Shenzhen Han's CNC Technology Co.,Ltd. has released its 2025 earnings forecast, significantly surpassing market expectations. Amid the expansion of computing power PCB production capacity and technological upgrade trends, we maintain our positive outlook on the company's core positioning in the PCB equipment industry, its technological leadership, the high-end upgrade of its product portfolio, and its long-term growth potential, with earnings expected to exceed expectations. The 2025 earnings forecast far exceeds expectations, driven by the expansion of computing power PCB production and product mix upgrades leading to substantial profit growth. The company forecasts a net profit attributable to shareholders of 785-885 million yuan for 2025, with a midpoint of 835 million yuan, representing a significant year-on-year increase of 177%. After excluding non-recurring gains and losses, the net profit is forecasted at 780-880 million yuan, with a midpoint of 830 million yuan, a substantial year-on-year surge of 295%. The significant earnings growth in 2025 is primarily attributed to robust demand for the company's core mechanical drilling business, fueled by accelerated capacity expansion and technological upgrades in downstream computing power PCBs, coupled with a notable optimization of the product structure as the proportion of AI PCB products increases.
Q4 2025 performance aligns with our previous expectation of sequential quarter-over-quarter improvement. Based on the midpoint figures, Q4 2025 net profit attributable to shareholders reached 343 million yuan, up 250% year-on-year and 50% quarter-on-quarter. After excluding non-recurring items, the figure was 355 million yuan, soaring 759% year-on-year and 57% quarter-on-quarter. We reiterate our previous view and remain optimistic about Han's CNC's new cycle of high-end upgrades for PCB equipment. 1) Strong growth in the core mechanical drilling business: As a leader in mechanical drilling, Han's CNC's CCD back-drilling machines offer distinct advantages, with their value per unit doubling, order demand increasing quarter by quarter, and the rising proportion of AI-related products significantly boosting profitability. We assess that the company is prepared to double its production capacity this year and has made ample preparations for equipment deliveries to board manufacturers this year and next. It is poised to secure bulk orders from numerous leading PCB clients, which will continuously optimize the product mix and drive high growth in its core business earnings.
2) Breakthrough in high-end ultrafast laser new products (from 0 to 1): Han's CNC's ultrafast laser products are technologically advanced, offering advantages such as saving on browning/blackening & post-processing resin removal, superior blind via processing quality, and the ability to process expanded layer blind vias. They are well-suited for new technology trends like SLP and CoWoS, and new material upgrades like M9/PTFE in the computing power PCB field, offering better yields, efficiency, and overall cost advantages. We anticipate that batch deliveries for 1.6T optical modules will commence this year, followed by benefits from material upgrades like the Rubin series and new technology applications. Furthermore, there is potential to break foreign monopolies in areas like AI terminal substrate carriers and SLP, indicating considerable earnings contribution potential from ultrafast laser equipment. 3) Supporting sales of other equipment: Alongside technological upgrades and changes in production processes in the downstream PCB industry, the company is well-positioned to leverage its advantage in drilling equipment to drive sales of supporting equipment such as exposure, forming, inspection, and lamination machines, thereby expanding its product categories.
Investment recommendation: Han's CNC is a global leader in PCB equipment, ranking first among domestic PCB equipment manufacturers for 16 consecutive years. The accelerated expansion of AI PCB production capacity, combined with the company's high-end product upgrades, is initiating a new cycle of high-quality growth. Based on the better-than-expected 2025 earnings forecast and the growth potential of new high-end products, we have raised our revenue forecasts for 2025-2027 to **/**/** billion yuan and net profit attributable to shareholders to **/**/** billion yuan, corresponding to a PE ratio of **/**/** times. Given the trends of downstream computing power PCB capacity expansion and technological upgrades, we are optimistic about Han's CNC's core positioning, technological leadership, high-end product upgrades, and long-term potential in the PCB equipment industry, with earnings likely to exceed expectations. We maintain a "**" rating. Risk warnings: AI development falling short of expectations, slower-than-expected downstream capacity expansion, intensifying industry competition, escalating geopolitical risks, and technological upgrades not meeting expectations.
Team introduction: Yan Fan holds dual bachelor's degrees in Information Management and Economics from Peking University and a master's degree from its Guanghua School of Management. With 18 years of experience in the securities industry, he worked at CITIC Securities from 2008 to 2011 before joining China Merchants Securities in 2011. He currently serves as Managing Director of the R&D Center, Chief Analyst for the Electronics sector, and Head of the TMT and Small & Mid-Cap Team. Team members: Cheng Xin, Chen Wei, Tu Kunshan, Zhao Lin, and Research Assistant (Wang Yanqian). Team honors: Ranked 2nd/5th/2nd/2nd/4th/3rd/3rd/4th/3rd/5th in the Electronics sector by New Fortune in 2011/2012/2014/2015/2016/2017/2019/2020/2021/2022; 2nd/4th/1st/2nd/3rd/3rd/2nd/3rd/3rd in the Electronics sector by Crystal Ball in 2011/2012/2014/2015/2016/2017/2018/2019/2020; 1st/2nd/3rd/3rd/3rd/3rd/2nd/2nd/1st in the TMT/Electronics sector by Golden Bull Award in 2010/2014/2015/2016/2017/2018/2019/2020; Most Valuable Golden Bull Analyst in 2018/2019. Stock rating definition: Stock ratings are based on the stock's performance relative to the market benchmark (CSI 300 Index) within 6 months from the report date: Strongly Recommended: Stock price increase exceeds the benchmark index by more than 20%; Accumulate: Stock price increase exceeds the benchmark index by 5-20%; Neutral: Stock price fluctuation relative to the benchmark index is within ±5%; Reduce: Stock price performance is weaker than the benchmark index by more than 5%. Industry rating definition: Industry ratings are based on the industry index's performance relative to the market benchmark (CSI 300 Index) within 6 months from the report date: Recommended: Industry fundamentals are favorable, and the industry index is expected to outperform the benchmark; Neutral: Industry fundamentals are stable, and the industry index is expected to move in line with the benchmark; Reduce: Industry fundamentals are weak, and the industry index is expected to underperform the benchmark.
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