2026-01-20 01:50Summary of Shennan Circuits Conference Call Company Overview - Company Name: Shennan Circuits Co Ltd (SCC) - Ticker: 002916.SZ - Sector: Technology, specifically in PCB (Printed Circuit Board) and IC substrate manufacturing - Headquarters: Shenzhen, Guangdong, China Key Industry Insights - AI Networking and Server Growth: SCC is positioned as a leading supplier of high layer count (HLC) PCBs for AI networking equipment, benefiting from the upward trend in AI investments in China [1][2] - IC Substrate Demand: The company is also a key player in the IC substrate market, which is expected to grow significantly due to China's self-reliant AI roadmap [3] Financial Performance and Forecasts - Revenue Growth: Revenue forecasts for FY25-27F have been increased by 0.8-5.8%, reflecting stronger demand in both IC substrate and AI PCB sectors [1][14] - Earnings Growth: Earnings forecasts for FY25-27F have been raised by 1.6-17%, driven by improved margins and product mix [1][14] - Target Price: The target price has been raised to CNY263, implying an 18% upside from the current trading price of CNY222.82 [1][5] Segment Performance - PCB Segment: Expected to contribute 20-30% of revenue from AI server and networking applications in FY26F, with a projected CAGR of 30% for FY25-27F [2] - IC Substrate Segment: Anticipated to grow at a CAGR of 21% from FY25-27F, contributing 17% of total revenue by FY27F [3] Financial Metrics - Revenue Estimates: - FY25F: CNY22,736 million - FY26F: CNY29,039 million - FY27F: CNY35,601 million [4] - Net Profit Estimates: - FY25F: CNY2,968 million - FY26F: CNY4,377 million - FY27F: CNY5,826 million [4] - EPS Growth: Normalized EPS is expected to grow from CNY5.79 in FY26F to CNY8.74 in FY27F, reflecting a strong growth trajectory [4] Risks and Challenges - Capacity Constraints: SCC is facing capacity constraints in the AI PCB market for FY25F, which could impact growth [1] - Market Competition: Increased competition in the PCB market and potential sanctions on telecom companies in China pose risks to achieving the target price [12][19] Valuation Methodology - The target price of CNY263 is based on a P/E ratio of 40x FY26F EPS of CNY6.56, aligned with a projected earnings CAGR of 40% for FY25-27F [1][19] Additional Insights - Market Capitalization: Approximately USD 21.3 billion [5] - Dividend Yield: Expected to increase from 0.8% in FY25F to 1.6% in FY27F [4] - ROE Improvement: Projected ROE to rise from 18.9% in FY25F to 26.5% in FY27F, indicating improved profitability [4] This summary encapsulates the key points from the conference call regarding Shennan Circuits, highlighting its growth potential, financial forecasts, and the challenges it faces in the current market environment.