AI-led PCB growth with substrate upside ahead

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 sMN 16 Mar 2026 CMB International Global Markets | Equity Research | Company Update Shennan Circuit (002916 CH) Shennan Circuit (002916 CH) - AI-led PCB growth with substrate upside ahead AI-led PCB growth with substrate upside ahead SCC’s FY25 revenue grew 32% YoY to RMB23.6bn, in line with BBG consensus and 4% above our forecast. GPM improved significantly to 28.3% (0.3ppts above BBG consensus and 1.4ppts above our estimate), up from 24.8% in FY24, driven by improved product mix, better cost efficiency and higher utilization. Net profit rose 75% YoY to RMB3.3bn, slightly below BBG consensus (-0.7%) but 8% ahead of our forecast. By quarter, 4Q revenue increased 42% YoY and 9% QoQ, while net profit grew 144% YoY but declined 1.6% QoQ. 4Q GPM eased sequentially to 28.6% from 31.4% in 3Q mainly due to depreciation from the Nantong IV and Thailand facilities and higher raw material costs. Looking ahead, we expect SCC to continue benefiting from strong multilayer PCB demand driven by robust AI infra. capex, while its substrate business should gradually improve as BT supply remains tight and ABF/FC-BGA ramps on rising domestic demand. Maintain BUY, with TP adjusted to RMB288.  PCB revenue grew 37% YoY in FY25 with GPM at 35.5%. SCC continued to benefit from strong AI data center demand (~25% of PCB revenue), while telecom was ~40% of PCB revenue, with utilization maintained at around 95% across most fully ramped facilities. 4Q GPM softened slightly due to ramp-up costs at Nantong IV and Thailand, higher raw material prices (e.g., gold and CCL), and a higher contribution from lower-margin PCBA (revenue up 9% YoY, GPM at 15%). Looking ahead, we expect PCB revenue to remain supported by ongoing AI infra. capex, with strong demand from data centers, switches and optical modules sustaining high utilization, while margins should stabilize as new capacity ramps and product mix improves.  Substrate revenue grew 31% YoY in FY25 with GPM improving to 22.6% (vs. 18.2% in FY24), supported by stronger BT substrate shipments and improving utilization amid tight industry supply and relatively stable pricing. BT demand remained robust with long order visibility, and Guangzhou BT capacity operated at relatively high utilization. Meanwhile, ABF/FC-BGA substrates remained in the early volume ramp stage (ABF revenue was >RMB100mn in FY25), while the Guangzhou facility continued to post losses as scale, yields and customer ramps develop. Looking ahead, we expect the substrate segment to improve gradually, supported by resilient BT demand and rising domestic compute demand for ABF/FC-BGA, with segment GPM likely trending toward the mid-20% range as utilization improves.  Reiterate BUY, with TP adjusted to RMB288 (prev. RMB235), based on 38x FY26E P/E (prev. 34x). We value the Company using a blended peer avera