Faratronic (600563.SS): FY2025 in line; industrial control growth to pick up driven by AIDC, grid, and rail; maintain Buy
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Goldman Sachs maintains a Buy rating on Faratronic, citing the company's leadership in film capacitors and accelerating industrial control growth driven by AIDC, grid, and railway applications. FY2025 results aligned with expectations, with revenue, gross profit, operating profit, and net profit growing 12%, 7%, 5%, and 15% year-on-year respectively.
Management guided for double-digit revenue growth in 2026, with Goldman forecasting 15%. The electric vehicle (EV) segment, representing 57% of 2025 revenue, is projected to grow 13% in 2026. Pricing pressures have significantly eased, with most capacitor prices bottoming. Overseas markets, particularly Japan and Korea, remain primary growth drivers, supported by an expanded Southeast Asia investment plan.
Industrial control is the standout growth area, projected to grow 25% in 2026. AIDC applications offer significant long-term upside for high-voltage film capacitors, with per-watt value multiples higher than traditional uses. Goldman expects AIDC to contribute 4% of total revenue by 2028 as architectures evolve toward HVDC. Additionally, power grid and railway applications provide substantial near-term domestic substitution opportunities.
Gross margin is expected to remain stable at 31.9% in 2026. Cost pressures from oil-based chemicals and copper are anticipated to be fully offset by selective pricing, product mix optimization, and cost reductions. Goldman raised 2026-2030 EPS estimates by 1-7% and maintained a 12-month target price of RMB 130.9, based on 20x 2027E P/E.