Investment Rating - The report maintains an "Add" investment rating for the company [2] Core Views - The company reported a revenue of 3.77 billion yuan for the first half of 2025, representing a year-on-year increase of 91%, with a net profit of 530 million yuan, up 452% year-on-year [1] - The company is investing 1.9 billion yuan to expand its PCB production capacity, focusing on AI computing clients and high-end markets [6] - The second quarter of 2025 saw a revenue of 2.19 billion yuan, a year-on-year increase of 101.1%, driven by the growth in AI servers and high-speed switches [6] - The company expects significant growth in revenue and net profit from 2025 to 2027, with projected revenues of 82.0 billion yuan, 118.9 billion yuan, and 160.6 billion yuan respectively [6] Financial Data and Valuation - The company’s total revenue is projected to decline by 7% in 2023, followed by growth rates of 43%, 75%, 45%, and 35% in the subsequent years [12] - The projected earnings per share (EPS) are expected to rise from -0.03 yuan in 2023 to 3.71 yuan in 2027 [12] - The price-to-earnings (PE) ratio is expected to improve from -1826.8 in 2023 to 14.8 in 2027 [12] - The company’s return on equity (ROE) is projected to increase from -0.6% in 2023 to 36.8% in 2027 [12]

Group 1 - The report indicates that the "bull market atmosphere" is continuously strengthening, with the main logic of "anti-involution" significantly improving the supply-demand structure for midstream manufacturing in 2026 [6][14] - The report suggests that the conditions for residents to fully allocate equity are still lacking, but the profit effect is accelerating, potentially leading to an earlier time for comprehensive incremental speculation in A-shares [6][14] - The report recommends actively seeking new structural opportunities in the current market phase, which is seen as a transitional stage for the market to find the main structure of the bull market [6][14] Group 2 - The report highlights the "iron triangle" stocks: Ruike Laser, Giant Network, and Heng Rui Medicine, which are expected to perform well due to their strong market positions and growth potential [6][17] - Other recommended stocks include: Pengding Holdings, Yangnong Chemical, Sun Paper, Zhongmin Resources, China Shipbuilding, Maifusi (Hong Kong), and Jianfa International Group (Hong Kong) [6][17] - The report emphasizes the importance of technology with industrial trend catalysts and midstream manufacturing with improved supply-demand dynamics as key investment themes [6][14] Group 3 - The previous stock combination from July 1 to July 31, 2025, achieved a return of 5.11%, with A-shares averaging a 3.53% increase, while the Hang Seng Index saw an increase of 2.91% [6][2] - Since the first release of the stock combination on March 28, 2017, the cumulative increase has reached 322.85%, with A-shares up 251.34% and Hong Kong stocks up 809.47% [6][2] - The report provides detailed performance metrics for the recommended stocks, including market capitalization and price changes, indicating a strong performance relative to benchmarks [6][15]

Summary of Conference Call Records Industry Overview - The conference call discusses the rapid growth of the AI computing market, particularly in the ASIC and PCB sectors, with a significant increase in demand expected due to AI servers and advanced switches [1][2][3]. Key Points and Arguments - **Market Growth Projections**: The PCB market is projected to exceed 50 billion yuan by 2025 and is expected to surpass 100 billion yuan by 2027, with AI servers accounting for over half of this demand [1][9]. - **ASIC Market Expectations**: Marvell has raised its ASIC market forecast to 55.4 billion USD by 2028, a 29% increase from previous estimates. Broadcom anticipates that the ASIC demand from three major clients will reach 60-90 billion USD by 2027 [1][2][8]. - **Supply-Demand Gap**: The PCB industry is expected to face a supply-demand gap, with a projected 10% shortfall in 2026 and 16% in 2027, primarily driven by unexpected AI demand surges [1][10]. - **Switch Upgrades**: The transition from 400G to 800G switches is leading to a significant increase in PCB demand, with 800G products having 6-8 more layers and costing 2-3 times more than 400G products [3][4]. Challenges in Production Expansion - **Challenges in Southeast Asia**: PCB manufacturers are expanding in Southeast Asia but face challenges such as talent shortages, inadequate infrastructure, and insufficient raw material supply, which slow down the expansion process [5][6]. - **Domestic Expansion**: Domestic PCB companies are expected to ramp up production from late 2025 to 2026, but this will not fully meet the surging demand driven by AI [7][10]. Company-Specific Insights - **Leading Companies**: Companies like Huadian (沪电) are highlighted as key players, with a projected output exceeding 30 billion yuan after capacity expansion. They are increasing CAPEX and collaborating closely with major clients like Google, AWS, and Meta [3][11]. - **Opportunities for Second-Tier Manufacturers**: Second-tier manufacturers, despite entering the market later, have significant opportunities due to the overall market growth. As long as they can expand capacity, they are likely to succeed [12]. Additional Important Information - **Talent and Infrastructure Issues**: The talent shortage in Thailand is a significant barrier, with a need for over 3,000 engineers by 2027, compounded by lengthy visa processes. Additionally, the high cost and instability of commercial utilities in Thailand affect production efficiency [5][6]. - **Future Demand Dynamics**: The demand for AI servers is expected to grow from less than 10 billion yuan in 2024 to over 60 billion yuan by 2027, significantly impacting PCB demand [9]. This summary encapsulates the critical insights from the conference call, focusing on the growth trajectory of the AI computing market, the challenges faced by PCB manufacturers, and the strategic positioning of key companies within the industry.