Economic Observer reporter Zheng Chenye

On the evening of March 12th, "Da Lian" Longtou Shenghong Technology (300476. SZ) released its 2025 annual report:

The annual operating revenue was 19.292 billion yuan, a year-on-year increase of 79.77%; The net profit attributable to shareholders of the listed company was 4.312 billion yuan, a year-on-year increase of 273.52%; After deducting non recurring gains and losses, the net profit was 4.304 billion yuan, a year-on-year increase of 277.07%; Profit growth is almost entirely driven by the main business.

As of noon on March 13th, among the major PCB (printed circuit board) listed companies that have released annual reports or performance reports, Shenghong Technology ranks first in terms of profit growth rate.

At the same time as disclosing its annual report, Shenghong Technology also announced its investment plan for 2026, with a planned total investment of no more than 20 billion yuan. The fixed assets investment does not exceed 18 billion yuan, covering new plant and engineering construction, equipment purchase, automatic production line transformation and upgrading, etc. As of the end of 2025, Shenghong Technology's total assets amounted to 35.244 billion yuan.

According to the annual report of Shenghong Technology, the company focuses on the research and development, production, and sales of high-density printed circuit boards, and leads the global market share in the fields of AI computing cards, AI Data Center UBBs (universal substrates for AI data centers), and switches. According to the data of market research institute Prismark, Shenghong Technology's market share in the PCB field ranks sixth among global PCB suppliers and third among domestic PCB manufacturers in Chinese Mainland.

Production has decreased, but profits have increased nearly threefold

According to the annual report, in terms of production and sales volume, Shenghong Technology's PCB product sales volume in 2025 was 8.6637 million square meters, a year-on-year decrease of 2.72%; The production volume was 8.0896 million square meters, a year-on-year decrease of 9.63%; The inventory is 857800 square meters, an increase of 12.57% year-on-year. On the other hand, its PCB manufacturing business revenue reached 18.084 billion yuan, a year-on-year increase of 79.92%; The net cash flow generated from operating activities was 4.603 billion yuan, a year-on-year increase of 238.85%, exceeding the net profit of the same period, and the weighted average return on net assets reached 35.56%.

The product sold less, but the revenue increased significantly. Regarding this, the annual report explains that "the product structure has been upgraded towards high-value and high-tech complexity, and the proportion of high-end products has significantly increased".

The annual report also shows that almost all of its revenue growth comes from overseas: direct export revenue was 14.821 billion yuan, accounting for 76.83% of total revenue, a year-on-year increase of 126.88%; Last year, Shenghong Technology's export share was 60.88%. In terms of domestic sales, in 2025, Shenghong Technology's domestic sales revenue will be 4.471 billion yuan, a year-on-year increase of only 6.48%.

In addition, according to the annual report, the top five customers of Shenghong Technology had a total sales revenue of 8.098 billion yuan, accounting for 41.98% of the total annual sales revenue. Among them, the largest customer was 2.887 billion yuan, accounting for 14.97%; The second largest customer received 2.423 billion yuan, accounting for 12.56%.

The annual report did not disclose specific customer names, but the relationship between Shenghong Technology and Nvidia's supply chain has long been a public fact. On the evening of January 31, 2026, Nvidia CEO Huang Renxun hosted a banquet for over 40 supply chain executives in Taipei, including TSMC Chairman Wei Zhe jia, Foxconn Chairman Liu Yang wei, and Industrial Rich Alliance Chairman Zheng Hong meng, among others. Chen Tao, Chairman of Shenghong Technology, was also present.

In a research report released by China Merchants Securities in January 2026, it was also stated that Shenghong Technology has entered the Nvidia AMD? The supply chains of companies such as Intel, Tesla, Microsoft, Bosch, Amazon, Google, Delta, etc.

According to the annual report of Shenghong Technology, on the cost side, the proportion of raw materials to operating costs increased from 62.67% last year to 65.91%, the proportion of direct labor decreased from 13.78% to 12.07%, and the proportion of manufacturing expenses decreased from 23.55% to 22.02%.

This means that by 2025, the increase in upstream raw material prices will consume a portion of Shenghong Technology's profit margin, resulting in a final annual gross profit margin of 35.22%.

In fact, the rising cost of raw materials is a common problem faced by the entire PCB industry. For example, Tianjin Pulin (002134. SZ) directly attributed the year-on-year decrease in net profit of 80.81% -86.71% in its 2025 performance forecast to the "rise in commodity prices, leading to an increase in raw material costs and a decrease in gross profit margin". Bomin Electronics (603936. SH) also mentioned in its performance forecast that "international precious metal prices continue to operate at high levels, with core raw material prices such as gold salt, copper balls, copper foil, and tin bars rising synchronously", which is one of the important reasons why its non recurring net profit is still negative.

Although Shenghong Technology has absorbed some cost pressures with its pricing power in high-end products, the continuous increase in the proportion of raw materials will still be a variable in the subsequent performance.

Looking at the PCB sector, Shenghong Technology's profitability performance is quite outstanding. Shennan Circuit (002916. SZ), which released its annual report on the same day as Shenghong Technology, had a total annual revenue of 23.647 billion yuan, which is 4.3 billion yuan higher than Shenghong Technology. However, its net profit attributable to the parent company was 3.276 billion yuan, which is 1 billion yuan less than Shenghong Technology.

The performance report previously released by Shanghai Electric Power Co., Ltd. (002463. SZ) also showed that its annual revenue for 2025 was 18.945 billion yuan, which is similar in size to Shenghong Technology, but its net profit attributable to the parent company was 3.822 billion yuan, with a growth rate of 47.74%, significantly lower than Shenghong Technology.

Pengding Holdings (002938. SZ) is currently the highest revenue company in the PCB sector. According to its disclosed performance report, the company's annual revenue for 2025 reached 39.147 billion yuan, with a net profit attributable to shareholders of approximately 3.738 billion yuan, but the growth rate of net profit attributable to shareholders was only 3.25%.

PCB companies with high profit growth rates have significantly benefited from the explosive demand for computing power brought by AI. Shenghong Technology stated in its annual report that the company has achieved large-scale production in key areas such as AI computing power, data centers, and high-performance computing; Shanghai Electric Power Co., Ltd. also stated in its performance report that it benefits from the structural demand for printed circuit boards in emerging computing scenarios such as high-speed computing servers and artificial intelligence.

The data of Shenghong Technology in the fourth quarter is worth looking at separately: the fourth quarter revenue was 5.175 billion yuan, a year-on-year increase of 70.58%, setting a new high for a single quarter; However, the net profit attributable to the parent company in the fourth quarter was 1.067 billion yuan, a decrease of about 3% compared to the third quarter's net profit attributable to the parent company of 1.102 billion yuan; The net profit attributable to shareholders in the fourth quarter was 1.056 billion yuan, which was a decrease compared to the net profit attributable to shareholders in the third quarter of 1.099 billion yuan.

In a recent research report, China Merchants Securities analyzed the possible reasons for the quarter on quarter decline in profit of Shenghong Technology in the fourth quarter of 2025: the computing power PCB production lines of the Huizhou factory and the Thailand factory are in a climbing stage, and the increase in labor costs due to the addition of more employees; The number of new product introduction projects for major clients has increased, resulting in a corresponding increase in research and development expenses.

The research report also mentioned that "the customer's computing power PCB supply system continues to introduce new players, and the company has suffered losses in some part number shares".

In addition, the expense data disclosed in Shenghong Technology's annual report shows that financial expenses increased from 21.14 million yuan in the previous year to 120 million yuan, a year-on-year increase of 467.07%. The annual report states that the main reason for this is the increase in exchange losses due to the impact of exchange rate fluctuations. That is to say, as its export proportion increases from 60% to nearly 80%, the impact of exchange rate fluctuations on performance is also expanding synchronously.

In terms of other expenses, Shenghong Technology's research and development expenses in 2025 will be 778 million yuan, a year-on-year increase of 72.88%; Sales expenses and management expenses increased by 28.15% and 27.59% respectively year-on-year. Regarding this, the annual report is attributed to the increase in employee salaries.

In terms of dividends, the company plans to distribute a cash dividend of 20 yuan (including tax) for every 10 shares, totaling approximately 1.74 billion yuan, accounting for 40.36% of net profit.

Technological iteration continues to accelerate

On the same day as the annual report was released, Shenghong Technology also announced an investment plan: in 2026, the company and its subsidiaries plan to invest a total of no more than 20 billion yuan. Among them, the fixed assets investment does not exceed 18 billion yuan, including new plant and engineering construction, equipment purchase, automatic production line transformation and upgrading; In addition, the equity investment shall not exceed 2 billion yuan.

The announcement states that the investment plan "still needs to be submitted to the company's shareholders' meeting for review" and "there is a certain degree of uncertainty".

In 2025, Shenghong Technology's revenue was 19.292 billion yuan. That is to say, the investment plan of 20 billion yuan mentioned above is roughly equivalent to its annual revenue scale.

The annual report also shows that in terms of production capacity layout, Shenghong Technology's domestic production capacity is centered around its Huizhou headquarters, with production units divided into multi-layer MLB (multi-layer printed circuit board) division, high multi-layer HLC (high multi-layer printed circuit board) division, and HDI (high-density interconnect printed circuit board) division, all located in the same park. Overseas, the company has invested in the construction of multiple production lines in Thailand, Vietnam, and Malaysia.

The annual report describes this strategy as a "China+N" global layout, with the goal of "meeting the overseas delivery needs of global customers for multi-layer PCBs, advanced HDI, and FPC, and enhancing global delivery service capabilities".

According to the annual report information, Shenghong Technology currently has the manufacturing capability of over 100 layers of high multilayer boards, and is one of the first enterprises in the world to achieve large-scale production of 6-order 24 layer HDI (high-density interconnect board) products. It has the technical capability of 10 order 30 layer HDI and 16 layer arbitrary interconnect HDI, and is promoting the research and development certification of 14 order 36 layer HDI.

The technical parameters disclosed in the annual report have been updated compared to before. The reporter noticed that in the research reports released by several securities firms based on their semi annual reports in the second half of 2025, the technical parameters quoted are still stuck at "8-level 28 layer HDI" and "promoting 10 level 30 layer HDI".

That is to say, from the information disclosed in the annual report, Shenghong Technology's technological iteration in the PCB field continues to accelerate. This is also reflected in other aspects, for example, in 2025, the company's cumulative R&D investment was 778 million yuan, a year-on-year increase of 72.88%; 1751 R&D personnel, a year-on-year increase of 28.56%; There are 87 ongoing research projects covering areas such as AI computing power, autonomous driving, robotics, and optical transmission.

From the downstream demand side, it seems that the good days of PCB manufacturers are far from over.

According to Prismark's data, the global PCB output value will reach 84.891 billion US dollars in 2025, a year-on-year increase of 15.4%. The HDI output value was 15.717 billion US dollars, a year-on-year increase of 25.6%; The output value of multi-layer boards was 33.091 billion US dollars, a year-on-year increase of 18.2%.

Prismark predicts that the average annual compound growth rate of the AI server related PCB market from 2024 to 2029 will reach 18.7%, the average annual compound growth rate of AI related HDI will be 29.6%, and the average annual compound growth rate of AI related 18 layer and above multi-layer boards will be 33.8%, far exceeding the average level of the PCB industry.

Not long ago, Nvidia CEO Huang Renxun also emphasized during the release of the fourth quarter financial report for the 2026 fiscal year that "the demand for computing power is growing exponentially". Renowned market research firm Jibang Consulting also recently estimated that global AI server shipments will increase by over 28% year-on-year in 2026, with models equipped with Nvidia GB300 becoming the mainstream of shipments.

Currently, Nvidia has announced that the GB300 AI server will begin large-scale delivery in the second quarter of 2026. In addition, at the upcoming GTC conference on March 16th, the new generation Vera Rubin architecture may be officially unveiled, and each upgrade of its architecture also requires higher requirements for PCB layers, frequencies, and material grades.

The annual report also mentioned that Shenghong Technology is carrying out forward-looking layout around the key technology route of "GPU, CPU" and conquering related cutting-edge technologies.

But currently, there are significant differences in the market's expectations for Shenghong Technology's performance in 2026.

For example, China Merchants Securities recently predicted that Shenghong Technology's net profit attributable to the parent company in 2026 would be 8.07 billion yuan; Guosheng Securities predicts this figure to be 10.5 billion yuan; Earlier, Bank of China International predicted this figure to be 12.036 billion yuan.

The predicted range is from 8 billion yuan to 12 billion yuan, with a difference of nearly 50%. But even if we take the most conservative end, it means that Shenghong Technology's net profit in 2026 will almost double on the basis of 2025.

In addition, it is worth mentioning that Shenghong Technology also disclosed 87 ongoing projects in its 2025 annual report, achieving a wide layout from AI computing power to aerospace. These projects include high-end intelligent server computing power circuit boards, MRIMM (Multi column Dual In Line Memory Module) memory module circuit boards, and other projects directly related to AI, as well as vertical aircraft control system circuit boards, advanced circuit boards for intelligent driving LiDAR, high dynamic machine human main control drive circuit boards, and circuit boards for marine information electronics.

In addition, Shenghong Technology also stated in its annual report that it will "accelerate the implementation of Southeast Asian production capacity layout, optimize global production capacity allocation", and "submit an application for H-share issuance and listing to the Hong Kong Stock Exchange".

As of the close on March 13th, Shenghong Technology's stock price was 278.23 yuan/share, down 0.81%, with a total market value of 242.8 billion yuan.