VGT(SZ:300476)2025-10-29 02:52Summary of Victory Giant Tech (300476.SZ) Investor Call Company Overview - Company: Victory Giant Tech (VGT) - Industry: PCB (Printed Circuit Board) manufacturing - Market Cap: Rmb284,604 million (approximately US$40,026 million) [4] Key Takeaways from the Investor Call 1. 3Q25 Net Profit Decline: The company reported a quarter-over-quarter (QoQ) decline in net profit due to a 1-2 week product transition impact, increased staff costs, and rising R&D expenses [1][2] 2. Capacity Buildup Progress: - Capacity expansion in Huizhou, Thailand, and Vietnam is on track. - The MSAP factory has ramped up production since June, adding 2,000-3,000 headcount. - Production on the 1-3rd floors of the MSAP factory started in late June, with the 4-5th floors expected to begin in November and the 6th floor by December [2][3] - The Drilling Center is set to start production in November, while the CNC Center will begin construction soon, with production expected in 2026 [2] - The Thailand A1 factory has all equipment installed and will start producing testing boards, with the A2 factory set to begin production in February 2026 [2] - Vietnam Phase 1 factory is expected to start production in mid-2026 [2] 3. Customer Relationships and Revenue Growth: - VGT produces quick turn PCBs for its largest customer, which could help reduce the customer's time from quick turn to mass production by 6 months, solidifying VGT's market position [3] - Management is optimistic about revenue and profit growth alongside the ramp-up of new GPU products, with other AI customers expected to contribute significantly in 2026 [3] 4. Market Demand and Future Outlook: - PCB is projected to account for 8-10% of AI server/rack BOM, up from 5%, driven by technology and material upgrades. - Current demand is reported to be significantly stronger than three months ago, with optimism for growth over the next 2-3 years [3] Financial Projections - Target Price: Rmb407, unchanged, based on a 30x 2026E P/E ratio [1][7] - Net Profit Forecasts: - 2025 net profit revised down by 5% to Rmb4,842 million. - 2026 and 2027 net profit estimates remain broadly unchanged at Rmb11,697 million and Rmb19,496 million, respectively [7][8] - Earnings Summary: - 2023A: Net Profit Rmb671 million, EPS Rmb0.778 - 2024A: Net Profit Rmb1,154 million, EPS Rmb1.338 - 2025E: Net Profit Rmb4,842 million, EPS Rmb5.613 - 2026E: Net Profit Rmb11,697 million, EPS Rmb13.558 - 2027E: Net Profit Rmb19,496 million, EPS Rmb22.600 [5] Risks and Challenges - Potential risks include: - Less-than-expected share allocation in GenAI-related PCBs due to yield issues. - Pricing and competition pressures in the automotive supply chain. - CSP capex reductions and weak economic conditions affecting demand. - Increasing material costs and geopolitical risks between the US and China [19] Conclusion - Victory Giant Tech is positioned for growth with ongoing capacity expansions and strong customer relationships, particularly in the AI sector. However, the company faces challenges that could impact its financial performance in the coming years. The target price remains optimistic, reflecting confidence in the company's long-term prospects.