Action | 26 Feb 2026 00:06:19 ET │ 13 pages Victory Giant Tech (300476.SZ) Raise TP to Rmb415.0 on Valuation Rollover without Earnings Change; Relatively Cheap Stock to Chase AI Beta and a GTC pick CITI'S TAKE We raise VGT TP to Rmb415.0 based on 20x 2027 P/E (rollover from 25x 2Q26-1Q27), set at 3-yr average P/E. We maintain our net profit forecast unchanged at Rmb8.6/Rmb17.9bn for 2026/2027E. As we discussed in our 2026 outlook report and marketing feedback note, VGT upside would be unlocked when investor ...

23 February 2026 | 12:38AM HKT Equity Research Victory Giant (300476.SZ): AI servers PCB in strong growth; Capacity expansion and diversification to better catch the rising demand; Buy We reiterate our positive view on Victory Giant's growth ahead where we expect net income to grow at 129% / 82% YoY in 2026E / 2027E driven by strong revenues growth and rising GM with AI servers PCB revenues contribution to up to 70% by 2027E (vs. 29% in 2025E). As we highlighted recently in Global PCB allocation breakdown, ...

Summary of Key Points from the Conference Call Industry Overview - The PCB/substrate market is experiencing significant growth driven by increased content in AI servers and anticipated ASP hikes in 2026 [2][12] - The supply of ABF substrates is concentrated in Taiwan, Korea, and Japan, with China playing a crucial role in MLPCB and HDI production [3] Company Dynamics Unimicron - Forecasts a 25% revenue and 117% EPS CAGR from 2025-2027, with an OPM expected to reach 16% due to strong demand for high-end ABF substrates [6] - Current stock price is NT$347.50 with a target price of NT$270.00, indicating a potential upside of ~15% [10] - Anticipates improved utilization rates and ASP growth due to T-glass shortages, with revenue expected to grow by ~30% in 2026 [70][83] Ibiden - Strong outlook due to Nvidia's GPU ramp-up and Intel's server CPU demand, with a price target set at ¥9,200 [7] - Plans to increase capex to ¥500 billion over the next three years, focusing on advanced technology for high ASP products [47] Ajinomoto - Holds a 95% market share in ABF Film, generating a 54% operating profit margin, with expectations for continued growth driven by AI demand [8] - Revenue growth forecasted at 40%+ through 2027 [8] Financial Performance - AI-related products are currently enjoying elevated margins, with gross margin expansions ranging from ~1ppt to 14ppts across various companies [5][58] - Companies like EMC and WUS are generating around 20% ROIC, the highest in the supply chain [5] Market Trends - The PCB market is capital-intensive, requiring continuous capacity expansion to meet cyclical demand [45] - Companies are ramping up investments for capacity expansion, with VGT expected to see a 7.8x increase in capex in 2026 [45] - The demand for high-end materials, particularly T-glass, is expected to remain tight through 2026, impacting pricing and margins [48] Investment Implications - Unimicron, Ajinomoto, and Ibiden are rated as outperformers, with respective price targets indicating significant upside potential [10][11] - The overall PCB market is projected to see revenue increases in 2025-2027, particularly for companies with higher AI and server exposure [38] Additional Insights - The complexity of PCBs is increasing, which supports a double-digit market outlook [4] - New product cycles, including midplane and backplane MLPCBs, are expected to partially offset competitive pressures on margins [5][58] - The geopolitical sensitivity of PCBs is lower compared to IC substrates, as they are sub-components shipped to ODMs for assembly [3] This summary encapsulates the key points discussed in the conference call, highlighting the dynamics of the PCB/substrate industry and the performance outlook for major companies involved.

Summary of Conference Call Notes on Taiwan PCB & Laminates Industry Overview - The conference call focused on the Taiwan PCB (Printed Circuit Board) and Laminates sector, specifically discussing the sales performance of two companies: Elite Material (EMC) and TUC. Key Company Insights Elite Material (EMC) - **Sales Performance**: EMC reported January sales of NT$10.9 billion, reflecting a 56% year-over-year increase and a 25% month-over-month increase, accounting for 41% of Citi's forecast for Q1 2026 [1][1] - **Market Outlook**: The strong sales in January are seen as a positive indicator for the CCL (Copper Clad Laminate) sector in 2026, suggesting potential for stronger-than-expected sales momentum even without the anticipated M9 adoption [1][1] - **Valuation**: The target price for EMC is set at NT$2,100, based on a target PE multiple of 25x on the average EPS for 2H26-1H27. This valuation is supported by a strong earnings outlook due to EMC's leading position in CCL supply for AI GPU and ASIC [8][8] - **Risks**: EMC is rated high-risk due to share price volatility, primarily from debates over the spec upgrade for next-gen AI servers. Key risks include slower-than-expected CCL upgrade trends and production bottlenecks in the AI supply chain [9][10] TUC - **Sales Performance**: TUC reported January sales of NT$3.5 billion, a 75% year-over-year increase and a 9% month-over-month increase, accounting for 38% of Citi's forecast for Q1 2026 [1][1] - **Market Outlook**: TUC's growth outlook is bolstered by AI ASIC and 800G products, with capacity ramping up in Thailand [11][11] - **Valuation**: The target price for TUC is set at NT$600, based on a target PE multiple of 22x on the average EPS for 2H26-1H27. This is justified by strong margin expansion potential from a higher sales mix of AI ASIC server and 800G products [11][11] - **Risks**: Similar to EMC, TUC is also rated high-risk due to share price volatility and potential production bottlenecks. Additional risks include weaker-than-expected demand for AI servers and flexible practices of OOC policy by end customers [12][13] Additional Insights - **Overall Sector Sentiment**: The positive sales figures for both EMC and TUC in January are viewed as a strong start for the CCL sector in 2026, indicating resilience in the face of potential challenges such as reduced working days in February due to the Chinese New Year [1][1] - **Investment Considerations**: Investors are advised to consider the ongoing spec migration and the ramp-up of next-gen AI ASICs as key drivers for growth in the CCL sector [1][1] This summary encapsulates the key points discussed in the conference call regarding the Taiwan PCB and Laminates sector, focusing on the performance and outlook of EMC and TUC.

Summary of Conference Call Notes on Taiwan PCB & Laminates Industry Industry Overview - The conference call focused on the **Taiwan PCB & Laminates** industry, specifically the **ABF/BT/CCL sector** and the implications of **Nittobo's results** on the market dynamics [1][2]. Key Points and Arguments 1. **Nittobo's Financial Results**: - Nittobo reported its results on February 5, 2026, which were analyzed for insights into the ABF/BT substrate market [1]. - The lack of details regarding the **T glass price hike** from April was noted as disappointing, but the potential for **additional T glass capacity expansion** and further price hikes is seen as favorable for ABF/BT substrate manufacturers [1][2]. 2. **Market Dynamics**: - The anticipated price hikes in T glass are expected to benefit substrate makers in the long term, although these changes may not materialize until **2027** [2]. - Limited color options for the near-term T glass price hike could dampen sentiment in the substrate sector, as high expectations are already priced in [2]. 3. **Impact on New T Glass Vendors**: - New T glass vendors may face challenges as their business growth could be limited due to existing customer preferences for Nittobo's solutions [1]. 4. **PCB CCL Market**: - Discussions regarding **NE/NER price hikes** indicate strong demand from the **AI PCB** sector, which is favorable for overall PCB CCL companies [1]. - However, potential capacity constraints on NER could negatively impact CCL players that heavily rely on Nittobo's solutions [1]. Additional Important Insights - The overall read-across from Nittobo's results for substrate names is considered **neutral**, while the read-across for PCB CCL is viewed as **positive** due to the discussions on price hikes [2]. - The ongoing **glass shortage** remains a critical issue affecting the industry, influencing both pricing and availability of materials [1]. This summary encapsulates the essential insights from the conference call regarding the Taiwan PCB & Laminates industry, highlighting the implications of Nittobo's results and the current market dynamics.

Summary of Victory Giant (300476.SZ) Conference Call Company Overview - **Company**: Victory Giant (300476.SZ) - **Industry**: PCB (Printed Circuit Board) manufacturing, specifically for AI servers Key Points and Arguments 1. **Growth Drivers**: - Victory Giant's growth is supported by several factors including: - Global ramp-up in AI infrastructure - Upgrades in AI PCB specifications towards higher layer counts - Increasing dollar content of PCBs in AI servers - Expansion into ASIC AI server PCBs - Global capacity expansion backed by solid orders [1][6][18] 2. **Capacity Expansion**: - The company is actively expanding its production capacity: - The Huizhou 4th plant is operational in stages - The 10th and 11th plants are under construction - The second phase of the Thailand A1 plant has started producing verification boards - Construction of the Thailand A2 plant and a plant in Vietnam is progressing [1][6] 3. **Financial Performance**: - 4Q25 net income guidance is set at Rmb1,115 million, reflecting a 1% quarter-over-quarter increase and a 186% year-over-year increase [6] - Revenue for 1Q25 was Rmb4,312 million, showing a 42% quarter-over-quarter increase [6] - Despite a projected 14% cut in 2025E net income due to flat revenue growth, the company expects strong growth in 2026-27E with revenues increasing by 88% and 77% year-over-year respectively [8][19] 4. **Earnings Revision**: - The earnings estimates for 2025E have been revised down from Rmb21,079 million to Rmb19,483 million, reflecting an 8% decrease [9] - The company’s gross profit (GP) and operating profit (OP) estimates have also been adjusted downwards for 2025E [9] 5. **Valuation**: - The 12-month target price (TP) remains unchanged at Rmb550, based on a target P/E multiple of 26.3x derived from peer correlations [17][19] - The current price is Rmb271.37, indicating a potential upside of 102.7% [19] 6. **Market Position**: - Victory Giant is expected to maintain its leading position in the supply chain of major GPU AI server players, with an increasing market share in the ASIC AI server supply chain [1][6] Important but Overlooked Content - **Risks**: - Key risks include slower-than-expected ramp-up in AI server shipments, delays in PCB specification upgrades, and increased market competition [18] - **Revenue Projections**: - Revenue projections for 2026E and 2027E are Rmb36,642 million and Rmb64,752 million respectively, indicating significant growth potential [19] This summary encapsulates the critical insights from the conference call regarding Victory Giant's strategic direction, financial outlook, and market positioning within the PCB industry for AI servers.

Summary of Thailand PCB Trip Takeaways Industry Overview - **Industry**: PCB (Printed Circuit Board) manufacturing in Thailand - **Companies Visited**: Victory Giant Technology (VGT), Dynamic PCB, Gold Circuit Electronics (GCE), Zhen Ding Technology (ZDT) [1] Core Insights - **Robust Demand**: Strong demand driven by volume growth, material upgrades, and increased production complexity, particularly in GPU and ASIC servers. The trend towards AI PCBs adopting more HDI or hybrid MLB/HDI designs is noted, with suppliers preparing equipment and capacity accordingly [2][3] - **Capex and Production Growth**: Significant capital expenditure (capex) plans are observed, with ZDT expecting 2026 capex to be approximately NT$50 billion (+60-70% year-over-year). GCE's monthly production output is estimated to increase by around 40% year-over-year by the end of 2026 [3] - **Supplier Base Expansion**: A broadening of the supplier base is noted, with end customers qualifying more PCB suppliers. However, this may not lead to meaningful orders as customers prefer to buy from key T1 suppliers. No oversupply risk is anticipated for the year [4] Cost Structure - **Production Costs**: Current production costs in Thailand are about 20% higher than in China but slightly lower than in Taiwan. The higher costs are attributed to logistics and installation expenses, although wages for production line operators are lower in Thailand [5] Company Preferences - **Investment Preference**: GCE is preferred over ZDT due to expected strong growth from ASIC and networking projects [6] Financial Projections - **Earnings Estimates**: Adjustments made to earnings estimates include a 3% decrease for 2025, but increases of 8% and 13% for 2026 and 2027, respectively, driven by new capacity expansion plans [20] - **Price Target**: GCE's price target raised to NT$800 from NT$705, reflecting higher earnings estimates and a favorable mix shift towards AI server PCBs and high-speed networking PCBs [25][27] Additional Insights - **Factory Developments**: Zhen Ding's Thailand campus is set to accommodate multiple factories, with various stages of construction and production timelines outlined. The campus is expected to account for 15-20% of total capacity in five years [14] - **Market Dynamics**: The longer lead times for PCB fabrication equipment and scarcity of high-end materials may pose challenges for new entrants. However, customers are still qualifying new suppliers for better supply chain management [19] - **Material Supply**: Elite Material remains a leading supplier for M8+ CCLs, with no de-specification observed for AI PCBs [19] Financial Metrics - **Projected Financials**: - 2025 Net Sales: NT$59.92 billion - 2026 Net Sales: NT$86.19 billion - 2027 Net Sales: NT$113.91 billion - 2025 Net Income: NT$9.25 billion - 2026 Net Income: NT$16.74 billion - 2027 Net Income: NT$24.52 billion [32][34] This summary encapsulates the key takeaways from the Thailand PCB trip, highlighting the robust demand, financial projections, and strategic insights regarding the PCB industry and the companies involved.

Summary of Global PCB and CCL Market for AI Servers Industry Overview - The global PCB (Printed Circuit Board) and CCL (Copper Clad Laminate) market for AI servers is projected to reach **US$27 billion** and **US$19 billion** respectively by **2027E**, up from **US$17 billion** and **US$8 billion** in previous estimates, indicating a **140%** and **178% CAGR** from **2025-2027E** [2][8][40]. Key Drivers of Growth 1. **Demand Drivers**: - The demand is primarily driven by the rise of high-end AI servers, including GPU and ASIC servers, which require advanced PCBs and CCLs [1][40]. - High-end products such as **30+ layer multilayer PCBs**, **6L+ HDI**, and **M9+ CCL** are expected to account for **16%**, **23%**, and **14%** of total shipments for AI server applications by **2027E** [1][42]. 2. **Specification Upgrades**: - The transition to next-generation high-end AI servers is expected to significantly increase the value TAM (Total Addressable Market) [1][42]. - The adoption of **M9 materials** and **6L HDI** is anticipated to enhance product value and performance [42]. 3. **Capex Growth**: - Capex for PCB suppliers is expected to grow by **24%** YoY in **2025**, **23%** in **2026E**, and **15%** in **2027E**; for CCL suppliers, growth is projected at **38%**, **22%**, and **7%** respectively [1][57]. 4. **Utilization Rates**: - Utilization rates for PCB and CCL are expected to remain high despite capacity expansions, driven by the ramp-up of AI infrastructure [1][41]. Market Dynamics - **Shipment Growth**: - PCB shipments are projected to increase by **69% CAGR** to **2.5 million square meters** by **2027E**, while CCL shipments are expected to grow by **72% CAGR** to **78 million sheets** [2][41]. - **Average Selling Price (ASP) Increases**: - The ASP of AI server PCBs is expected to grow at **42% CAGR**, reaching **US$11,062** per square meter by **2027E**; CCL ASP is projected to increase by **62% CAGR** to **US$239** per sheet [43][40]. Gross Margins and Profitability - Major PCB and CCL companies are expected to see higher gross margins due to increasing sales of high-margin AI server products, tight supply, and rapid transitions to newer generations [44][40]. Investment Recommendations - Companies recommended for investment include **Shennan (002916.SZ)**, **GCE (2368.TW)**, **EMC (2383.TW)**, and **TUC (6274.TWO)**, which are positioned to benefit from the growth in the AI server PCB and CCL market [3]. Conclusion - The global PCB and CCL market for AI servers is poised for robust growth driven by technological advancements, rising demand, and significant increases in average selling prices. This presents a compelling investment opportunity in the sector, particularly for companies that are adapting to the evolving specifications and demands of AI infrastructure.

Summary of Shennan Circuit Conference Call Company Overview - **Company**: Shennan Circuit (002916.SZ) - **Industry**: Printed Circuit Board (PCB) and Copper Clad Laminate (CCL) Key Points Incentive Plan - Shennan announced a Phase II Restricted Stock Incentive Plan, granting **15.16 million shares** (2.27% of total issued capital) to **667 key personnel** at a price of **RMB 114.72/share** [1][2] - The plan aims to align key talent with shareholder interests during the AI upcycle, with stringent unlocking criteria including: - Recurring net profit CAGR of **≥13%** compared to 2024 - Continuous ROE improvement to **>12.8%** by 2028 - Performance in the **75th percentile** of industry peers [1][2] Financial Performance Expectations - The incentive scheme is designed to ensure double-digit year-on-year growth during **2026-2028E** and to outperform major peers [2] - The exercise price reflects a **40% discount** from the closing price of **RMB 191.2/share** prior to the announcement [2] Market Position and Valuation - Shennan's target price is set at **RMB 281**, indicating an expected share price return of **46.1%** and a total return of **47.1%** [3] - The company is positioned as a key player in the domestic AI server and auto segments, contributing over **55%** of total PCB sales [7] - The target PE of **48x** forward reflects a **40-50% premium** to the sector average, justified by Shennan's leading position and technology leadership [7] Risks - Potential downside risks include: - Slower-than-expected growth in the China AI server market - Weaker demand for auto and ADAS systems - Lower-than-expected profits from the new plant in Wuxi - Higher laminate cost inflation [8] Conclusion - The recent stock price retreat of over **20%** from the year-to-date peak in early October has led to a reiteration of the **Buy** rating [1]

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