Core Viewpoint - Dongshan Precision Manufacturing Co., Ltd. (002384.SZ) has submitted an application to list on the Hong Kong Stock Exchange, with UBS Group, Haitong International, GF Securities, and CITIC Securities as joint sponsors. The company is recognized as the world's largest PCB supplier for edge AI devices, with products used in smartphones, personal computers, automobiles, industrial applications, and IoT devices, and is rapidly expanding into the data center terminal market [1][3]. Company Overview - Dongshan Precision is an innovative company focused on smart manufacturing with a global perspective. It has established a leading market position in core product areas and is the largest edge AI device PCB supplier and the second-largest soft board supplier globally, based on projected 2024 revenues [3]. - The company offers a diverse product portfolio, including PCBs, precision components, touch panels, LCD modules, and optical modules, which are widely used in consumer electronics, automotive, data centers, communication equipment, and industrial control devices [3][4]. - Dongshan Precision is the only supplier globally that possesses capabilities in PCB, optical chips, and optical modules, which together account for approximately 9% to 14% of AI server material costs, enhancing its ability to enter the high-growth data center terminal market [3]. Market Position and Strategy - The company has long-term partnerships with four of the top five consumer electronics brands, four of the top five electric vehicle manufacturers, and four of the top five cloud service providers globally. It engages deeply with clients during the early product design stages, fostering trust and aligning with industry trends [4]. - Dongshan Precision is expanding its global manufacturing footprint and enhancing regional operational capabilities to meet evolving customer demands. The recent acquisition of European automotive parts supplier GMD exemplifies this strategy [4]. - As of the first half of 2025, 77.7% of the company's revenue came from clients outside mainland China, with production facilities in 15 countries and regions across Asia, North America, Europe, and Africa, employing approximately 20% of its workforce abroad [4]. Financial Performance - The company reported revenues of RMB 31.58 billion, RMB 33.65 billion, and RMB 36.77 billion for the years 2022, 2023, and 2024, respectively. The primary revenue source during this period was electronic circuits [8]. - Gross profits for the same years were RMB 5.09 billion, RMB 4.68 billion, and RMB 4.22 billion, indicating a decline primarily due to reduced margins in communication equipment components and increased losses in other areas [9]. - Net profits for 2022, 2023, and 2024 were RMB 2.37 billion, RMB 1.97 billion, and RMB 1.09 billion, respectively [10]. Industry Overview - The PCB industry is essential for electronic devices, providing critical functions such as precise electrical interconnection and low-loss signal transmission. The increasing performance demands of electronic devices are driving technological upgrades in the PCB industry [11]. - The global PCB market is projected to grow significantly, with the data center PCB market expected to reach USD 12.5 billion in 2024 and grow at a compound annual growth rate (CAGR) of 10.9% to USD 21 billion by 2029 [14]. - The edge AI device PCB market is anticipated to expand rapidly, with a market size exceeding USD 9.8 billion in 2024 and a projected CAGR of 26.4% to reach USD 31.7 billion by 2029 [25].

Company Overview - Dongshan Precision Manufacturing Co., Ltd. (东山精密) has submitted an application for listing on the Hong Kong Stock Exchange, with UBS Group, Haitong International, Guangfa Securities, and CITIC Securities as joint sponsors [1] - The company is recognized as the world's largest PCB supplier for edge AI devices, with products utilized in smartphones, personal computers, automobiles, industrial applications, and IoT devices [1][3] - Dongshan Precision is also the second-largest supplier of flexible printed circuit boards (FPC) and ranks among the top three PCB suppliers globally [3] Product and Market Position - The company has established a leading market position in core product areas and offers a diverse product portfolio, including PCBs, precision components, touch panels, LCD modules, and optical modules [3] - Dongshan Precision is the only supplier globally that possesses capabilities in PCBs, optical chips, and optical modules, which together account for approximately 9% to 14% of the material costs for AI servers [3] - The company has long-term partnerships with four of the top five consumer electronics brands, four of the top five electric vehicle manufacturers, and four of the top five cloud service providers [4] Financial Performance - The company reported revenues of RMB 31.58 billion, RMB 33.65 billion, and RMB 36.77 billion for the years 2022, 2023, and 2024, respectively [7] - Gross profits for the same years were RMB 5.09 billion, RMB 4.68 billion, and RMB 4.22 billion, indicating a decline in gross profit primarily due to reduced margins in communication device components and increased losses in other areas [8] - Net profits for 2022, 2023, and 2024 were RMB 2.37 billion, RMB 1.97 billion, and RMB 1.09 billion, respectively [9] Industry Overview - The PCB industry is essential for electronic devices, providing critical functions such as precise electrical interconnection and low-loss signal transmission [10] - The global PCB market is projected to grow significantly, with the data center PCB market expected to reach USD 12.5 billion in 2024 and grow at a compound annual growth rate (CAGR) of 10.9% from 2024 to 2029 [13] - The edge AI device PCB market is anticipated to exceed USD 9.8 billion in 2024, with a CAGR of 62.5% from 2019 to 2024, driven by the increasing demand for edge computing capabilities [24] Strategic Initiatives - Dongshan Precision is expanding its global manufacturing footprint and enhancing localized operations to meet evolving customer demands [4] - The recent acquisition of European automotive parts supplier GMD is part of the company's strategy to integrate manufacturing expertise into localized operations [4] - The company aims to provide comprehensive solutions by leveraging synergies in research and development, engineering, supply chain, and operations [3]

Investment Rating - The report maintains a "Recommended" rating for the company [4]. Core Views - The company achieved a revenue of 16.955 billion yuan in H1 2025, a year-on-year increase of 1.96%, with a net profit attributable to shareholders of 758 million yuan, up 35.21% year-on-year [4]. - The electronic circuit segment remains the primary revenue source, while the new energy business shows rapid growth, achieving a revenue of 4.940 billion yuan, a year-on-year increase of 29.66% [4]. - The company plans to invest up to 1 billion USD to expand PCB capacity, focusing on high-end PCB products to meet increasing customer demand [4]. - The company is actively pursuing acquisitions to diversify its business, including the acquisition of GMD Group and Solstice Optoelectronics, with total investments not exceeding 5.935 billion yuan [4]. Financial Performance Summary - H1 2025 financial highlights include: - Revenue: 16.955 billion yuan, up 1.96% year-on-year - Net profit: 758 million yuan, up 35.21% year-on-year - Gross margin: 13.59%, up 0.52 percentage points year-on-year - Net margin: 4.47%, up 1.11 percentage points year-on-year [4]. - The company forecasts revenues of 42.118 billion yuan, 52.404 billion yuan, and 60.264 billion yuan for 2025, 2026, and 2027, respectively, with corresponding net profits of 2.524 billion yuan, 3.425 billion yuan, and 4.565 billion yuan [5][6]. Future Projections - Expected revenue growth rates are 15% for 2025, 24% for 2026, and 15% for 2027 [5]. - The projected earnings per share (EPS) are 1.38 yuan for 2025, 1.87 yuan for 2026, and 2.49 yuan for 2027, with corresponding price-to-earnings (PE) ratios of 40, 30, and 22 times [5][6].