Nomura: Shengyi Electronics (688183) — 1H26 Profit Alert Reaffirms Upward Trend
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Key Views
Shipments of new products from the key ASIC customer (including Trainium 3) have begun, supporting ASP and margin expansion in 2H26. AI switch upgrades add further demand upside. The server segment remains the largest revenue source, projected at 66% of total revenue in FY26F with a 28% revenue CAGR through FY26–28F.
Nomura raises FY26–28F revenue forecasts by 7–15% and net profit estimates by 6.5–11.1% to reflect faster product ramps, partially offset by gross margin reductions of 0.1–0.8pp from upstream material cost pressures.
Outlook
ASIC and AI switch demand should continue accelerating through 2H26 and 2027, fueled by surging token consumption from agentic workloads. Customer diversification is progressing, with exposure to the key ASIC customer expected to decline from 50% in 2025 to 42% by FY28F. Key risks include weaker downstream PCB demand, intensifying high-end competition, and raw material cost escalation.
Recommended Securities
Shengyi Electronics (688183 CH): Buy, target price CNY159.00 (based on 35x FY27F EPS of CNY4.55, in line with historical median P/E).