2025-08-19 05:42Summary of Shennan Circuits Conference Call Company Overview - Company: Shennan Circuits (002916.SZ) - Industry: PCB (Printed Circuit Board) manufacturing, with a focus on AI applications Key Points and Arguments 1. AI PCB Demand: There is ongoing strength in demand for AI PCBs, which is expected to support resilient pricing and margins despite rising costs of raw materials such as CCL, gold-related chemicals, and glass fiber [1][2][4] 2. Pricing and Margins: The company is anticipated to experience slower price erosion than normal, leading to resilient margins. This is attributed to tight supply conditions in high-end PCBs for AI servers and networking [2][4] 3. Revenue Estimates: Revenue estimates for 2025E, 2026E, and 2027E have been revised slightly upward by 0% to 2%, reflecting a more resilient pricing outlook [8] 4. Target Price Update: The 12-month target price has been revised up to Rmb150 from Rmb132, based on a 29x P/E ratio for 2026E, aligning with the company's historical average [4][12] 5. Valuation: Shennan Circuits is currently trading at approximately 28x/23x P/E for 2026E/2027E, which is considered undemanding compared to its historical average of 29x [3][11] 6. Market Position: The company is viewed as a key beneficiary of China's domestic AI infrastructure investments, with expectations for robust revenue and net profit growth as local equipment vendors increase their server and networking shipments [11] Additional Important Content 1. Risks: Key downside risks include weaker demand in datacom/AI PCBs, geopolitical disruptions affecting supply chains, competitive pricing pressures, and potential deterioration in 5G demand [13] 2. Industry Context: The overall PCB industry in China has seen strong share price rallies driven by AI demand, contributing to valuation recovery [3] 3. Financial Metrics: The revised net profit estimates for 2025E, 2026E, and 2027E have been increased by 1% to 3%, reflecting the anticipated slower price erosion [8] This summary encapsulates the essential insights from the conference call regarding Shennan Circuits, highlighting its market position, financial outlook, and associated risks.