SHENGYI ELECTRONICS CO.(SH:688183) Shenwan Hongyuan Securities·2025-12-30 12:31Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [4][7]. Core Insights - The company is expected to benefit significantly from the growth in AI ASIC and the upgrade of switch rates, particularly in the context of AI hardware [4][6]. - The revenue forecast for the company from 2025 to 2027 is projected to be 98 billion, 154 billion, and 203 billion yuan respectively, with a compound annual growth rate (CAGR) of 55% for net profit during the same period [7][8]. - The report highlights that the current valuation does not reflect the growth potential, with a PEG ratio of 0.5 compared to an average of 0.8 for comparable companies, indicating a potential upside of 50% [7][8]. Financial Data and Profit Forecast - Total revenue (in million yuan) is forecasted as follows: - 2024: 4,687 - 2025: 6,829 - 2025E: 9,842 - 2026E: 15,353 - 2027E: 20,266 - Year-on-year growth rates for total revenue are projected at 43.2%, 114.8%, 110.0%, 56.0%, and 32.0% respectively [5]. - Net profit attributable to the parent company (in million yuan) is forecasted as follows: - 2024: 332 - 2025: 1,115 - 2025E: 1,721 - 2026E: 2,887 - 2027E: 4,119 - Year-on-year growth rates for net profit are projected at 497.6%, 418.3%, 67.8%, and 42.7% respectively [5]. Company Overview - The company has been focused on PCB (Printed Circuit Board) business since its establishment in 1985, with applications in various fields including communication devices, network equipment, computers/servers, automotive electronics, consumer electronics, and industrial control [6][19]. - The company ranks 35th among the top 100 PCB manufacturers globally as of 2024 [6][29]. Market Dynamics - The data center PCB market is expected to grow from 12.5 billion USD in 2024 to 21 billion USD in 2029, with a CAGR of 10.9% [6][45]. - The demand for high-end PCB products is driven by the acceleration of AI capital expenditures, which enhances the infrastructure for servers and switches [6][45]. Production Capacity and Supply Chain - The company's production capacity is expected to increase from 2 million square meters per year in 2025 to 3 million square meters per year by 2027 [8]. - The company is expanding its production facilities in Dongguan, Ji'an, and Thailand, with new plants expected to come online in the near future [8][19]. Customer Base and Market Position - The company has established relationships with major clients such as Amazon, IBM, and Huawei, with server orders expected to account for 49% of total orders by 2024 [6][62]. - The company has a high customer concentration, with the top five customers accounting for a significant portion of revenue [37][38].