Shengyi Technology (Shengyi) reported robust 3Q25 results. Revenue reached RMB7.9bn (+55%/+12% YoY/QoQ), with gross margin expanding sharply to 28.1% (vs. 22.9% in 3Q24 and 26.9% in 2Q25). Net profit surged 131%/18% YoY/QoQ to RMB1.0bn, lifting net margin to 12.8% (vs. 8.6%/12.2% in 3Q24/2Q25). The results underscore Shengyi’s strategic positioning as a core AI infrastructure play. We expect the Company’s revenue to grow 41%/38% YoY in 2025/26E, while NP to grow 102%/79% YoY. Reiterate BUY and raise our TP to RMB90, as we roll over our valuation period to 2026E and raise earnings forecast to reflect strong AI-driven momentum (a much stronger upcycle) and sustained margin improvement.

PCB: riding the AI server wave. Subsidiary Shengyi Electronics (688183 CH, NR) delivered another record quarter, with PCB revenue hitting RMB3.1bn (+154%/+40% YoY/QoQ). Quarterly revenue nearly matched fullyear 2023 level (RMB3.3bn), highlighting strong demand for high-layer count HDI boards used in AI servers. We see major hyperscalers continue to scale investment in AI infrastructure. As a key beneficiary, we forecast Shengyi Electronics’ full-year PCB revenue near RMB10bn (more than doubled) this year, becoming the group's primary growth engine.

CCL: steady amid cost headwinds. The CCL segment (incl. other) posted revenue of RMB4.9bn (+23% YoY, flat QoQ). While elevated copper prices (LME +15% since July) pose near-term pressure, we expect ASP increases to largely offset cost inflation. We project CCL revenue to grow 18% in 2025, bringing group revenue growth to ~41%.

Margins: structural upside from mix shift. Group gross margin rose 2.5pp/2.3pp/1.3pp through the first three quarters of 2025, reaching 28.1% in 3Q. This reflects the PCB segment's rapid mix shift toward high-value HDI products (Shengyi Elec. GPM: 33.9% in 3Q, +9.0ppt/+3.1ppt YoY/QoQ). We expect further improvement in 4Q with potential price adjustments, and project 2025 group GPM of 27.3%.

Reiterate BUY with TP raised to RMB90, based on 35x 2026E P/E (vs. prev. 30x 2025E P/E), near +2SD above its 5-yr hist. forward P/E, given 1) Shengyi's structural positioning in the AI upcycle, and 2) PCB's rising earnings contribution and premium valuation vs. CCL. We raise our revenue forecast by 1%/16% for 2025/26E and NP forecasts by 5%/46%, reflecting the strong growth and significant margin improvements. Key risks include: slower-than-expected capacity ramp-up, intensified competition, geopolitical uncertainties, etc.