3Q earnings：Record quarterly margin while share-price correction appears overdone

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR <GO> OR http://www.cmbi.com.hk 1 MN 2 Nov 2026 CMB International Global Markets | Equity Research | Company Update Shengyi Tech (600183 CH) Shengyi Tech (600183 CH) - 3Q earnings: Record quarterly margin while share-price correction appears overdone 3Q earnings: Record quarterly margin while share-price correction appears overdone Shengyi Tech (SYT) delivered strong 3Q26 results, with revenue rising 78.8% YoY/30.3% QoQ to RMB14.18bn and net profit surging 238.4%/61.6% to RMB3.44bn, both ahead of Visible Alpha (VA) consensus. SYT’s GPM reached a record 41.6%, up from 32.6% in 2Q26, driven by a richer high-end AI-related product mix, new-product shipments and operating leverage from capacity ramp-up despite raw-material inflation. PCB subsidiary Shengyi Electronics (688183 CH, NR) reported 3Q revenue of RMB3.76bn, up 23.0% YoY, and net profit of RMB801mn, up 37.1%, with GPM of 36.6% (vs. 33.7% in 2Q), indicating stronger margin uplift in CCL. We raise FY26/27E revenue forecasts by 4.8%/1.0% and GPM by 3.6ppt/3.5ppt on stronger margin resilience and mix upgrades. Maintain BUY and TP of RMB190 on 34x FY27E P/E (vs. 40x previously), slightly below its 2-SD above its average 1-yr forward P/E on market rotation towards non-AI sectors and reduced investor appetite for AI-related names, rather than any deterioration in SYT’s fundamentals.  AI demand drove broad-based growth across CCL and PCB. The CCL business benefited from strong demand for high-end products, increasing profit contributions from newly developed products, timely capacity ramp-up and continued sales-mix optimization, supporting higher sales volume, revenue and gross profit. SYE’s 9M26 revenue increased 39.8% YoY to RMB9.55bn, while net profit rose 71.5% to RMB1.91bn. PCB earnings continued to outpace revenue growth, supported by robust AI-computing demand, higher utilization and a rising contribution from high-value-added products.  Margins: Stronger CCL contribution drove SYT’s GPM outperformance. SYT’s 3Q26 GPM of 41.6% was 5.0ppt above SYE’s GPM of 36.6%, pointing to a stronger mix and operating-leverage benefits in the CCL segment. PCB profitability also remained healthy, supported by higher utilization and a richer mix of high-layer-count and high-density products.  Capacity expansion and product upgrades support further growth; maintain BUY. Capex increased 76.1% YoY to RMB3.00bn in 9M26 as SYT continued to invest in high-end CCL and PCB capacity. We expect sustained AI-server and data-center demand, further product-mix upgrades and new-capacity ramp-up to remain the key earnings drivers. We believe the recent share-price correction should have been overdone given SYT’s earnings potential (25-28E CAGR: 77.2% based on our estimates). Key risks include: Slower-than-expected capacity ramp-up, raw-material inflation, change in tech roadmaps, etc. Target