Investment Rating - The report maintains a "Recommended" investment rating for the company [1]. Core Views - The company has achieved significant revenue growth, with a 28.39% year-over-year increase in revenue to 16.754 billion yuan and a 56.30% increase in net profit to 2.326 billion yuan for the first three quarters of 2025 [5][9]. - The company is positioned to benefit from the domestic substitution of semiconductor substrates, with a diverse range of packaging substrate products that cater to various applications, including mobile smart terminals and servers/storage [9][10]. - The report projects an increase in net profit for the years 2025 to 2027, with estimates of 3.202 billion yuan, 4.698 billion yuan, and 5.893 billion yuan respectively, reflecting a strong growth trajectory [10][12]. Financial Summary - Revenue projections for the company are as follows: 17.907 billion yuan in 2024, 22.922 billion yuan in 2025, 29.110 billion yuan in 2026, and 36.388 billion yuan in 2027, with year-over-year growth rates of 32.4%, 28.0%, 27.0%, and 25.0% respectively [8][12]. - The company's net profit is expected to grow significantly, with projections of 3.202 billion yuan in 2025, 4.698 billion yuan in 2026, and 5.893 billion yuan in 2027, indicating a robust growth rate [10][12]. - Key financial ratios indicate improving profitability, with gross margins expected to rise to 30% by 2026 and net profit margins reaching 16.2% by 2027 [12]. Market Position - The company is recognized as a leading domestic IC substrate manufacturer, benefiting from the increasing demand for AI computing power, structural growth in the storage market, and the rise of automotive electronics [9][10]. - The company has successfully introduced new high-end DRAM products, leading to a significant increase in orders for storage products [9][10].

Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Insights - The company reported significant year-on-year growth in performance, with a revenue increase of 28.39% to 16.754 billion yuan and a net profit increase of 56.30% to 2.326 billion yuan for the first three quarters of 2025. The gross margin and net margin were 28.20% and 13.90%, respectively [2][4]. - In Q3 2025, the company achieved a revenue of 6.301 billion yuan, reflecting a year-on-year growth of 33.25% and a quarter-on-quarter growth of 11.11%. The net profit for the quarter was 966 million yuan, showing a year-on-year increase of 92.87% and a quarter-on-quarter increase of 11.20%. The gross margin and net margin for the quarter were 31.39% and 15.35%, respectively [2][4]. - The company benefits from the demand for AI computing upgrades, structural growth in the storage market, and increased demand for automotive electronics. The demand for AI accelerator cards, switches, optical modules, servers, and related products continues to rise, contributing to revenue growth [9]. - The company emphasizes a long-term strategy of technological leadership, with R&D investment accounting for 7.36% of revenue in Q3 2025. Ongoing projects include advancements in next-generation communication, data center, and automotive electronics PCB technologies [9]. - The company is expected to achieve net profits of 3.467 billion yuan, 5.056 billion yuan, and 7.025 billion yuan for the years 2025, 2026, and 2027, respectively, with corresponding PE ratios of 41.24, 28.28, and 20.36 [9]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company achieved total revenue of 16.754 billion yuan and a net profit of 2.326 billion yuan, with respective year-on-year growth rates of 28.39% and 56.30% [2][4]. - In Q3 2025, the company reported revenue of 6.301 billion yuan and a net profit of 966 million yuan, with year-on-year growth rates of 33.25% and 92.87% [2][4]. Market Position and Strategy - The company is recognized as a leading player in the PCB industry in China and a pioneer in the packaging substrate sector. The demand for products in the communication and data center sectors is expected to drive future growth [9]. - The company maintains a focus on technological innovation and R&D, with significant investments aimed at enhancing its product offerings and market competitiveness [9].

Core Viewpoint - Yingxin Development has reached a trading limit, marking a consecutive two-day increase, while Yishitong has surged over 14%. Other companies such as Shannon Chip, Sanfu Co., Huahong Semiconductor, Shenzhen South Circuit, and Shikong Technology have also seen gains [1] Company Performance - Yingxin Development has achieved a trading limit and a two-day consecutive increase [1] - Yishitong has experienced a significant rise of over 14% [1] - Other companies including Shannon Chip, Sanfu Co., Huahong Semiconductor, Shenzhen South Circuit, and Shikong Technology have followed suit with upward trends [1]

Core Viewpoint - The electronic ETF (515260) is experiencing fluctuations, with a slight decrease in value, but there is optimism in the sector as evidenced by significant capital inflow and strong performance from many constituent stocks [1][3]. Market Performance - The electronic sector has a total market capitalization of 107.32 trillion yuan, leading all sectors and accounting for 12.42% of the total market, an increase of nearly 3 percentage points since the beginning of the year [3]. - As of October 31, 49 out of 50 constituent stocks of the electronic ETF have reported Q3 results, with 44 companies profitable and 40 showing year-on-year net profit growth [3]. Company Performance - Notable profit increases include: - Silan Micro's net profit increased 11 times year-on-year - Geke Micro, Shenghong Technology, Cambricon, and others reported net profit growth rates of 518%, 324%, 321%, and 265% respectively [3]. Investment Outlook - Galaxy Securities emphasizes that the technology sector will be a long-term investment focus, particularly in the electronic industry driven by AI and overall valuation improvements [3]. - The ETF is positioned to benefit from trends in semiconductor equipment and materials localization, as well as infrastructure investments driven by AI demand [3]. Sector Trends - Major tech companies like Google, Meta, Microsoft, and Amazon are increasing capital expenditures, indicating a sustained trend into the next year [4]. - The demand for AI-related products, particularly in the PCB sector, is surging, with many companies experiencing strong order growth and production capacity expansion [4]. Policy Support - There is strong governmental support for the semiconductor industry, aiming for self-sufficiency, while AI is reshaping consumer electronics, enhancing user experiences [5].

Core Viewpoint - Fund managers remain confident in AI computing power despite some divergence in their investment strategies during Q3 2025, with a focus on the PCB sector and light communication leaders [1][2][3] Group 1: Fund Manager Strategies - Notable fund manager Jin Zicai increased holdings in PCB-related companies such as Shenzhen South Circuit, Shengyi Technology, and Huidian Co., while reducing positions in leading optical module firms like NewEase and Taicheng Light [1][2] - Fund manager Zheng Xi also mirrored this strategy by increasing investments in PCB companies and reducing exposure to optical communication stocks [2] - Fund manager Lei Tao diversified by increasing allocations in both optical communication and PCB sectors, with significant gains reported [2] Group 2: Market Outlook - Jin Zicai expressed optimism about the overseas computing power sector, suggesting that the market has underestimated the growth potential and sustainability of earnings in this area [3] - Zheng Xi highlighted the increasing allocation to AI computing and semiconductor storage sectors, anticipating strong growth in AI applications and a favorable market for global computing resources [3] - The overall sentiment among top-performing fund managers indicates a belief in the ongoing demand for computing power, with expectations of significant growth opportunities ahead [3]

Investment Rating - The report maintains a "Recommended" rating for the company [3]. Core Insights - The company achieved record high performance in Q3 2025, with revenue reaching 16.754 billion yuan, a year-on-year increase of 28.39%, and a net profit attributable to shareholders of 2.326 billion yuan, up 56.30% year-on-year [7]. - The demand for AI acceleration cards, switches, optical modules, servers, and related products continues to rise, contributing to increased orders and revenue for storage packaging substrate products [7]. - The company is expanding its production capacity with new facilities, including the Nantong Phase IV and a factory in Thailand, which are expected to enhance PCB production capabilities [7]. - The company's gross margin improved significantly in Q3, reaching 31.39%, an increase of 5.99 percentage points year-on-year and 3.8 percentage points quarter-on-quarter [7]. - The projected net profit for 2025 to 2027 is expected to be 3.319 billion yuan, 4.120 billion yuan, and 4.820 billion yuan, respectively, with corresponding EPS of 4.98 yuan, 6.18 yuan, and 7.23 yuan [7]. Financial Forecast Summary - Revenue is forecasted to grow from 17.907 billion yuan in 2024 to 31.244 billion yuan in 2027, with growth rates of 32.4%, 27.4%, 21.0%, and 13.2% respectively [2]. - The net profit attributable to shareholders is expected to increase from 1.878 billion yuan in 2024 to 4.820 billion yuan in 2027, with growth rates of 34.3%, 76.8%, 24.1%, and 17.0% respectively [2]. - The gross margin is projected to improve from 24.8% in 2024 to 28.0% in 2027 [2]. - The company’s PE ratio is expected to decrease from 80.89 in 2024 to 31.51 in 2027, indicating a more attractive valuation over time [2].

Core Viewpoint - The company reported strong financial performance for the first three quarters of the year, with significant year-on-year growth in revenue and net profit, indicating robust demand in key business areas such as PCB and AI-related products [2]. Financial Performance Summary - For the first three quarters, the company achieved revenue of 16.75 billion, a year-on-year increase of 28.4%, and a net profit of 2.33 billion, up 56.3% year-on-year [2]. - In Q3 alone, revenue reached 6.30 billion, reflecting a year-on-year growth of 33.3% and a quarter-on-quarter increase of 11.1%. Net profit for Q3 was 970 million, showing a year-on-year increase of 92.9% and a quarter-on-quarter rise of 11.2% [2]. - The gross margin for the first three quarters was 28.2%, up 2.3 percentage points year-on-year, while the net margin was 13.9%, an increase of 2.5 percentage points year-on-year [2]. Business Segment Insights - The PCB business was a major growth driver, contributing approximately 400 million in quarter-on-quarter growth, driven by strong demand in AI servers, switches, and optical modules [2]. - The BT substrate business also saw a quarter-on-quarter increase of about 200 million, primarily due to rising demand in the storage market and upward price trends [2]. - The electronic assembly business experienced a slight decline quarter-on-quarter [2]. Future Outlook - The company is expected to continue benefiting from strong demand in AI computing and ongoing capacity expansion, with new projects in Thailand and Nantong progressing well [3]. - The company is actively enhancing its production capabilities and optimizing product structure, which is anticipated to lead to further profitability improvements [3]. - In the medium to long term, the company is well-positioned in both overseas and domestic computing supply chains, with plans for significant capacity expansion in AI computing [3].

Market Performance - The National Big Fund holding concept declined by 2.96%, ranking among the top declines in concept sectors as of the market close on October 31 [1] - Within this sector, notable declines were seen in companies such as Yandong Micro, Shenzhen South Circuit, and Jiangbolong, while six stocks experienced price increases, with Aisen Co., Robot, and Jingjiawei leading with gains of 4.14%, 0.88%, and 0.44% respectively [1] Capital Flow - The National Big Fund holding concept experienced a net outflow of 8.299 billion yuan, with 41 stocks seeing net outflows, and 21 stocks having outflows exceeding 100 million yuan [2] - The stock with the highest net outflow was SMIC, with a net outflow of 1.470 billion yuan, followed by Zhongwei Company, Tuojing Technology, and Huahong Company with net outflows of 646 million yuan, 638 million yuan, and 612 million yuan respectively [2] Top Decliners - The top decliners in the National Big Fund holding concept included: - SMIC: -3.40% with a turnover rate of 3.46% and a net outflow of 1.470 billion yuan [3] - Zhongwei Company: -6.89% with a turnover rate of 3.04% and a net outflow of 646 million yuan [3] - Tuojing Technology: -6.66% with a turnover rate of 4.72% and a net outflow of 638 million yuan [3] Top Gainers - The stocks with the highest net inflows included: - Aisen Co.: 4.14% increase with a net inflow of 589.075 million yuan [4] - Jingjiawei: 0.44% increase with a net inflow of 437.647 million yuan [4] - Saiwei Electronics: -0.53% with a net inflow of 23.2725 million yuan [4]

Investment Rating - The report maintains a "Buy" rating for the company [1][5]. Core Views - The company has shown robust growth in revenue and net profit for the first three quarters of 2025, driven by the AI PCB and storage sectors, with a positive outlook for the packaging substrate market [3][8]. - The report highlights the company's strategic investments in high-end PCB capacity and the expected benefits from rising BT substrate prices due to material supply constraints [8]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company achieved revenue of RMB 167.54 billion, a year-on-year increase of 28.39%, and a net profit of RMB 23.26 billion, up 56.30% year-on-year [8]. - The gross margin for the first three quarters of 2025 was 28.20%, an increase of 2.30 percentage points year-on-year [8]. Revenue and Profit Forecast - The company is projected to achieve revenues of RMB 230.02 billion, RMB 321.10 billion, and RMB 419.23 billion for the years 2025, 2026, and 2027, respectively [5]. - The expected net profits for the same years are RMB 33.41 billion, RMB 58.16 billion, and RMB 76.43 billion, respectively [5]. Valuation Metrics - The report provides earnings per share (EPS) estimates of RMB 5.01, RMB 8.72, and RMB 11.46 for 2025, 2026, and 2027, respectively, with corresponding price-to-earnings (PE) ratios of 46.6, 26.8, and 20.4 [5][7]. - The company’s market capitalization is approximately RMB 155.64 billion [3]. Market Trends - The report notes a significant increase in demand for high-speed PCBs in communication and data center sectors, particularly for products related to AI and high-performance computing [8]. - The tightening supply of T-Glass fiberglass materials is expected to lead to price increases for BT substrates, benefiting the company's operations [8].

Summary of Shennan Circuit (002916.SZ) Conference Call Company Overview - **Company**: Shennan Circuit - **Industry**: PCB (Printed Circuit Board) manufacturing - **Market Position**: Leading PCB supplier in China, focusing on telecom and aeronautics sectors, with a "3-in-1" model encompassing PCB, PCB assembly, and IC substrate packaging [20][21] Key Financial Highlights - **Revenue Growth**: - 9M25 revenue increased by 28.4% year-over-year (YoY) to RMB 16.754 billion, with 3Q25 growth at 33.3% compared to 25.6% in 1H25 [1] - **Net Profit**: - Attributable net profit surged 56.3% YoY to RMB 2.326 billion, with 3Q25 growth accelerating to 92.9% compared to 37.8% in 1H25 [1] - **Earnings Estimates**: - 2025-27 earnings estimates raised by 13-15%, target price increased to RMB 281 from RMB 230 based on a 48x PE for 2026E [1][22] 4Q25 Outlook - **Revenue Forecast**: Expected 4Q25 revenue growth of 33% YoY to RMB 6.427 billion, similar to 3Q growth [3] - **Net Profit Forecast**: Anticipated net profit growth of 115% to RMB 838 million, driven by a low base in 4Q24 [3] Capacity Expansion Plans - **New Plants**: - Thai plant to start in mid-2025, targeting annual revenue of RMB 1.3 billion - Nantong Phase 4 for AI-PCB to commence in 4Q25, with projected annual revenue of RMB 1.5 billion [4] - **Capital Expenditure**: High capex of around RMB 3 billion per annum planned to support AI infrastructure growth [4] Margin and Cost Insights - **Gross Margin**: - 3Q25 gross margin improved to 31.4%, with net margin rising to 15.3% [11] - **Material Cost Inflation**: - Major CCL players increased ASP by RMB 5-10 per sheet in October due to a ~10% rise in copper costs [12] Segment Performance - **PCB and Substrate Segments**: - PCB segment gross margin reached a record high of 36% in 3Q25, with AI-PCB margins estimated at over 40% [10] - Substrate gross margin improved significantly to ~20% in 3Q25 from 15% in 1H25 [10] Investment Strategy - **Recommendation**: Buy rating maintained, with a preference for Shengyi Tech over Shennan due to higher operating leverage in the CCL industry [1][21] - **Market Exposure**: Over 80% revenue exposure to PCB-related businesses, with strong growth potential in AI servers and automotive sectors [21] Risks - **Downside Risks**: - Slower-than-expected growth in AI server demand, weaker automotive demand, and higher laminate cost inflation could impact performance [23] Conclusion - Shennan Circuit is positioned for significant growth driven by its strong market position in the PCB sector, ongoing capacity expansions, and favorable industry dynamics, despite potential risks from market fluctuations and cost pressures [1][21][23]