Robust Q2 earnings; AI-driven mix upgrade and ASP hikes in full swing

生益科技(600183)
    Shengyi Tech(SYT)reported strong1H26results,with revenue increasing50%YoY to RMB19.0bn and net profit surging130%YoY to RMB3.3bn.In2Q26,revenue rose54%YoY/34%QoQ to RMB10.9bn,slightly below Bloombergconsensus of RMB11.2bn.Net profit reached RMB2.13bn,up147%YoY/84%QoQ and well above consensus of RMB1.7bn.GPM expanded to32.6%from28.1%in1Q26,beating the30.4%consensus estimate.The results reinforce ourview that SYT remains a key beneficiary of the AI infrastructure upcycle.ReiterateBUY and raise our TP to RMB190,based on40x2027E P/E(previouslyRMB90based on35x2026E P/E),approximately2-SD above its1-yrhistorical mean.We forecast revenue and earnings CAGRs of47%and68%over2025-28E,implying a PEG of0.58x.We lift revenue forecasts by16%/39%and net profit forecasts by15%/31%in FY26/27E,respectively,reflecting strongAI-CCL/PCB demand and higher margin assumptions driven by ASP increasesand a richer high-end product mix.
    Core segments:Broad-based AI-driven growth across CCL&PCB.CCL&prepreg sales volumes increased14.2%/12.4%YoY,respectively in1H26,while segment revenue rose47.7%to RMB12.4bn,reflecting priceadjustments and a richer AI product mix.Subsidiary Shengyi Electronics(688183CH,NR)recorded revenue of RMB5.8bn,up53.5%YoY,and netprofit of RMB1.1bn,up109%YoY.PCB shipments increased23.1%YoY,with sales growth outpacing volume as high-layer-count and HDI productscontinued to ramp up.SYT’s strength across CCL and PCB gives it broadexposure to the AI infra.value chain.We forecast revenue growth of62%/51%in FY26/27E driven by expansion of high-end CCL products.
    Margins:ASP increases and mix upgrades drove another step-up.GPMexpanded by4.8ppt YoY to30.7%in1H26.CCL&prepreg GPM increasedby5.5ppt to29.2%,while PCB GPM rose by3.4ppt to31.2%.Strongerpricing and premium AI products drove profit growth ahead of sales.SYTrecorded RMB410mn of fair-value gains,mainly related to Novoray’s(688300CH,NR)convertible bonds,while adj.net profit neverthelessincreased111%YoY.We forecast GPM of30.6%/31.7%in FY26/27E.
    Capacity expansion supports medium-term growth.Jiangxi Phase IIreached full production in1H26,adding annual capacity of18mn sqm of CCLand34mn meters of prepreg.Thailand plant is expected to begin trialproduction in2H,while the two-phase Songshan Lake project is planned toadd48mn sqm of CCL and100mn meters of prepreg.Capex reachedRMB1.88bn in1H26.Ramp-up execution and the availability of criticalupstream materials remain key variables for earnings delivery beyond2026.
    Reiterate BUY with TP raised to RMB190,based on40x FY27E P/E,approx.2-SD above SYT’s one-year historical mean.We believe themultiple is justified by accelerating earnings,structural mix upgrades andexposure to tight AI-related CCL and PCB capacity.Key risks include slowercapacity ramp-up,raw-material costs,intensifying competition,etc.