Shenzhen Kinwong Electronic (03228): First Financial Report After "A+H" Listing Released, Second Growth Curve Drives Q3 Earnings Explosion

Under the AI wave, tiny circuit boards have become a critical bottleneck in the global electronics supply chain. PCBs are the circuit connection carriers between chips, memory, and other components. AI servers' higher requirements for high-speed transmission and complex wiring have also made the design, manufacturing, and delivery of products such as high-layer boards and high-order HDI more difficult. At the recent TPCAShow2026 conference (the 27th Taiwan Printed Circuit Industry International Exhibition), some PCB supply chain companies expressed optimism about AI demand, and in the recently released "Q3 reports," many PCB manufacturers achieved considerable performance growth. Shenzhen Kinwong Electronic (03228), a PCB leader listed on the Hong Kong stock market at the end of September, is one of them. It is understood that the company recently delivered results for Q3 2026 that far exceeded expectations, marking the rapid conversion of its years of strategic investment into operating results. Single-quarter performance jumped, with AI computing power demand becoming the core incremental driver Looking across Shenzhen Kinwong Electronic's financial report, in the first three quarters of 2026, Shenzhen Kinwong Electronic achieved revenue of approximately RMB15.233 billion, up 37.45% year on year; net profit attributable to shareholders was RMB1.616 billion, up 70.42% year on year. At the same time, the high growth in performance was accompanied by a significant improvement in profit quality. On a single-quarter basis, the elasticity of Shenzhen Kinwong Electronic's performance was also several times the cumulative growth rate. Q3 operating revenue was approximately RMB6.621 billion, up 66.06% year on year; net profit attributable to shareholders was RMB1.014 billion, up 239.67% year on year. In the same period, the single-quarter gross margin reached 33.73%, up 11.78 percentage points year on year, hitting a new high in recent years. Regarding the change in performance, Shenzhen Kinwong Electronic said it was mainly due to an increase in revenue from the company's high-performance PCB products, combined with reasonable cost-price pass-through, order structure optimization, and internal cost reduction and efficiency enhancement, which raised the sales gross margin and drove an improvement in profitability. From the perspective of net margin, this change remains evident: the Q3 net margin attributable to shareholders was 15.32%, up 7.83 percentage points year on year. After excluding non-recurring gains and losses, the improvement in operating quality was even purer. Q3 net profit attributable to shareholders after deducting non-recurring gains and losses was approximately RMB1.042 billion, with a year-on-year increase of as much as 337.47%. As a traditional manufacturing leader with the world's largest market share in automotive PCB, Shenzhen Kinwong Electronic had previously been constrained by the cost lag and pass-through constraints of automotive PCB products. The AI wave, like a "tailwind," has enabled the company to enter the "fast lane" of an upward shift in its profit center driven by a qualitative change in product mix. The core DRIVE behind this Q3 earnings explosion came from the volume ramp-up of high-performance PCB products in high-speed communications and AI data infrastructure. Specifically, the communications and data infrastructure business achieved substantial growth during the year, with AI servers and high-speed optical modules as the main sources of incremental growth. To date, the company has supplied high-performance PCBs in mass production to leading global AI computing infrastructure customers, with application scenarios and product coverage continuing to broaden. In terms of technology and capacity, mSAP has become the mainstream technology route for 800G and 1.6T optical module PCBs, and Shenzhen Kinwong Electronic has achieved mass delivery, thereby realizing performance conversion. Regarding future orders, as of the end of Q3 2026, the company had a full order backlog in AI servers and data centers and high-speed optical modules, with high capacity utilization and yield rates, and is making every effort to ensure delivery. While the AI business advances rapidly, the automotive electronics business, as the company's "ballast," remains solid and has shown a trend of profit recovery. In the past few years, affected by factors such as rising raw material prices, the gross margin of the automotive business came under pressure. However, since the second half of 2025, through measures such as communicating price increases with customers, factoring material costs into pricing for new businesses, optimizing order structure, and internal cost reduction, the profitability of automotive electronics had clearly recovered by June 2026. Riding the AI tailwind, Kinwong enters a phase of capacity expansion In the PCB supply chain, the scarcity of high-end capacity determines the ranking of profit distribution: companies with mass production capability for high-layer boards of 18 layers and above and high-order HDI receive computing-power orders with unit prices several times those of ordinary boards. According to Prismark forecasts, from 2025 to 2030 the global HDI market size will grow to US$30.010 billion, with compound annual growth rates of 28.1% and 32.3% in the server and data storage, and wired communications sectors, respectively. Industry data show that the output value of high-layer boards of 18 layers and above is expected to grow 79.0% year on year, HDI by 23.0%, and packaging substrates by 28.8%, all far above the industry average; the PCB value per AI server is close to 10 times that of an ordinary server, which shows the strength of demand-side pull on high-end categories. Such prosperity clearly has a distinct asymmetry: high-end capacity remains persistently tight, with order visibility for some leading manufacturers already extending to 2027, and gaps in upstream segments such as copper-clad laminates, glass fiber cloth, and ABF substrates are even judged to last at least until 2030; at the same time, mid- and low-end capacity in consumer electronics and traditional communications is continuing to be cleared out under the dual squeeze of rising raw material prices and shrinking orders, and industry profits are accelerating toward leading companies with high-end product delivery capabilities. EB SECURITIES summarizes the current stage as a triple resonance of "AI computing power demand expansion + technological iteration and upgrading + price increase pass-through realization," the essence of which is that the high threshold on the supply side and the high growth rate on the demand side have formed a mismatch in high-end categories that is difficult to bridge in the short term. Shenzhen Kinwong Electronic's capacity layout is a direct response to this window: 3 mSAP production lines are already operating well, the 4th was completed in August, and 5 more will be completed within the year, reserving capacity for next-generation scenarios such as 3.2T optical modules; the high-order HDI plant has entered the trial operation stage and is expected to be fully connected and put into production in October, and after full ramp-up will form an annual capacity of 800,000 square meters of high-order HDI. The total investment in the ultra-high-layer PCB intelligent manufacturing project for AI computing infrastructure has been raised to RMB4.388 billion. Overseas, the first-phase plant of the Thailand base was fully connected in September, serving overseas customers' AI server and data center demand, with mass production capability for ultra-high-layer boards of more than 40 layers, high-layer boards, and HDI, and undertaking the functions of overseas delivery and geopolitical risk diversification. Huatai estimates that the new capacity is expected to gradually reach full production in 2027, driving a further increase in the share of high-end products. In the first three quarters of 2026, Shenzhen Kinwong Electronic invested RMB5.123 billion in capital expenditure, and construction in progress rose to RMB1.654 billion, which is exactly the mapping of this round of high-end capacity expansion in the financial statements. Looking forward from the current point, Shenzhen Kinwong Electronic is expected to dilute fixed costs through economies of scale, and as line utilization rises rapidly, this will contribute positively to gross margin. From a capital market perspective, institutions are consistent in their judgment of Shenzhen Kinwong Electronic's profit direction but differ on valuation. Huachuang Securities raised its 2026-2028 net profit attributable to shareholders forecasts to RMB2.992/6.977/10.029 billion and assigned a 2027 PE of 22x, with a target price of RMB143. Although Huatai also raised its earnings forecasts, it lowered its target price from RMB137.25 to RMB101.15 after the earnings beat. This divergence sends a fairly clear signal: Q3's explosive profit does not automatically equate to an upward shift in the valuation center, and the market is still waiting for more data to verify a "sustainable share of high-end revenue," which may also explain to some extent why H-shares surged after results and then fell back. Overall, Shenzhen Kinwong Electronic's Q3 report is a concentrated realization of two factors: automotive board pass-through recovery providing bottom support, and mass delivery of high-end AI products driving a structural uplift. The company has thus entered a new range of significantly rising gross and net margins. The industry's shortage of high-end capacity provides it with an entry window, and the pace of order backlog and capacity construction supports the continuation of the trend in direction. In 2027, whether high-end capacity can smoothly reach full production may be the next key node.