Ac t i o n | 16 Oct 2025 04:50:23 ET │ 14 pages Han's CNC Technology (301200.SZ) 3Q25E Preview: Record High Quarterly Revenue Expected Driven by AI-Related Demand CITI'S TAKE Han's CNC (HC) will report its 3Q25 results in the evening of 20 October. In contrast of 3Q low season with 20% QoQ revenue decline on average over the past four years (2021-24), we estimate HC's revenue to grow by 2% QoQ to hit record high of Rmb1.45bn in 3Q25E, driven by continuing strong PCB mechanical drilling equipment demand from ...

Summary of Han's CNC Technology (301200.SZ) 3Q25E Preview Company Overview - **Company**: Han's CNC Technology (HC) - **Ticker**: 301200.SZ - **Industry**: PCB Equipment Manufacturing - **Market Position**: Leading PCB equipment supplier in China with a global market share of 6.6% in 2024, expected to reach 10%-11% in 2025[27] Key Financial Projections - **3Q25 Revenue**: Estimated to reach Rmb1.45 billion, a 2% QoQ increase, contrasting with a typical 20% QoQ decline in the low season[1][2] - **YoY Revenue Growth**: Expected to grow by 86% YoY in 3Q25, up from 75% YoY in 2Q25[2] - **Net Income**: Projected to increase by approximately 180% YoY to Rmb168 million in 3Q25[1] - **Gross Profit Margin (GPM)**: Anticipated to expand by 6.3 percentage points YoY to 31.7% in 3Q25[13] Market Dynamics - **AI-Related Demand**: Strong demand for PCB mechanical drilling equipment driven by AI PCB customers, particularly Victory Giant Technology (VGT), which accounted for ~15% of HC's total revenue in 1H25[28] - **Industry Comparison**: Taiwanese competitor Ta Liang reported a 96% YoY revenue growth in 3Q25, indicating robust industry demand[3] Earnings Forecast Revisions - **Revised Earnings Forecasts**: 2025/26E earnings forecasts increased by 7%/15% due to the upward revision of the AI-PCB Total Addressable Market (TAM) by 5%/35%[1][4] - **Future Revenue Projections**: Expected revenues for 2025E and 2026E are Rmb5.413 billion and Rmb7.783 billion, respectively, reflecting a growth of 62% and 44% YoY[28] Valuation Metrics - **Target Price**: Increased to Rmb124, based on a 50x P/E ratio for 2026E, which is considered not aggressive given the projected 86% earnings CAGR for 2025-26E[5][29] - **Market Capitalization**: Approximately Rmb39.06 billion (US$5.48 billion) as of 16 October 2025[7] Risks and Considerations - **High-Risk Rating**: The stock is rated as high risk due to potential challenges such as weaker-than-expected demand for AI PCB equipment, rising component costs affecting GPM, and increased price competition in the industry[30] Additional Insights - **AI-PCB Upgrade**: The global AI-PCB TAM is projected to increase significantly, with corresponding PCB equipment TAM expected to reach Rmb15.9 billion by 2026E[4] - **Capacity Expansion**: HC is well-positioned to benefit from aggressive capacity expansions by VGT and other PCB manufacturers seeking certifications from AI server vendors[28] This summary encapsulates the critical insights and projections regarding Han's CNC Technology, highlighting its strong market position, financial growth, and the potential risks associated with its operations in the evolving PCB equipment industry.

Summary of Han's CNC Technology (301200.SZ) Conference Call Company Overview - Han's CNC Technology (HC) is a leading PCB equipment supplier in China, specializing in PCB drilling, exposure, testing, formation, and attachment equipment [18][11] - HC holds a 6.6% global market share and an 11.3% market share in China for PCB equipment in 2024 [18][14][17] Core Industry Insights - The global PCB equipment market is expected to resume growth in 2024, driven primarily by AI server and data center demands [2] - The total addressable market (TAM) for AI PCBs is projected to increase by 148% YoY from Rmb14.0 billion in 2024 to Rmb34.7 billion in 2025E, and further to Rmb53.0 billion in 2026E [2][24] - AI-related PCB equipment TAM is expected to reach Rmb23.8 billion in 2026E, which is 3.8 times the market size in 2024 [2] Financial Performance and Projections - HC's earnings are forecasted to grow by 89% and 59% YoY in 2025E and 2026E, respectively, driven by a revenue growth of 50% and 39% YoY [1][24] - The company’s gross profit margin (GPM) is expected to expand as AI PCB products, which require high-end equipment, increase from less than 10% in 2024 to 30%-50% in 2025E and 2026E [1][3][29] - HC's net profit is projected to reach Rmb1,259 million by 2027E, with a diluted EPS of Rmb2.997 [6][10] Key Customer and Market Dynamics - Victory Giant Technology (VGT) is HC's largest customer in the AI sector, contributing approximately 15% of HC's revenue in 1H25 [1][24] - The demand for PCB equipment is expected to surge as more Chinese PCB makers seek certifications from AI server/data center vendors [32] Competitive Landscape - HC has replaced German competitor Schmoll as the main supplier of mechanical drilling equipment to VGT [3] - Other competitors in the PCB equipment market include Mitsubishi Electric, Amada, and various unlisted companies [5][20] Valuation and Investment Outlook - The target price for HC is set at Rmb108, based on a P/E ratio of 50x for 2026E, reflecting a strong earnings CAGR of 73% for 2025-26E [5][37] - The expected total return is 27.1%, with a market cap of Rmb36.4 billion [7][10] Risks and Considerations - Potential risks include weaker-than-expected demand for AI PCB equipment, rising component costs affecting GPM, and increased price competition due to industry supply growth [37] - HC is not significantly exposed to US tariff risks, as its sales are primarily within China and to neighboring countries [37] Additional Insights - Han's Laser, which owns 83.6% of HC, produces non-PCB laser equipment to avoid conflicts of interest, with related party transactions accounting for less than 0.2% of HC's COGS and revenue [4][32] - The early stage of the AI PCB boom may lead to an "equipment demand overshoot" as PCB makers expand capacities before securing firm orders [1][24]