Summary of Victory Giant Tech (300476.SZ) Investor Call Company Overview - **Company**: Victory Giant Tech (VGT) - **Industry**: PCB (Printed Circuit Board) manufacturing - **Market Cap**: Rmb284,604 million (approximately US$40,026 million) [4] Key Takeaways from the Investor Call 1. **3Q25 Net Profit Decline**: The company reported a quarter-over-quarter (QoQ) decline in net profit due to a 1-2 week product transition impact, increased staff costs, and rising R&D expenses [1][2] 2. **Capacity Buildup Progress**: - Capacity expansion in Huizhou, Thailand, and Vietnam is on track. - The MSAP factory has ramped up production since June, adding 2,000-3,000 headcount. - Production on the 1-3rd floors of the MSAP factory started in late June, with the 4-5th floors expected to begin in November and the 6th floor by December [2][3] - The Drilling Center is set to start production in November, while the CNC Center will begin construction soon, with production expected in 2026 [2] - The Thailand A1 factory has all equipment installed and will start producing testing boards, with the A2 factory set to begin production in February 2026 [2] - Vietnam Phase 1 factory is expected to start production in mid-2026 [2] 3. **Customer Relationships and Revenue Growth**: - VGT produces quick turn PCBs for its largest customer, which could help reduce the customer's time from quick turn to mass production by 6 months, solidifying VGT's market position [3] - Management is optimistic about revenue and profit growth alongside the ramp-up of new GPU products, with other AI customers expected to contribute significantly in 2026 [3] 4. **Market Demand and Future Outlook**: - PCB is projected to account for 8-10% of AI server/rack BOM, up from 5%, driven by technology and material upgrades. - Current demand is reported to be significantly stronger than three months ago, with optimism for growth over the next 2-3 years [3] Financial Projections - **Target Price**: Rmb407, unchanged, based on a 30x 2026E P/E ratio [1][7] - **Net Profit Forecasts**: - 2025 net profit revised down by 5% to Rmb4,842 million. - 2026 and 2027 net profit estimates remain broadly unchanged at Rmb11,697 million and Rmb19,496 million, respectively [7][8] - **Earnings Summary**: - 2023A: Net Profit Rmb671 million, EPS Rmb0.778 - 2024A: Net Profit Rmb1,154 million, EPS Rmb1.338 - 2025E: Net Profit Rmb4,842 million, EPS Rmb5.613 - 2026E: Net Profit Rmb11,697 million, EPS Rmb13.558 - 2027E: Net Profit Rmb19,496 million, EPS Rmb22.600 [5] Risks and Challenges - Potential risks include: - Less-than-expected share allocation in GenAI-related PCBs due to yield issues. - Pricing and competition pressures in the automotive supply chain. - CSP capex reductions and weak economic conditions affecting demand. - Increasing material costs and geopolitical risks between the US and China [19] Conclusion - Victory Giant Tech is positioned for growth with ongoing capacity expansions and strong customer relationships, particularly in the AI sector. However, the company faces challenges that could impact its financial performance in the coming years. The target price remains optimistic, reflecting confidence in the company's long-term prospects.

Core Viewpoint - The PCB industry is experiencing significant growth driven by the demand for high-end printed circuit boards (PCBs) due to the rise of AI and high-performance computing applications [2][4][9]. Financial Performance - Huada Empyrean reported Q3 revenue of 5.019 billion yuan, a year-on-year increase of 39.92%, and a net profit of 1.035 billion yuan, up 46.25% [2]. - Shenghong Technology achieved Q3 revenue of 5.086 billion yuan, a 78.95% increase, with a net profit of 1.102 billion yuan, up 260.52% [7]. - Shenyang Electronics reported Q3 revenue of 3.060 billion yuan, a 153.71% increase, and a net profit of 584 million yuan, up 545.95% [2]. Industry Trends - The average TTM price-to-earnings ratio for the PCB industry has reached 82.33, nearly four times that of the A-share market, indicating strong market optimism [4]. - The demand for high-end PCBs is expected to grow significantly, with AI server shipments projected to increase from 1.2 million units in 2023 to over 2.1 million units by 2025 [9]. R&D and Technological Advancements - Leading PCB companies are significantly increasing their R&D investments, with Huada Empyrean investing 792 million yuan (up 37.25%), Shenghong Technology 608 million yuan (up 84.43%), and Dazhu CNC 254 million yuan (up 45.21%) [10]. - The industry is moving towards higher layer counts and more precise manufacturing processes, driven by the requirements of AI applications [11]. Capacity Expansion - Huada Empyrean plans to invest approximately 4.3 billion yuan in new high-end PCB production facilities, expected to begin trial production in the second half of 2026 [12]. - Shenghong Technology is expanding its capacity for high-layer and high-density interconnect (HDI) boards, with plans to enhance production capabilities [11]. Market Dynamics - The AI boom is creating a competitive landscape where leading firms are rapidly expanding their production capabilities, potentially leading to market share battles among top companies [13]. - The supply-demand dynamics in the high-end PCB market may shift from a seller's market to a buyer's market as competition intensifies [13].

Core Insights - TTM Technologies (TTMI) is set to report its third-quarter 2025 results on October 29, with expected revenues between $690 million and $730 million, reflecting a 15.59% increase year-over-year [1][8] - The company anticipates non-GAAP earnings per share (EPS) in the range of 57 to 63 cents, with a consensus estimate of 61 cents, indicating a year-over-year growth of 48.78% [2][8] - TTM Technologies has consistently surpassed earnings estimates in the past four quarters, with an average surprise of 16.85% [2] Revenue and Segment Performance - The Aerospace and Defense (A&D) segment, which constituted 45% of total sales in the previous quarter, is expected to have driven revenue growth due to a record backlog of approximately $1.46 billion [3][8] - The strong order pipeline and favorable program mix in the A&D segment are anticipated to have supported stable utilization levels and improved operational efficiency [3] Strategic Initiatives - TTM Technologies has undertaken strategic capacity and footprint expansion initiatives, including the acquisition of a large facility in Wisconsin and land rights in Penang, Malaysia, enhancing global manufacturing flexibility and supply-chain resilience [4][8] - The company entered the quarter with a robust financial position, featuring $97.8 million in operating cash flow and $448 million in cash, allowing for investments in capacity expansion and technology upgrades [5] Challenges and Market Dynamics - Despite the positive factors, TTM Technologies may face challenges due to softer bookings momentum, as indicated by a book-to-bill ratio of 0.89 in the second quarter, suggesting new orders lagged behind shipments [6] - This imbalance could limit near-term revenue visibility and production activity, potentially impacting sales growth and capacity utilization [6] Earnings Prediction Model - The current model does not predict a definitive earnings beat for TTM Technologies, as it has an Earnings ESP of 0.00% and a Zacks Rank of 2 (Buy) [7]

Industry Overview - The global PCB industry is characterized by a large number of manufacturers, low concentration, and intense market competition. However, the industry is experiencing significant growth opportunities due to the booming sectors of electric vehicles, 5G communication, servers, cloud computing, and artificial intelligence. Prismark forecasts a steady growth of the global PCB market at a compound annual growth rate (CAGR) of 5.2% from 2024 to 2029, with the market size expected to exceed $90 billion, reaching $94.661 billion by 2029 [1]. Company Strengths - Hongban Technology has developed strong technical capabilities and production experience in the research and manufacturing of various PCB products. The company focuses on the R&D, production, and sales of printed circuit boards, targeting the mid-to-high-end application market with characteristics of high precision, high density, and high reliability. It is one of the few companies in the industry with a high revenue share from HDI boards and the ability to mass-produce any interconnected HDI boards and IC substrates [1]. Technical Capabilities - Hongban Technology has established a comprehensive technical system in the high-end HDI board production field, achieving breakthroughs in several key processes. The minimum aperture for laser blind holes can be controlled at 50μm, and the thinnest thickness of the core board plating layer is only 0.05mm. The company can produce HDI boards with up to 26 layers, with overall blind hole layer deviation accurately controlled within 50μm, placing its technology at the forefront of the industry. In the IC substrate field, the company has mastered processes such as Tenting and mSAP, achieving high-precision manufacturing with sample minimum line width/spacing reaching 10μm/10μm and mass production minimum line width/spacing of 18μm/18μm [2]. Product Structure - Hongban Technology has formed a complete product structure, including HDI boards, rigid boards, flexible boards, rigid-flex boards, class substrates, and IC substrates. The company possesses comprehensive R&D and production capabilities, providing customers with diverse product options and one-stop services. Its products are widely used in consumer electronics, automotive electronics, high-end displays, and communication electronics, with significant competitive advantages and market positions in the consumer electronics and automotive electronics sectors [2]. Customer Base - Hongban Technology has established a solid customer base in the PCB industry over the years, leveraging its leading technical strength and reliable product quality. In the consumer electronics sector, the company has formed long-term stable partnerships with globally recognized smartphone brands such as OPPO, vivo, and Honor. In the automotive electronics sector, it maintains close cooperation with well-known electric vehicle manufacturer BYD. In the high-end display sector, stable partnerships have been established with leading companies in the LED display industry, such as Zhaochi and Zhouming Technology. These high-quality customers possess strong market competitiveness and industry influence, reflecting Hongban Technology's technical strength and laying a solid foundation for the company to continue exploring new markets [3]. Future Outlook - As the PCB industry continues to grow, Hongban Technology will leverage its advantages in technology, products, and customers to focus on the R&D, production, and sales of mid-to-high-end printed circuit boards. The company aims to deepen its technical layout and strive to achieve its vision of becoming a world-class circuit board manufacturing base [3].

Core Viewpoint - The company, Shenghong Technology, specializes in the research, production, and sales of high-density printed circuit boards, with applications in various advanced fields such as artificial intelligence, automotive electronics, and new communication technologies [1] Group 1: Company Overview - Shenghong Technology is focused on high-density printed circuit boards, which are essential for modern technological applications [1] - The company's products are utilized in sectors including artificial intelligence, automotive electronics (new energy), next-generation communication technology, big data centers, industrial interconnect, medical instruments, computers, and aerospace [1] Group 2: Innovation and Competitive Position - The company emphasizes the importance of research and development, innovation, and product upgrades to maintain its competitive edge [1] - Shenghong Technology is actively engaged in cutting-edge fields such as AI computing power, AI servers, humanoid robots, and autonomous driving, indicating a strong commitment to technological advancement [1] - The company aims to strengthen its position as an industry leader through continuous technical breakthroughs [1]

Core Insights - ECARX has announced a strategic partnership with Victory Giant Technology (VGT) to develop advanced computing platforms for the automotive sector [1][5] - VGT specializes in high-density interconnect (HDI) and high-layer-count printed circuit boards (PCBs) used in automotive intelligence and AI applications [2][3] - The automotive industry is increasingly demanding high-performance computing platforms, which raises the need for precision and reliability in manufacturing [3][4] Company Overview - ECARX is a global automotive technology provider focused on delivering turnkey solutions for next-generation smart vehicles, including system on a chip (SoC) and central computing platforms [6][7] - Founded in 2017 and listed on Nasdaq in 2022, ECARX has over 1,600 employees across 13 locations worldwide [7] - The company has partnerships with major automakers, including Volkswagen Group and FAW Group, and its products are present in over 9.3 million vehicles globally [7] Industry Context - The demand for centralized AI-capable computing architectures in the automotive industry is growing, necessitating advanced manufacturing capabilities [3][4] - VGT's expertise in producing custom-engineered PCBs will support ECARX's intelligent manufacturing centers, facilitating system integration from R&D to mass production [5] - The collaboration aims to extend technological advancements into other emerging industries beyond automotive intelligence [5]

Summary of Conference Call Notes Industry Overview - **Industry**: ABF (Ajinomoto Build-up Film) and BT (Bismaleimide Triazine) substrates - **Outlook**: The overall supply-demand outlook for ABF substrates is improving, with expectations of a return to balance by mid-2026, leading to sustainable pricing for suppliers post-2026 [1][3][10] Key Points Demand and Growth Projections - **AI Server Applications**: Demand for high-end ABF substrates is primarily driven by AI server applications, projected to account for 18% in 2025, 21% in 2026, and 26% in 2027 of the overall Total Addressable Market (TAM) [2][10][18] - **TAM Growth**: The ABF substrate TAM is expected to grow at a CAGR of 24% from 2025 to 2027 [3][10][16] - **Capacity Growth**: Industry capacity growth is forecasted to slow to 11% YoY from 2025 to 2027, down from 17% CAGR from 2020 to 2024 [3][10] Pricing Outlook - **Price Increases**: ABF and BT substrate prices are expected to rise by 5-10% each quarter in 2026 due to supply shortages and strong demand [4][31][35] - **BT Substrate Pricing**: A significant price increase of 30-45% has been observed since July, with further increases anticipated [4][31] - **Material Shortages**: Shortages of key production materials are expected to restrict ABF substrate suppliers' utilization rates in 2026, leading to a high order backlog ratio in early 2027 [11][12] Company-Specific Insights - **NYPCB**: Maintained a Buy rating with a revised 12-month target price of NT$330, reflecting a positive outlook due to flexible pricing strategies [9][68] - **Kinsus**: Expected to outperform due to high exposure to BT substrates, with a target price increase to NT$125 [8][63][68] - **Unimicron**: Anticipated to underperform due to weak performance in the AI HDI market, with a target price adjustment to NT$150 [8][9][68] Earnings Revisions - **NYPCB**: 2025E earnings revised down by 1% due to rising costs, but 2026/27E earnings revised up by 6%/10% due to better pricing outlook [59][60] - **Kinsus**: 2025E earnings revised down by 2%, but 2026/27E earnings revised up by 12%/17% [63][64] - **Unimicron**: 2025E earnings revised down by 7%, with 2026/27E earnings revised up by 3%/15% [66][67] Additional Insights - **Networking Demand**: Anticipated surge in networking-related demand, projected to grow at a CAGR of ~150% from 2024 to 2027, driven by increased data traffic in AI datacenters [19][21] - **Supply Constraints**: Expected capacity constraints from 2027, with no new major capacity expansions announced by Japanese and Taiwanese suppliers [22][30] Conclusion The ABF and BT substrate markets are poised for significant growth driven by AI applications and networking demands, with favorable pricing dynamics expected to support supplier margins. Companies like NYPCB and Kinsus are well-positioned to capitalize on these trends, while Unimicron faces challenges in specific market segments.

Group 1 - The core viewpoint of the news is that the China Securities Regulatory Commission (CSRC) has requested supplementary materials from Shenghong Technology regarding its business scope and share pledge situation as part of its listing application on the Hong Kong Stock Exchange [1][2] - Shenghong Technology is a leading global supplier of AI and high-performance computing PCBs, focusing on the R&D, production, and sales of advanced HDI and multi-layer PCBs [2] - The company has achieved significant revenue growth, with reported revenues of approximately 7.885 billion RMB, 7.931 billion RMB, and 10.731 billion RMB for the fiscal years 2022, 2023, and 2024 respectively [2] Group 2 - The CSRC has specifically requested Shenghong Technology to clarify whether its business operations fall under the negative list of foreign investment access measures [1] - The company is required to provide details on the share pledge situation of its controlling shareholders and actual controllers, assessing the potential for significant ownership disputes or changes in control [1] - Shenghong Technology's market share in the AI and high-performance computing PCB sector is the largest globally, with key applications including AI computing cards, servers, and data center switches [2]

Core Insights - TTM Technologies, Inc. is leveraging opportunities in the defense and AI sectors while still being considered a bargain despite a recent price increase since April [1] Company Strategy - The company has made strategic investments in its growth path over the past few years, positioning itself favorably within its industry [1] Research Approach - Avalon Capital Research emphasizes the importance of delivering independent and actionable research on U.S.-listed companies, aiming to provide clarity on earnings events, corporate strategy shifts, and sector trends [1] - The research firm combines institutional rigor with modern digital publishing to make high-quality analysis accessible to both professional and retail investors [1]

Core Viewpoint - The company has consistently focused on high-quality PCB research and manufacturing since its establishment, with a wide range of downstream applications [1] Group 1: Company Focus and Strategy - The company emphasizes the importance of market demand changes and is actively promoting business layout and customer development in emerging fields represented by robotics and LiDAR [1] - The company utilizes advanced technology, excellent quality, and fast, efficient service to drive its business initiatives [1] Group 2: Product Application and Revenue - Some of the company's products are applied in humanoid robot actuators, although the current revenue contribution from this segment is less than 1% [1]