Shengquan Group(SH:605589) SINOLINK SECURITIES·2025-03-20 00:38Investment Rating - The report initiates coverage with a "Buy" rating for the company, setting a target price of 33.37 CNY per share based on a 27x PE for 2025 [3]. Core Insights - The company is expected to benefit significantly from the growing demand for high-frequency and high-speed resins driven by AI server requirements, with global AI server shipments projected to increase by 46% in 2024 and nearly 28% in 2025 under base case assumptions [1][23]. - The company holds a unique position in the domestic market as the only provider of a full range of resin products (M6, M7, M8) certified through the domestic industrial chain, enhancing its competitive edge [1][39]. - The traditional business of the company remains robust, with leading production and sales volumes in phenolic and furan resins, achieving a gross margin of 19.79% and 22.59% respectively in 2023 [2]. Summary by Sections AI Technology and High-Frequency Resin Demand - The demand for electronic resins is expected to rise significantly due to the increasing complexity and performance requirements of PCBs used in AI servers [1][13]. - The global PCB market is projected to grow at a CAGR of 5.4% from 2023 to 2028, with specific segments like 18+ multilayer boards and HDI boards experiencing faster growth [14][16]. Traditional Business Operations - The company leads in the production and sales of phenolic and furan resins, with 2023 production volumes of 501,400 and 153,900 tons respectively, and gross margins of 19.79% and 22.59% [2]. - The company is expanding into biomass chemicals and new energy sectors, with projected revenues of 1.34 billion CNY and 1.61 billion CNY from the biomass segment in 2025 and 2026 respectively [2]. Profit Forecast and Valuation - Revenue projections for 2024-2026 are 9.82 billion CNY, 11.24 billion CNY, and 12.58 billion CNY, with corresponding net profits of 852 million CNY, 1.05 billion CNY, and 1.22 billion CNY [3][6]. - The report anticipates an EPS of 1.01 CNY, 1.24 CNY, and 1.44 CNY for the same period, reflecting growth rates of 7.9%, 22.8%, and 16.55% respectively [3][6].