SHENGYI ELECTRONICS CO.(SH:688183) Shenwan Hongyuan Securities·2025-12-30 13:56Investment Rating - The report initiates coverage with a "Buy" rating for the company [7][4]. Core Insights - The company is positioned to benefit from the structural expansion of PCB demand driven by AI infrastructure investments, particularly in server and switch applications [6][39]. - Revenue forecasts for 2025-2027 are projected at 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][5]. - 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][6]. Financial Data and Profit Forecast - Total revenue (in million yuan) is expected to grow from 4,687 in 2024 to 9,842 in 2025, with a year-on-year growth rate of 110% [5]. - Net profit attributable to the parent company is forecasted to increase from 332 million in 2024 to 1,721 million in 2025, reflecting a growth rate of 418.3% [5]. - Earnings per share are projected to rise from 0.40 yuan in 2024 to 2.07 yuan in 2025 [5]. Market Position and Growth Drivers - The company has established itself as a key player in the PCB industry, ranking 35th globally in 2024 according to Prismark [6][24]. - The demand for high-end PCBs is expected to surge due to the increasing capital expenditure on AI infrastructure, with the data center PCB market projected to grow from 12.5 billion USD in 2024 to 21 billion USD by 2029 [6][39]. - The company has successfully developed products for major clients, including Amazon, and anticipates that server orders will increase from 24% in 2023 to 49% in 2024 [6][53]. Supply Chain and Production Capacity - The company's production capacity is expected to increase from 2 million square meters per year to 3 million square meters per year between 2025 and 2027 [8]. - New facilities in Ji'an and Thailand are projected to commence production in the coming year, contributing to capacity expansion [8][6]. Key Assumptions - PCB shipment volume is expected to maintain a saturation rate of 90-100% during the expansion period, with shipment growth rates of 40%, 20%, and 10% from 2025 to 2027 [8]. - The average selling price (ASP) of PCBs is anticipated to increase by 50%, 30%, and 20% over the same period, reaching 4,609, 5,992, and 7,190 yuan per square meter respectively [8]. - Gross margins for PCBs are projected to improve from 30% in 2025 to 32% in 2027, reflecting the demand for high-end AI-related PCB products [8].