Shengyi Technology Co., Ltd. (600183) released its 26H1 interim report, posting revenue of RMB 19.026 billion, up 50.05% year-on-year, with net profit attributable to shareholders of RMB 3.287 billion, surging 130.42% year-on-year, while non-GAAP net profit reached RMB 2.908 billion, up 111.0%. Combined with recent company and industry developments, the following analysis emerges.

Q2 2026 performance landed at the upper end of the guidance range, with net margin improving sharply quarter-over-quarter. Single-quarter Q2 revenue hit RMB 10.885 billion, up 53.98% year-on-year and 33.71% quarter-on-quarter, while net profit attributable to shareholders reached RMB 2.129 billion, up 146.98% year-on-year and 83.85% sequentially. The 26H1 net margin stood at 17.28%, up 6.03 percentage points year-on-year, while Q2 net margin reached 19.56%, up 7.37 points year-on-year and 5.34 points quarter-on-quarter. Two key drivers powered the net margin surge: first, gross margin climbed notably (26H1 gross margin of 30.69%, up 4.84 points year-on-year; Q2 gross margin of 32.64%, up 4.54 points sequentially), reflecting copper-clad laminate (CCL) price hikes and a richer high-speed product mix; second, robust revenue growth diluted the expense ratio across the board, with selling, administrative, and R&D expense ratios down 0.45, 0.78, and 0.26 percentage points year-on-year, respectively.

Breaking down by business segment: 1) The CCL business saw volume, price, and product structure improve in tandem, with pricing power fully validated. 26H1 CCL sales reached 87.1401 million square meters, up 14.24% year-on-year, while prepreg sales hit 115.7488 million meters, up 12.43%. CCL and prepreg revenue reached RMB 12.357 billion, up 47.74% — revenue growth ran roughly three times faster than volume growth, implying a significant uptick in average selling prices, confirming price hikes landed amid a supply-demand imbalance and rising raw material costs, alongside a rising high-speed materials mix. By region, domestic sales of RMB 14.835 billion grew 51.02% year-on-year with a gross margin of 29.36%, up 5.86 points — the main engine of margin improvement, while export margins rose only 0.57 points, a milder gain.

2) The PCB segment (via subsidiary Shengyi Electronics) grew strongly with even better profitability. Consolidated PCB revenue reached RMB 5.519 billion, up 52.03% year-on-year, with gross margin of 31.20%, up 3.35 points. Minority interest income of RMB 431 million jumped 119.58% year-on-year, driven primarily by Shengyi Electronics' profit expansion. Among the subsidiary tier, Jiangxi Shengyi contributed the largest marginal increment, posting revenue of RMB 1.876 billion, up 160.87% (Phase II project reached full production in the first half of 2026, adding 18 million square meters of annual CCL capacity and 34 million meters of prepreg), with net profit of RMB 185 million. Suzhou Shengyi posted revenue of RMB 2.773 billion, up 36.53%, with net profit of RMB 285 million, while Shaanxi Shengyi saw revenue of RMB 2.154 billion, up 23.03%, with net profit of RMB 187 million.

The CCL business benefits from the price-hike cycle combined with AI product ramp-up driving structural upgrades, while the AI PCB segment maintains high prosperity. Looking to H2 by segment: (1) For traditional CCL, in early July, prices for standard FR4-CCL and prepreg already rose 15%. In H2, the company will continue its "small steps, fast pace" price-hike strategy, leveraging its industry leadership and bargaining power to secure upstream raw material supply resources, smoothly pass through costs, and capture excess pricing gains.

(2) On AI CCL: Shengyi Technology previously announced that its total procurement from three related suppliers — Lianyungang New Material, Yangzhou Tianqi, and Shandong Xingshun — was raised sharply from RMB 391 million to RMB 1.12 billion for 2026, an increase of 186%. The procurement quota with Lianyungang New Material rose from RMB 170 million to RMB 310 million, up 82.35%. The Shandong Xingshun quota surged 441%, closely matching the industry-wide shortage of electronic glass fiber (E-glass), while the 82% increase in spherical silica micropowder procurement from Lianyungang New Material corresponds to rigid volume ramp-up in AI-CCL filler materials. As of May 31, cumulative procurement from Lianyungang stood at RMB 62.66 million, only 20.21% of the adjusted full-year quota. Average monthly procurement from January to May was approximately RMB 12.53 million; for June-December, RMB 247 million remains to be completed over seven months, implying an average of about RMB 35.29 million per month — nearly triple the January-May pace. Shengyi's H2 capacity utilization will remain at high levels, and the Jiangxi Phase II high-speed CCL capacity reached full production on June 11, laying a solid foundation for H2 high-speed material ramp-up. The company has already achieved breakthroughs across all material part numbers for North American customer N's Vera Rubin architecture, with ASIC customers being introduced on schedule. The supply share for AI high-speed CCL is expected to rise quarter by quarter as capacity releases through this year and next, driving continued product structure premiumization and pushing profitability upward across cycles.

(3) For the PCB business: AI computing PCB demand remains robust, with subsidiary Shengyi Electronics' Dongguan and Ji'an AI PCB bases ramping capacity in phases, potentially adding over RMB 8 billion in output value. AWS customer T3 new products continue to ship in volume, combined with continuous introduction of 800G switch and domestic computing demand, the PCB business is expected to maintain rapid growth.

The CCL industry's upward cycle is expected to persist. The company boasts an excellent customer and product matrix, with utilization rates likely to stay elevated. Its growth attributes stand out, with clear advantages in S8/S9/S10/S11 and PTFE high-speed materials positioning, and its high-end products are expected to make steady progress in AI computing, edge-side applications, and domestic substitution. In 26H2, upstream copper foil processing fees are rising and glass fabric supply remains tight (thin fabrics are being squeezed out by AI-specific low-Dk fabric demand). Cost support combined with supply-demand tightness suggests the CCL price-hike cycle's duration and magnitude could both exceed earlier expectations. With rapid growth in high-speed material capacity and shipment scale, profitability is poised for sustained improvement. The company's technical leadership, core positioning in PCB upstream materials, and long-term headroom — combined with strong management — will continue to be recognized by the market. The 2026 high-speed laminate ramp-up will drive a new round of high-quality growth, with mid-to-long-term earnings potentially beating expectations. Risks include raw material price volatility, intensifying competition, demand shortfalls, rising geopolitical risks, and technology upgrade delays.