After quarterly earnings fell short of expectations, PCB leader Shenghong Technology plans to invest 20 billion yuan per year

AI Inquiry · Can the booming AI business support the 100 billion yuan production target?

Ji Mian News Reporter | Zhang Yi

Leading PCB manufacturer Shenghong Technology (300476.SZ) recently released a seemingly “explosive” 2025 performance report: the company achieved revenue of 19.292 billion yuan, a year-on-year increase of 79.77%; net profit attributable to parent was 4.312 billion yuan, a surge of 273.52% year-on-year. The company plans to distribute 20 yuan (tax included) per 10 shares.

Despite such impressive data, Shenghong Technology’s stock price has fallen a total of 3.25% since 2026.

On one hand, the stock price in 2025 has already increased by 583.25%, partially overestimating performance expectations; on the other hand, the answer lies within the annual report—Shenghong Technology’s quarterly net profit growth is weak, gross margin is declining, and Q4 performance fell short of market expectations.

Nevertheless, Shenghong Technology still announced an investment plan of “200 billion yuan in one year” to help the company reach the “trillion-yuan output value” goal by 2030. This is equivalent to building four more Shenghong Technologies in five years.

“The company’s existing capacity plus all under-construction and planned capacity is roughly worth a trillion yuan in output value,” an insider from Shenghong Technology told Ji Mian News exclusively.

So, is such capacity expansion aggressive? How will the funding gap be addressed? How will the capacity be absorbed? Why is performance growth sluggish? Shenghong Technology responded exclusively to Ji Mian News on these questions.

The “Wild Ride” of Performance: Weak Sequential Growth

PCB is known as the “mother of electronic products.” After last year’s explosive growth, Shenghong Technology has become a PCB leader with a market value of 240 billion yuan. According to Prismark data, the company ranks 6th among global PCB suppliers and 3rd among domestic Chinese PCB manufacturers.

But last year’s annual report was mixed.

Regarding the reasons for performance growth, Zhu Xiyao, Secretary of the Board and Vice President of Shenghong Technology, said during institutional research: “In key areas such as AI computing power, data centers, and high-performance computing, several high-end products have achieved large-scale mass production, driving product structure upgrades toward high value and high technical complexity, with a significant increase in high-end product proportion.”

Regionally, overseas markets are the main growth driver.

• The company’s direct exports last year amounted to 14.821 billion yuan, a 126.88% increase year-on-year, with revenue share rising from about 60% in 2024 to 76.83%;
• Domestic sales were 4.471 billion yuan, up only 6.48% year-on-year, with revenue share dropping from nearly 40% to 23.17%.

However, the “wild growth” side of performance shows signs of weakness in quarterly data.

• Last year’s four quarters recorded revenues of 4.312 billion yuan, 4.719 billion yuan, 5.086 billion yuan, and 5.175 billion yuan, with almost stagnant quarter-on-quarter growth in Q4;
• Net profits attributable to parent were 921 million yuan, 1.222 billion yuan, 1.102 billion yuan, and 1.067 billion yuan, with slight declines in Q3 and Q4.

This performance fell below market expectations. Previously, institutions generally expected Shenghong Technology’s full-year net profit to exceed 5 billion yuan. Actual performance increased by about 700 million yuan less.

Meanwhile, Shenghong Technology’s overall gross profit margin last year was 35.22%, up 12 percentage points year-on-year. The most notable increase was driven by HDI, with gross margin rising from 22.5% in 2024 to 45% in the first three quarters of last year.

But breaking down quarterly data shows that gross margin in the second half of the year was lower than in the first half, with Q2, Q3, and Q4 gross margins at 38.83%, 35.19%, and 33.51%, respectively.

Recent trend of Shenghong Technology’s gross margin

Q1-Q4 2025 quarterly gross margin of Shenghong Technology

CICC Securities analyst Yuan Xin believes that the lower-than-expected Q4 profit “mainly due to: insufficient release of new capacity; raw material price increases squeezing profit margins.”

Shenghong Technology explained to Ji Mian News that factors affecting performance include fluctuations in raw material costs, pre-emptive talent reserves for capacity expansion, and exchange rate fluctuations.

On one hand, costs are rising, including increased employee wages. “In the second half of the year, there were many capacity expansion plans, so we recruited many engineers in advance to train at existing factories. Once they are proficient, they can work at the new factories after capacity is launched,” the insider said.

On the other hand, raw material prices rose in the second half of last year, including copper prices and glass cloth, slightly increasing raw material costs.

Shenghong Technology’s raw materials include copper-clad laminates, semi-cured sheets, copper balls, and copper foil. The annual report shows that last year, raw material costs were 8.237 billion yuan, accounting for 65.91% of revenue, an increase of 3.24 percentage points year-on-year.

The impact of raw materials needs to be viewed in layers. Shenghong Technology emphasized: “Copper-clad laminates come in many types. Low-end products follow market prices with large fluctuations; high-frequency, high-speed high-end copper-clad laminates are relatively stable in 2025. New orders will be renegotiated based on current raw material prices.”

The company also warned of risks related to raw material supply tightness and price volatility this year. “In cases of significant raw material price hikes, we will raise product prices accordingly, but there is a certain lag in passing these costs downstream.”

The Mystery Behind the Divergence of Quantity and Price: AI Business Surges to Over 40%

Ji Mian News found a seemingly contradictory data point: both production volume and sales volume declined year-on-year.

In 2025, Shenghong Technology’s PCB production volume was 8.0896 million square meters, down 9.63% year-on-year; sales volume was 8.6637 million square meters, down 2.72%. Clearly, the growth in performance is not driven by “volume expansion,” but mainly by “price-driven” increases.

2025 production and sales volume of Shenghong Technology

This reflects a change in product structure.

“Square meters are relatively fixed. The company’s new production capacity in 2025 was limited,” an insider explained to Ji Mian News: “The company is continuously advancing capacity construction and line upgrades, but as products iterate and technology upgrades, the increase in PCB layer counts consumes more capacity. Therefore, the change in output volume by area is small, but the product value has increased significantly.”

The insider further revealed that the most vigorous downstream demand is for AI. “Products for AI accounted for over 40% in the first three quarters of last year, compared to less than 10% in 2024, and even higher for the full year.”

The company’s Hong Kong IPO prospectus confirms this. AI and high-performance computing products jumped from 6.6% in 2024 to 41.5% in the first three quarters of last year. Revenue from smart terminal products halved from 33.9% to 19.2%.

Breakdown of Shenghong Technology’s PCB product revenue

“AI server single-unit PCB value is far higher than traditional servers,” Shenghong Technology said. “Our high-margin high-density interconnect (HDI) and multilayer PCB (MLPCB) demand has grown significantly compared to other products.”

This structural change is also reflected in customer concentration.

In 2025, sales to the top five customers totaled 8.098 billion yuan, accounting for 41.98%; in 2024, the top five customers’ combined sales were 2.012 billion yuan, only 20.03%.

In 2025, sales to the first and second largest customers each exceeded 2 billion yuan, and the third largest also surpassed 1.8 billion yuan.

“This is not the final penetration,” an insider explained to Ji Mian News. The top five customers in the financial report are all direct customers; PCB sales go to assembly plants, which then sell to end manufacturers of leading servers.

Data shows Shenghong Technology has entered the supply chains of NVIDIA, AMD, Intel, Tesla, Microsoft, Bosch, Amazon, Google, and other international giants.

The insider told Ji Mian News that whether domestic or foreign, new customers are constantly being contacted and developed. “Order visibility is usually about two months, longer for high-end products.”

Aggressive Capacity Expansion Aiming for the “Trillion-Yuan Output Value” Blueprint

Performance is the past, but Shenghong Technology is planning a “big gamble” for the future—setting a “trillion-yuan output value” target for 2030.

Ji Mian News noted that in the 2025 annual report, Shenghong Technology proposed “marching toward the 2030 trillion-yuan output value goal.” In fact, the company had previously set a goal in 2024 to “strive to achieve a second 10 billion yuan in 2026,” which it has nearly achieved in 2025.

How can Shenghong Technology reach this new goal?

The company’s securities department responded exclusively to Ji Mian News: “This is the company’s new five-year plan, and the current construction progress is already aligned with the trillion-yuan output value layout. Last year, two new factories were completed, and new projects including factories 10 and 11, as well as plants in Thailand, Vietnam, and Malaysia, are underway. All these plans together amount to roughly a trillion yuan in output value.”

Xu Xiyao also said that the company continues to expand capacity for high-end HDI, high-multilayer PCB, and FPC products, including expansion projects in Huizhou, Thailand, Vietnam, and Malaysia, “with industry-leading expansion speed.” “The construction speed of new factories is fast, and equipment for capacity expansion has been pre-ordered and is being delivered.”

Ji Mian News found that within three years, Shenghong Technology’s projects reaching production include:

• Huizhou production center’s high-multilayer MLPCB capacity will increase by about 1.02 million square meters annually;
• Changsha and Yiyang will add about 1.392 million square meters of single- and double-layer PCBs, about 72,000 square meters of HDI, and about 360,000 square meters of MLPCB;
• Huizhou expansion project will add 150,000 square meters of high-multilayer MLPCB and 100,000 square meters of high-end HDI.

By the end of 2025, Shenghong Technology’s under-construction projects totaled 3.61 billion yuan, an increase of 33.53 billion yuan from 257 million yuan at the beginning of the year, a growth of 1,300%, mainly due to increased machinery and engineering expenditures.

Regarding capacity utilization, the insider explained: “Factories that have been mass-produced two years ago are fully loaded. Last year, new factories 4 and 9 were built, and equipment is ready. Most production lines are operating normally, with only a few processes still ramping up. Overall, the company’s capacity utilization is at a good level.”

The 200 Billion Yuan Investment Plan in One Year

Supporting the trillion-yuan output target is an unprecedented capital expenditure plan.

In 2026, Shenghong Technology and its subsidiaries plan to invest no more than 20 billion yuan in total, including no more than 18 billion yuan in fixed assets (such as plant construction, equipment purchase, automation upgrades), and no more than 2 billion yuan in equity investments.

This figure is a significant increase of 567% compared to the 30 billion yuan cap in 2025.

“Last year, the actual investment was over 6 billion yuan, and this year, the plan is not to exceed 20 billion yuan. The projects we are planning, constructing, and overseas factories amount to about 20 billion yuan in total,” an insider from Shenghong told Ji Mian News.

Behind this massive investment is the prospect of explosive industry growth. Prismark estimates that the AI server-related PCB market will have an average annual compound growth rate of 18.7% from 2024 to 2029; among them, HDI will grow at 29.6% annually, multilayer boards of 18 layers and above at 33.8%, far exceeding the PCB industry’s average growth rate.

Where will the funds come from for such large-scale investment?

Self-funding is insufficient. As of the end of 2025, the company’s cash and tradable financial assets totaled 3.417 billion yuan, more than doubling from the previous year-end, but still inadequate for the scale of investment.

Liabilities increased alongside assets last year. As of the end of last year, accounts payable and notes payable totaled 10.526 billion yuan, up from 4.963 billion yuan at the end of the previous year.

The company is preparing on two fronts:

• One is Hong Kong listing as a key financing channel. “The company is planning to list in Hong Kong, and has obtained the offshore listing filing from the China Securities Regulatory Commission. If successfully issued, the financing amount could cover part of this demand.” the insider said.
• • The second is that before the financing is completed, the company has already begun preliminary preparations, including land acquisition, construction, and equipment purchase. The company is financing through self-owned funds, operating cash flow, and bank loans to ensure the expansion pace is unaffected.*

Ji Mian News also learned that Shenghong’s secretary Zhu Xiyao said: “The company is working closely with intermediaries to implement all listing procedures and aims to list in Hong Kong as soon as possible.”

Beyond core business, Shenghong Technology is also a “stock trading expert.” Last year, the company bought into Founder Technology (600601.SH), with an investment cost of 366 million yuan, and the book value at the end of the period rose to 2.683 billion yuan, with an unrealized gain of about 2.3 billion yuan, yielding over 600%.

However, Founder Technology’s stock price has retreated more than 10% since 2026.

Shenghong Technology’s 2025 securities investment

The top ten circulating shareholders of Shenghong Technology have changed.

In Q4 last year, Huatai-PineBridge CSI 300 ETF and E Fund CSI 300 ETF became the sixth and ninth largest shareholders, respectively, with northbound funds from Hong Kong Central Clearing and natural person Guo Chao increasing holdings; those reducing holdings include E Fund ChiNext ETF and Huizhou Boda Xing Industrial Co., Ltd.

In the new year, institutions have set new expectations for Shenghong Technology, with significant differences among them.

• Cai Xin Securities expects Shenghong Technology’s 2026 net profit attributable to parent to be 8.384 billion yuan;
• Guoxin Securities forecasts revenue of 35.8 billion yuan and net profit of 10.5 billion yuan this year;
• China Merchants Securities projects revenue of 32.01 billion yuan and net profit of 8.07 billion yuan.

“Excellence” no longer satisfies the market’s expectations for Shenghong Technology; “above expectations” is the goal. The pains of rapid expansion are unavoidable. Whether the “trillion-yuan output value” target can be achieved depends on the company’s ability to balance capital expenditure and profits amid high-speed growth.