23 Oct 2026 CMB International Global Markets | Equity Research | Company Update

Shennan Circuit (002916 CH) 3Q26 earnings: Continued margin expansion fueled by AI

Shennan Circuit (002916 CH)

3Q26 earnings: Continued margin expansion demand fueled by AI demand

Target Price RMB432.00

SCC delivered strong 3Q26 results, with revenue/net profit rising 66.3%/94.4% YoY and 20.4%/34.0% QoQ to RMB10.48bn/RMB1.88bn. Net profit was near the upper end of the profit alert range, while NPM expanded to 17.9%, from 16.1% in 2Q26 and 15.3% in 3Q25. GPM also improved to 34.9%, vs. 32.4%/31.4% in 2Q26/3Q25, driven by robust AI infrastructure demand, a richer product mix, high capacity utilization and the continued ramp-up of the Guangzhou plant. We adjust up the revenue estimates by 9.3%/9.8% and GPM estimates by 0.5ppt/0.3ppt in FY26/27E on surging demand and more favorable product mix. Maintain BUY but lower our TP to RMB432 from RMB462, as we reduce our target multiple to 31x 2027E P/E from 37x, broadly in line with the peer average.

(Previous TP RMB462.00)

Up/Downside 52.0% Current Price RMB284.30

China Semiconductors Zhimin ZHOU

(852) 3850 5268 zhouzhimin@cmbi.com.hk

Kevin ZHANG

 AI demand and product upgrades drove broad-based growth. According to mgmt., continued investment in AI infrastructure supported demand for AI servers, high-speed switches, optical modules, processors and memory-related substrates. High capacity utilization, product-mix improvement and the Guangzhou plant ramp-up altogether drove earnings growth. In 9M26, revenue/net profit increased 53.8%/77.5% YoY to RMB25.77bn/RMB4.13bn, while GPM expanded 4.4ppt to 32.6%. Net profit grew 87.8% despite higher finance expenses and lower government-related income, indicating solid underlying profitability.

(852) 3761 8727 kevinzhang@cmbi.com.hk

Aaron GUO

(852) 3916 3715 aaronguo@cmbi.com.hk

Stock Data

Mkt Cap (RMB mn) 189,059.5 Avg 3 mths t/o (RMB mn) 3,214.1 52w High/Low (RMB) 457.90/187.41 Total Issued Shares (mn) 665.0

 AI-related products and new capacity to drive the growth outlook. We expect AI-related PCBs, BT substrates, FC-BGA and ABF products to remain the key growth drivers into 2027E, supported by capacity expansion in Guangzhou, Thailand, Nantong and Wuxi. Further margin upside will depend on product-mix improvement and utilization gains to more than offset raw material inflation, ramp-up costs and incremental depreciation.

Source: FactSet

Shareholding Structure

Shentian Tech 62.6% E Fund Management 2.7%

Source: Bloomberg

 Key risks include weaker hyperscalers’ capex, slower client qualification,

Share Performance

slower capacity ramp-up, etc.

Absolute Relative 1-mth -28.9% -16.5% 3-mth -15.9% -4.2% 6-mth -5.6% 21.8%

Earnings Summary

(YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB mn) 17,907 23,647 36,783 47,828 61,823

Source: FactSet

12-mth Price Performance

YoY growth (%) 32.4 32.1 55.6 30.0 29.3 Gross margin (%) 24.8 28.3 32.4 33.9 35.8 Net profit (RMB mn) 1,877.6 3,275.7 6,115.3 9,295.5 13,255.3

YoY growth (%) 34.3 74.5 86.7 52.0 42.6 EPS (Reported) (RMB) 3.66 4.91 9.17 13.94 19.88 P/E (x) 77.7 57.9 31.0 20.4 14.3 ROE (%) 13.5 20.6 31.4 36.4 38.4 Source: Company data, Bloomberg, CMBIGM estimates

Source: FactSet

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR OR http://www.cmbi.com.hk

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Figure 1: Earnings forecasts update New Old Diff. (%)

RMB mn FY26E FY27E FY28E FY26E FY27E FY28E FY26E FY27E FY28E Revenue 36,783 47,828 61,823 33,644 43,550 56,105 9.3% 9.8% 10.2% Gross profit 11,917 16,193 22,135 10,716 14,639 19,932 11.2% 10.6% 11.1% Net profit 6,115 9,295 13,255 5,470 8,326 11,932 11.8% 11.6% 11.1% EPS (RMB) 9.17 13.94 19.88 8.20 12.49 17.90 11.9% 11.6% 11.1% Gross margin 32.4% 33.9% 35.8% 31.9% 33.6% 35.5% 0.5 ppt 0.3 ppt 0.3 ppt

• Net margin 16.6% 19.4% 21.4% 16.3% 19.1% 21.3% 0.3 ppt 0.3 ppt 0.1 ppt

Source: Company data, CMBIGM estimates

Figure 2: CMBIGM forecast vs. Bloomberg consensus

CMBIGM estimates Bloomberg consensus Diff (%)

RMB mn FY26E FY27E FY28E FY26E FY27E FY28E FY26E FY27E FY28E Revenue 36,783 47,828 61,823 33,834 45,846 59,011 8.7% 4.3% 4.8% Gross profit 11,917 16,193 22,135 10,705 15,649 20,977 11.3% 3.5% 5.5% Net profit 6,115 9,295 13,255 5,783 9,036 12,400 5.7% 2.9% 6.9% EPS (RMB) 9.17 13.94 19.88 8.55 13.45 18.48 7.3% 3.7% 7.6% Gross margin 32.4% 33.9% 35.8% 31.6% 34.1% 35.5% 0.8 ppt -0.3 ppt 0.3 ppt

• Net margin 16.6% 19.4% 21.4% 17.1% 19.7% 21.0% -0.5 ppt -0.3 ppt 0.4 ppt

Source: Company data, CMBIGM estimates, Bloomberg consensus

Figure 3: Peer table P/E (x) EPS (US$) GPM%

Company Ticker CY26E CY27E CY26E CY27E CY26E CY27E

Shengyi Elec. 688183 CH 26.8 17.6 0.48 0.73 34.3 35.0 Avary 002938 CH 31.4 20.6 0.33 0.51 24.2 25.9 WUS 002463 CH 32.2 20.9 0.50 0.77 38.8 40.3 Victory Giant 300476 CH 21.1 11.4 1.27 2.34 36.2 38.8 Ibiden 4062 JT 89.3 54.2 0.62 1.00 31.9 38.0 Fastprint 002436 CH 137.3 63.6 0.04 0.08 24.1 27.2 Unimicron 3037 TT 49.0 26.0 0.68 1.29 26.1 36.6 Average 55.3 30.6 0.56 0.96 30.8 34.5

Source: Company data, CMBIGM, Bloomberg consensus as of 22 Oct, 2026

Figure 4: Forward P/E chart

50

45

40

35

30

25

20

15

10

02-25

08-24

10-24

12-24

04-25

06-25

08-25

10-25

12-25

02-26

04-26

06-26

1-yr Forward P/E Mean

Mean+1SD Mean-1SD

Source: Company data, CMBIGM estimates

Figure 5: P/E band

(RMB)

500

400

300

200

100

0

10/24

10/25

06/26

08/24

12/24

02/25

04/25

06/25

08/25

12/25

02/26

04/26

Closing Px 11.5x 18.4x 25.3x 32.2x 39.1x

Source: Company data, CMBIGM estimates

Financial Summary

INCOME STATEMENT 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Revenue 13,526 17,907 23,647 36,783 47,828 61,823 Cost of goods sold (10,357) (13,460) (16,951) (24,866) (31,635) (39,687) Gross profit 3,170 4,447 6,696 11,917 16,193 22,135 Operating expenses (1,558) (2,141) (2,642) (4,235) (5,124) (6,128) SG&A expense (870) (1,030) (1,446) (2,248) (2,780) (3,408) R&D expense (1,073) (1,272) (1,591) (2,207) (2,631) (3,091) Others 385 161 396 221 287 371 Operating profit 1,611 2,306 4,054 7,683 11,070 16,007 Other income 5 6 6 0 0 0 Other expense (4) (11) (18) 0 0 0 Other gains/(losses) (182) (231) (370) (449) (199) (621) Interest income 12 10 16 14 42 78 Interest expense (66) (80) (78) (137) (158) (170) Others 23 23 13 (237) (308) (398) Pre-tax profit 1,398 2,023 3,624 6,874 10,447 14,897 Income tax (1) (145) (345) (756) (1,149) (1,639) After tax profit 1,398 1,879 3,279 6,118 9,298 13,258 Minority interest (0) 1 3 3 3 3 Net profit 1,398 1,878 3,276 6,115 9,295 13,255

BALANCE SHEET 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Current assets 8,597 10,854 13,654 21,986 28,378 40,914 Cash & equivalents 853 1,553 998 1,894 6,542 9,160 Account receivables 3,091 3,806 5,250 10,068 9,587 15,819 Inventories 2,686 3,395 5,140 6,442 8,292 10,192 Prepayment 8 9 36 26 40 48 Other current assets 1,959 2,091 2,230 3,555 3,917 5,695 Non-current assets 14,010 14,448 16,929 20,525 23,970 28,235 PP&E 10,083 12,396 13,339 15,009 17,198 19,871 Right-of-use assets 26 9 61 139 232 343 Deferred income tax 272 187 259 359 443 585 Intangibles 544 585 639 769 942 1,168 Goodwill 0 0 0 0 0 0 Other non-current assets 3,085 1,271 2,631 4,248 5,155 6,269 Total assets 22,607 25,302 30,583 42,511 52,348 69,149

Current liabilities 6,425 7,489 10,024 17,056 19,179 25,100 Short-term borrowings 400 10 15 5,141 3,660 6,350 Account payables 2,037 2,687 3,934 4,786 5,961 7,521 Tax payable 42 59 216 300 370 488 Other current liabilities 3,291 3,933 4,762 5,177 7,129 8,034 Contract liabilities 212 208 173 368 478 618 Accrued expenses 443 592 924 1,284 1,581 2,088 Non-current liabilities 2,995 3,167 3,378 3,651 3,876 4,260 Long-term borrowings 2,407 2,577 2,679 2,679 2,679 2,679 Bond payables 0 0 0 0 0 0 Deferred income 372 471 525 730 899 1,188 Other non-current liabilities 217 119 174 241 297 393 Total liabilities 9,420 10,656 13,402 20,707 23,054 29,360

Share capital 513 513 667 681 681 681 Retained earnings 6,179 7,594 10,024 14,361 21,603 31,759 Other reserves 6,492 6,510 6,459 6,728 6,972 7,309 Total shareholders equity 13,184 14,617 17,149 21,770 29,257 39,749 Minority interest 3 29 31 34 37 39 Total equity and liabilities 22,607 25,302 30,583 42,511 52,348 69,149

CASH FLOW 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Operating Profit before taxation 1,398 1,879 3,279 6,118 9,298 13,258 Depreciation & amortization 1,272 1,437 1,668 1,857 2,137 2,514 Change in working capital (364) (846) (1,611) (5,248) 1,738 (6,180) Others 283 513 503 (149) 294 (315) Net cash from operations 2,589 2,982 3,838 2,578 13,468 9,277

Investing Capital expenditure (3,250) (2,526) (3,765) (5,362) (5,573) (6,661) Acquisition of subsidiaries/ investments 0 0 (904) 0 0 0 Net proceeds from disposal of short-term investments

0 0 0 0 0 0

Others (311) 601 10 184 201 244 Net cash from investing (3,561) (1,925) (4,660) (5,177) (5,372) (6,417)

Financing Dividend paid (589) (543) (846) (1,772) (1,993) (2,959) Net borrowings 1,117 133 207 5,126 (1,481) 2,691 Proceeds from share issues 0 31 0 114 0 0 Others (617) (10) (11) 14 14 14 Net cash from financing (89) (389) (650) 3,483 (3,460) (254)

Net change in cash

Cash at the beginning of the year 1,912 851 1,551 997 1,892 6,540 Exchange difference (0) 32 12 12 12 12 Cash at the end of the year 851 1,551 997 1,892 6,540 9,158

GROWTH 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Revenue (3.3%) 32.4% 32.1% 55.6% 30.0% 29.3% Gross profit (11.2%) 40.3% 50.6% 78.0% 35.9% 36.7% Operating profit (14.3%) 43.1% 75.8% 89.5% 44.1% 44.6% Net profit (14.8%) 34.3% 74.5% 86.7% 52.0% 42.6%

PROFITABILITY 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Gross profit margin 23.4% 24.8% 28.3% 32.4% 33.9% 35.8% Operating margin 11.9% 12.9% 17.1% 20.9% 23.1% 25.9% Return on equity (ROE) 11.0% 13.5% 20.6% 31.4% 36.4% 38.4%

GEARING/LIQUIDITY/ACTIVITIES 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec Current ratio (x) 1.3 1.4 1.4 1.3 1.5 1.6

VALUATION 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec P/E 104.6 77.7 57.9 31.0 20.4 14.3

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets.

Disclosures & Disclaimers

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CMBIGM Ratings

BUY : Stock with potential return of over 15% over next 12 months HOLD : Stock with potential return of +15% to -10% over next 12 months SELL : Stock with potential loss of over 10% over next 12 months NOT RATED : Stock is not rated by CMBIGM

OUTPERFORM : Industry expected to outperform the relevant broad market benchmark over next 12 months MARKET-PERFORM : Industry expected to perform in-line with the relevant broad market benchmark over next 12 months UNDERPERFORM : Industry expected to underperform the relevant broad market benchmark over next 12 months

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