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

PCB (Printed Circuit Board) leader 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 shareholders 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 as dividends.

Despite such impressive data, Shenghong Technology’s stock price has actually declined by 3.25% since 2026.

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

Nevertheless, Shenghong Technology has announced an investment plan of 20 billion yuan annually to support its goal of reaching a “trillion-yuan output value” by 2030. This is equivalent to building four more Shenghong Technologies in five years.

“With our current capacity plus all under-construction and planned capacity, we nearly have a trillion-yuan output value,” a Shenghong Technology representative told Jiemian News exclusively.

So, is such 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 these questions.

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

However, last year’s annual report was a mixed bag of good and bad.

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.

However, the “boom” in performance has a downside. From quarterly data, the company’s revenue and net profit growth have shown signs of slowing down.

This performance fell below market expectations. Previously, institutions generally expected Shenghong Technology’s annual net profit to exceed 5 billion yuan. The actual performance increased by about 700 million yuan less than expected.

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.

However, dissecting quarterly data shows that the 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.

Caitong Securities analyst Yuan Xin believes that the lower-than-expected Q4 profit is mainly due to: “The release of new capacity falling short of expectations; raw material price increases squeezing profit margins.”

A Shenghong Technology representative explained to Jiemian 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 hired 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 person 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.

Raw materials for Shenghong include copper-clad laminates, semi-cured sheets, copper balls, and copper foil. The annual report shows that last year’s 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. A Shenghong representative emphasized: “There are many types of copper-clad laminates. Low-end products follow market prices with large fluctuations; high-frequency, high-speed high-end copper-clad laminates had relatively stable prices in 2025. New orders will be renegotiated based on current raw material prices.”

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

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

In 2025, Shenghong’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, performance growth is not driven by “volume expansion” but mainly by “price-driven” factors.

This indicates a change in product structure.

“Around 2025, the area is relatively fixed, and the company’s newly added factories for the year were limited,” a Shenghong representative explained. “The company is continuously advancing capacity construction and line upgrade projects, but with product iteration and technological upgrades, the increase in PCB layer counts and complexity consumes more capacity. Therefore, the output volume by area hasn’t changed much, but the product value has significantly increased.”

The person further revealed that the most robust downstream demand is from AI. “Our AI-related products accounted for over 40% in the first three quarters of last year, compared to less than 10% in 2024, and a higher proportion for the full year.”

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

“AI servers’ single-unit PCB value is far higher than traditional servers,” Shenghong said. “Our high-margin high-density interconnect (HDI) and multilayer PCBs (MLPCB) have seen significant demand growth compared to other products.”

This structural change is also reflected in customer concentration.

In 2025, the top five customers contributed 8.098 billion yuan in sales, 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,” a Shenghong representative explained. “The top five customers in the financial report are all direct customers. PCB is sold to assembly plants, which then sell to end manufacturers of servers and other devices.”

Data shows Shenghong has entered the supply chains of well-known international companies such as Nvidia, AMD, Intel, Tesla, Microsoft, Bosch, Amazon, and Google.

The representative told Jiemian 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.”

Performance is a past achievement, and Shenghong is planning a “big gamble” for the future — the company has set a target of reaching a trillion-yuan output value by 2030.

Jiemian News noted that in the 2025 annual report, Shenghong mentioned “striding toward the 2030 trillion-yuan output goal.” In fact, the company had previously proposed in 2024 to “strive to achieve a second 10-billion-yuan goal by 2026,” which it has nearly accomplished in 2025.

How can Shenghong achieve this new goal?

The company’s Securities Department responded exclusively to Jiemian: “This is part of the company’s new five-year plan. The current construction progress is already aligned with the trillion-yuan output target. Last year, two new factories were completed, and ongoing projects include factories 10 and 11, as well as plants in Thailand, Vietnam, and Malaysia. All these plans together amount to nearly a trillion-yuan scale.”

Xu Xiyao also said that the company is continuously expanding capacity for high-end HDI, high-layer-count PCBs, and FPCs, including expansion projects in Huizhou, Thailand, Vietnam, and Malaysia, “leading the industry in expansion speed.” “The construction speed of new factories is fast, and equipment for capacity expansion has been pre-ordered and is being delivered.”

Jiemian found that Shenghong’s projects completed within three years include:

By the end of 2025, Shenghong’s ongoing projects totaled 3.61 billion yuan, an increase of 33.53 billion yuan from 2.57 billion yuan at the beginning of the year, a growth of 1,300%, mainly due to increased machinery installation and engineering expenses.

Regarding capacity utilization, a Shenghong representative told Jiemian: “Factories that have been mass-produced two years ago are operating at full capacity. Last year, new factories 4 and 9 were built, with equipment ready. Most production lines are in normal operation, with only a few processes still ramping up. Overall, the company’s capacity utilization is at a good level.”

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

In 2026, Shenghong and its subsidiaries plan to invest up to 20 billion yuan, 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 from the maximum 3 billion yuan investment plan in 2025, up 567%.

“Last year, the actual investment exceeded 6 billion yuan. This year, the plan is not to exceed 20 billion yuan. We already have ongoing projects and overseas factories, totaling about 20 billion yuan,” a Shenghong representative told Jiemian.

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 these, HDI will grow at 29.6% annually, and multilayer boards of 18 layers and above at 33.8%, far exceeding the PCB industry average.

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

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, but still not enough for the scale of investment.

The company’s liabilities also increased significantly. By 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 for a dual approach.

The company’s Secretary Zhu Xiyao also said: “We are working closely with intermediaries to implement all listing procedures and strive to list in Hong Kong as soon as possible.”

Beyond core business, Shenghong 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 year-end rose to 2.683 billion yuan, with an unrealized gain of about 2.3 billion yuan, yielding over 600% return.

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

The top ten circulating shareholders of Shenghong have also seen changes.

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 individual 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, with significant differences among them.

“Being ‘excellent’ is no longer enough; exceeding expectations is the goal,” said one analyst. The pains of expansion are inevitable, and whether the “trillion-yuan output target” can be achieved depends on the company’s ability to balance capital expenditure and profits amid rapid growth.