 2025[3] - The report includes multiple links to announcements regarding trading activities and fluctuations for various companies[3]

Core Insights - The report from China Merchants Securities indicates that Shenzhen South Circuit's revenue growth accelerated in the second quarter, with improved profit margins, particularly in the core PCB business [1] - The second quarter revenue reached 5.7 billion RMB, marking a historical high, with year-on-year and quarter-on-quarter growth of 30% and 19% respectively, exceeding Bloomberg consensus estimates by 6% [1] - Net profit amounted to 869 million RMB, reflecting year-on-year and quarter-on-quarter increases of 43% and 77%, surpassing Bloomberg consensus estimates by 41% [1] Company Performance - The company's production capacity continues to expand due to the Thai production line, Nantong Phase IV project, and ongoing factory upgrades [1] - Research and development investment remains stable at 6%-7% of sales, which will help consolidate the company's competitive advantage and support long-term growth [1] Investment Outlook - The target price has been raised to 235 RMB [1] - Given the company's strategic positioning in high-growth areas such as AI servers, data centers, and automotive electronics, a "buy" rating is maintained [1]

Market Overview - On September 2, the component sector experienced a decline of 5.86%, with Nanya Technology leading the drop [1] - The Shanghai Composite Index closed at 3858.13, down 0.45%, while the Shenzhen Component Index closed at 12553.84, down 2.14% [1] Individual Stock Performance - Notable declines included: - Nanya Technology: closed at 66.99, down 10.09% with a trading volume of 86,400 and a turnover of 601 million [2] - Xinsen Technology: closed at 19.60, down 10.01% with a trading volume of 2,024,900 and a turnover of 4.121 billion [2] - Deep South Circuit: closed at 179.89, down 10.00% with a trading volume of 198,600 and a turnover of 3.754 billion [2] - Other significant declines included Jianghai Co., Ltd. at 32.98, down 9.99%, and Shengyi Technology at 49.50, down 9.79% [2] Capital Flow Analysis - The component sector saw a net outflow of 6.377 billion from institutional investors, while retail investors contributed a net inflow of 5.872 billion [2][3] - The table of capital flow indicates that: - Mingyang Circuit had a net outflow of 32.6271 million from institutional investors [3] - Xinjie Technology saw a net inflow of 10.4327 million from retail investors [3] - ST Dongjing experienced a net outflow of 2.6864 million from institutional investors but a net inflow of 2.1320 million from retail investors [3]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company reported strong Q2 2025 results with record-high sales and improved profit margins, particularly in its core PCB business. Revenue reached 5.7 billion RMB, marking a 30% year-over-year and 19% quarter-over-quarter increase, exceeding Bloomberg consensus estimates by 6%. Net profit was 869 million RMB, up 43% year-over-year and 77% quarter-over-quarter, surpassing Bloomberg estimates by 41%. The gross margin improved by 2.8 percentage points to 27.6%, while the net margin reached a historical high of 15.5% [1] - The company's strategic positioning in high-growth sectors such as AI servers, data centers, and automotive electronics supports the "Buy" rating. Continuous capacity expansion from projects in Thailand and Nantong, along with stable R&D investment at 6%-7% of sales, will reinforce the company's competitive advantage and long-term growth [1] - The target price has been raised to 235 RMB, reflecting an 18.7% potential upside from the current price of 198 RMB [3] Financial Summary - For FY25E, the company is projected to achieve sales revenue of 22.68 billion RMB, a 26.6% year-over-year increase. The gross margin is expected to be 26.9%, and net profit is forecasted at 3.03 billion RMB, representing a 61.4% increase year-over-year [2][15] - The company’s EPS is expected to rise to 5.91 RMB in FY25E, with a P/E ratio of 33.5 times [2][15] - The company’s market capitalization is approximately 101.55 billion RMB, with a 52-week stock price range of 198.00/67.53 RMB [3][14] Business Segment Performance - The PCB business, accounting for 60% of total sales, achieved revenue of 6.3 billion RMB in the first half of the year, a 29% year-over-year increase. The growth was driven by strong demand in wireless communication infrastructure, data centers, and automotive applications [8] - The packaging substrate segment saw sales of 1.7 billion RMB, a 9% year-over-year increase, but faced margin pressure due to rising raw material costs and capacity ramp-up challenges [8] Market Comparison - The company’s P/E ratio is projected to be higher than the historical average, reflecting the industry's upward cycle momentum. The new target price is based on a 33.7 times P/E for FY26E, which is approximately one standard deviation above the five-year historical average [8]

Core Viewpoint - The stock price of ShenNan Circuit (002916.SZ) continues to rise, nearing the 200 yuan mark, with a significant increase of over 20% in the past three trading days, reflecting strong market confidence and positive business fundamentals [2][3][5]. Financial Performance - In the first half of 2025, ShenNan Circuit achieved operating revenue of 10.453 billion yuan, a year-on-year increase of over 25%, and a net profit attributable to shareholders of 1.360 billion yuan, up nearly 38% [3][9]. - The company's revenue and net profit have shown consistent growth, with the operating revenue and net profit in the first half of 2025 increasing 2.83 times and 4.4 times, respectively, compared to the same period in 2017 [10]. Stock Market Activity - ShenNan Circuit's stock price has increased significantly since its IPO on December 13, 2017, with a cumulative increase of 22 times when adjusted for stock splits [6]. - As of the end of the second quarter of 2025, funds held a total of 75.39 million shares of ShenNan Circuit, marking a net increase of 45.44 million shares from the previous quarter, the highest level since the company's listing [7][8]. Research and Development - The company invested 672 million yuan in R&D in the first half of 2025, accounting for 6.43% of its operating revenue, with ongoing progress in various R&D projects [3][10]. - ShenNan Circuit is focusing on next-generation communication, data center, and automotive electronics PCB technology development, as well as expanding its production capacity in both existing and new facilities [10][11]. Expansion Plans - ShenNan Circuit is advancing its expansion plans, including a factory in Thailand that has begun trial production, with an investment of 1.274 billion yuan [4][11].

New Stock Issuance - New stock issuance for AiFenda (301575) is priced at 27.69 RMB, effective from September 1, 2025[1] - Fushun Special Steel (600399) is undergoing a tender offer from August 12 to September 10, 2025[1] - KaiPu Cloud (688228) has a recent announcement regarding its stock[1] Market Alerts - Significant abnormal fluctuations reported for Siquan New Materials (301489) on August 22, 2025[1] - New announcements for various stocks including Xinhua Jin (600735) and Jishi Media (601929) on August 30, 2025[1] - Multiple stocks including ST Guohua (000004) and ST Huayang (603825) have recent updates as of August 29, 2025[1] Trading Insights - The report includes links to detailed announcements for stocks experiencing significant market activity, such as ST Zhongji (000972) and ST Yilanzhong (300096)[1] - The document highlights the importance of monitoring stock performance and related announcements for investment decisions[1]

Group 1 - The report on overseas mutual funds indicates that as of March 31, 2025, there were 1,532 mutual funds holding A-shares with a total scale of $1.9 trillion, showing a slight decrease in both number and scale compared to previous periods [9][10][11] - The performance of overseas mutual funds investing in A-shares was notably differentiated, with active funds outperforming passive funds, achieving an average return of 0.51% and a median return of 0.28% [10] - The report highlights that overseas mutual funds increased their holdings in the home appliance, transportation, and computer sectors while reducing their investments in power equipment and new energy sectors [10][11] Group 2 - The report on Shenzhen Circuit (002916.SZ) forecasts revenue for 2025-2027 to be 22.134 billion, 26.330 billion, and 30.087 billion yuan respectively, with net profit expected to be 3.273 billion, 4.278 billion, and 5.154 billion yuan [12] - The target market capitalization for Shenzhen Circuit in 2026 is projected to be 162.572 billion yuan, with a target price of 243.83 yuan, and the report initiates coverage with a "buy" rating [12] - The report emphasizes the company's strong position in the PCB market, particularly in data center and communication sectors, with significant growth potential driven by advancements in AI and high-speed communication technologies [13][14] Group 3 - The report on Tunan Co., Ltd. (300855.SZ) indicates that the company is one of the few in China capable of mass-producing both deformed and cast high-temperature alloys, with a focus on aerospace and nuclear power applications [17][18] - The company is expected to achieve a revenue growth rate of 25.10% and a net profit growth rate of 25.10% from 2020 to 2024, with projected revenues of 1.258 billion yuan and net profits of 267 million yuan in 2024 [17] - Tunan's order backlog reached a historical high of 1.75 billion yuan as of the first half of 2025, reflecting a year-on-year increase of 236.5% [18] Group 4 - Alibaba's self-developed AI chips are aimed at meeting its own AI inference needs, with a planned investment of 380 billion yuan over the next three years to enhance its AI capabilities [20][21] - The report notes that Alibaba's AI inference chip, Hanguang 800, has surpassed NVIDIA's T4 and P4 in certain performance metrics, indicating a strong competitive position in the AI chip market [20] - The report highlights the potential for growth in power supply and liquid cooling technologies as major cloud service providers increase their investment in AI chips [22]

深南电路涨1.04%，报200.06元/股，股价再创新高，总市值突破1333.88亿元，成交额达1.46亿元。 ...

Summary of Shennan Circuits Earnings Call Company Overview - **Company**: Shennan Circuits - **Industry**: PCB (Printed Circuit Board) and IC (Integrated Circuit) substrates manufacturing - **Market Position**: Fourth-largest PCB manufacturer globally as of 2024 [16] Key Financial Results - **Q2 2025 Revenue**: Rmb 5.7 billion, representing an increase of 18.6% QoQ and 30.1% YoY, exceeding consensus estimates by 4% and 6% [2][9] - **Net Profit**: Rmb 869 million, up 77% QoQ and 43% YoY; adjusted net profit (after non-recurring items) was Rmb 780 million, reflecting a 61% QoQ and 37% YoY increase [2][9] - **Gross Profit Margin (GPM)**: Improved to 27.6%, a record high since Q3 2020, up 2.9 percentage points QoQ and 0.5 percentage points YoY [3][9] Revenue Growth Drivers - **PCB Sales Growth**: Increased by 29% YoY, driven by robust demand in data centers, wired communications, and automotive sectors [3] - **Data Center PCB**: Significant growth attributed to global AI capital expenditure upcycle, with revenue mix exceeding 25% compared to 20% in FY24 [3] - **IC Package Substrate Sales**: Rose by 9% YoY, supported by better BT substrate orders due to tight raw material supply [3] Operational Insights - **Utilization Rates**: High utilization rates for both PCB and BT substrates, with ongoing efforts to ramp up production capacity at new plants in Thailand and Nantong [4] - **Future GPM Expectations**: Anticipated recovery of GPM by 4-5 percentage points in H2 2025 [4] Market Outlook - **AI-Related Orders**: Management maintains a positive outlook for AI-related orders, particularly from North American customers, expecting data center revenue to lead growth in 2025 [4] - **Supply Constraints**: The company is currently supply-constrained for high-end PCBs, indicating potential for future growth as capacity expands [4] Investor Sentiment - **Expected Market Reaction**: Anticipated positive reaction from investors due to the earnings beat and favorable outlook for the second half of the year, following significant stock price increases since April [5] Valuation Metrics - **Market Capitalization**: Rmb 86.9 billion (approximately US$12.1 billion) [6] - **12-Month Price Target**: Rmb 171.00, with a current price of Rmb 169.50 [6][31] - **P/E Ratio (2025E)**: 34.3x, with projected EPS of Rmb 4.94 [8] Risks and Considerations - **Downside Risks**: Include slower-than-expected server demand, pricing pressure from clients, and longer breakeven times for new business segments [17] Conclusion Shennan Circuits demonstrated strong financial performance in Q2 2025, driven by robust demand in key sectors, particularly data centers and AI-related applications. The company is well-positioned for future growth, although it faces supply constraints and market risks that could impact its performance.