Nomura: Jinpan Smart Technology (688676) AI Data Center Demand to Extend Growth Runway
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Nomura asserts that accelerating artificial intelligence data center demand will provide sustained long-term growth momentum for Jinpan Smart Technology. As a core transformer supplier, the company is positioned to benefit significantly from the rapid expansion of data center infrastructure projects.
Data center-related revenue already accounted for 30% of total revenue in 2025, with projections indicating this will reach 40% in 2026. Nomura forecasts a 25% compound annual growth rate for revenue between 2026 and 2028, marking a notable increase from the previously expected 15% rate. Overseas operations are also expanding smoothly, with 2025 international revenue growing 50% year-over-year to represent 20% of the total business.
The company's gross margin remains stable at approximately 32%, supported by scale efficiencies and ongoing product mix optimization. To accommodate this growth, capacity is planned to increase by 30% in 2026. At 20 times 2026 price-to-earnings, the stock trades at an attractive discount to the industry average of 28 times. Consequently, Nomura maintains a Buy rating with a target price of 45 yuan. Risks include slower data center construction and potential margin compression from heightened competition.