Sytech(SH:600183)2025-09-07 16:19Key Takeaways from Shengyi Technology (600183.SS) 2Q25 Results Briefing Company Overview - Company: Shengyi Technology (SYTECH) - Industry: High-speed copper-clad laminate (CCL) for AI-related applications Core Points 1. Rising Order Momentum: Monthly shipments of high-speed CCL are expected to increase to 800-900k sheets in 3Q25 from 700-800k sheets at the end of 2Q25, indicating a 10-15% rise in run rate [1][3] 2. AI-Related Business: The majority of AI-related CCL shipments are directed towards NVDA GB200 and GB300 servers, primarily for switches on M8 PCBs [1][3] 3. New Plant Developments: New plants in Jiangxi and Thailand are under development, with the Jiangxi plant expected to have a monthly capacity of 1.5 million sheets starting in 4Q25, and the Thai plant with a capacity of 0.7 million sheets commencing in 1Q26 [1][9] 4. Stable ASP: Average Selling Price (ASP) remains firm, but is unlikely to rise in the near term unless there is a surge in demand from non-AI segments [1][3] 5. Product Mix Upgrade: Management sees good order momentum for 3Q25, allowing for a shift towards AI-oriented products, moving away from non-AI downstream applications like home appliances and consumer electronics [3][4] 6. High-End AI Products: SYTECH is working on high-end AI products, with a focus on NVDA's supply chain, although it is considered a latecomer compared to foreign rivals [4][10] 7. Certification Delays: ASIC certification for GPU vendors is still pending, with management noting that Chinese companies typically take longer to achieve certification [8] 8. No HK Listing Plans: SYTECH has no plans for a Hong Kong listing, opting to finance new plants through internal cash flow due to strong cash generation [10] 9. Upstream Supply: The company reports reasonable upstream supply, including low Dk/2 materials, contrary to market perceptions of a severe shortage [11] Financial Metrics - Current Price: Rmb49.50 - Target Price: Rmb60.00 - Expected Share Price Return: 21.2% - Expected Dividend Yield: 1.7% - Expected Total Return: 23.0% - Market Cap: Rmb120,249 million (approximately US$16,847 million) [6] Risks and Opportunities - Downside Risks: Include worse-than-expected demand for AI-CCL orders, subdued consumption in China, and higher-than-expected capital expenditures on 5G/IoT products [16] - Upside Risks: Include securing ASIC-based customers, better macroeconomic conditions in China, and stronger-than-expected AI demand [16] Conclusion - The company is positioned to benefit from rising demand in the AI sector, with significant growth potential from new plant developments and a strategic shift towards high-end AI products. However, it faces risks related to market demand and certification timelines.