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[24][25] 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[11] 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[25] - **Industry Comparison**: Taiwanese competitor Ta Liang reported a 96% YoY revenue growth in 3Q25, indicating robust industry demand[3] Growth Drivers - **AI-PCB Market**: The global AI-PCB Total Addressable Market (TAM) has been revised upward by 5%/35% to Rmb36.2 billion/Rmb71.8 billion for 2025/26E, respectively[4] - **Equipment TAM**: Corresponding PCB equipment TAM is expected to increase to Rmb15.9 billion/Rmb31.6 billion for 2025/26E[4] Valuation and Investment Strategy - **Target Price**: Revised target price set at Rmb124, based on a 50x P/E ratio for 2026E, reflecting an 86% earnings CAGR for 2025-26E[5][26] - **Investment Rating**: Rated as Buy/High Risk due to strong positioning in the AI PCB super cycle[25] Risks - **Potential Risks**: 1. Weaker-than-expected demand for AI PCB equipment 2. Rising component costs affecting GPM 3. Increased price competition due to industry supply growth[27] Additional Insights - **Earnings Summary**: - 2025E Net Profit: Rmb606 million, with a 101% YoY growth - 2026E Net Profit: Rmb1,044 million, with a 72% YoY growth[6][12] - **Market Capitalization**: Approximately Rmb39.06 billion[7] This summary encapsulates the critical insights and projections regarding Han's CNC Technology, highlighting its strong growth potential driven by AI-related demand and favorable market conditions.

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]