Click the blue text above to follow me👆 Recently, the A-share market has witnessed a dramatic comeback story.
The protagonist is a company called Shenghong Technology based in Huizhou, whose main business sounds quite ordinary:
Manufacturing printed circuit boards (PCBs), those small components hidden inside electronic devices that ordinary people cannot see.
However, this company has seen its stock price soar 13 times since the low point at the beginning of 2024, with a market value reaching 194.7 billion yuan, an increase of 137 billion yuan compared to four months ago.
This is equivalent to a daily market value increase of 1.1 billion yuan, comparable to the speed of a money printing machine. How can a circuit board be worth so much? Shenghong Technology’s main business is PCBs, which stands for printed circuit boards.
In simple terms, this is the highway for electronic devices, connecting components like chips, resistors, and capacitors.
Without it, phones become bricks, computers become useless, and AI servers lose connectivity.
It may sound like a low-tech field, but the barriers to high-end PCBs are quite significant.
For instance, the most popular AI servers today require circuit boards that can handle massive data flows, which ordinary factories cannot produce. Shenghong Technology’s strength lies in becoming a core supplier for NVIDIA.
It is important to note that NVIDIA’s GPU chips are now essential for AI companies worldwide, and Shenghong Technology’s circuit boards directly support these chips.
As the company’s chairman Chen Tao puts it:
We are not making ordinary circuit boards; we are building the infrastructure for the AI computing era. Binding with major clients, orders are pouring in Shenghong Technology’s performance in 2024 is impressive:
Revenue of 10.7 billion yuan, a year-on-year increase of 35%;
Net profit of 1.15 billion yuan, a direct increase of 70%.
Even more astonishing is that in the first quarter of 2025, net profit surged by 339%, equivalent to a daily net profit of 10 million yuan.
Where is this money coming from? The answer is two words: exports.
Sixty percent of the company’s revenue comes from overseas markets, with a client list that includes not only NVIDIA but also regulars from the tech giants club like AMD, Intel, Tesla, and Microsoft. There is an interesting detail:
Shenghong Technology sold over 20 million PCBs to Tesla in 2024.
Assuming each Tesla uses hundreds of circuit boards, this supply volume is enough to equip tens of thousands of electric vehicles.
This dependency on major clients, while risky, has the benefit of stable orders and the ability to keep up with cutting-edge technology.
After all, being tied to a technology bellwether like NVIDIA is equivalent to securing a ticket to the AI industry. Global Layout: Battling on Two Fronts in Vietnam and Thailand Chen Tao’s ambitions go beyond just making quick money from selling circuit boards.
In recent years, he has accomplished a significant task: opening factories in Vietnam and Thailand.
In 2024, he invested 260 million USD to build a factory in Vietnam, and this year he added another 3.2 billion yuan to expand the production line in Thailand.
Some believe this is a passive choice to de-China, but Chen Tao’s explanation is:
The global supply chain needs multi-point layouts; we must follow our clients. This statement is indeed true.
Many products from clients like NVIDIA and AMD are assembled in Southeast Asia, and by setting up factories locally, Shenghong Technology can shorten supply cycles and reduce transportation costs.
More importantly, labor costs in Southeast Asia are lower than in China, which translates to real savings for manufacturing companies.
Capital Operations: Financing with One Hand, Reducing Holdings with the Other However, such aggressive expansion relies heavily on capital market support.
This year, Shenghong Technology has made three major moves:
First, it raised 1.9 billion yuan through a targeted placement, followed by plans to raise 7.2 billion yuan through a listing in Hong Kong.
Including previous financing, Chen Tao has raised over 9 billion yuan this year, equivalent to 300 million yuan in cash inflow daily. However, there is a controversy: the company’s stock price has risen 13 times, yet executives have started cashing out.
Just in May of this year, major shareholders cashed out 1.7 billion yuan, and in early August, executives reduced their holdings by 450 million yuan.
Some question whether this is a case of major shareholders cutting the leeks, but from another perspective, it may be a rational move to lock in the company’s valuation.
After all, no one can predict how long this AI boom will last, and cashing out while the stock price is high can be seen as a prudent operation. Technical Moat: The Entry Ticket to High-End PCBs Shenghong Technology’s core competitiveness lies in its mastery of high-end HDI (High-Density Interconnect) technology.
This type of circuit board has many layers and high precision; for example, a 6-layer 24-layer HDI board, with fewer than five companies globally capable of stable mass production.
NVIDIA’s latest B200 server uses this technology, and Shenghong Technology is one of the few suppliers. The direct benefit of the technical barrier is a surge in gross profit margin.
In 2024, the company’s gross profit margin jumped from 22.7% to 33.4%, meaning that for every 100 yuan of product sold, the net profit increased by 10 yuan.
This is considered exorbitant in the manufacturing industry, as traditional PCB manufacturers generally have gross profit margins between 15-20%. Risk Warning: Even the Pig on the Wind Can Fear the Wind Stopping Of course, Shenghong Technology’s story is not without its concerns.
First, the risk of a bubble in the AI industry always exists.
Currently, major tech companies are pouring money into AI, but the truly profitable application scenarios have not yet been fully realized.
Once the investment enthusiasm wanes, Shenghong Technology’s orders may face a cliff-like drop. Secondly, the backlash of capacity expansion.
The factories in Vietnam and Thailand are still under construction, requiring continuous investment in the short term, while the company has only 1.3 billion yuan in cash, with total short and long-term debts of 3.3 billion yuan.
If the Hong Kong listing encounters obstacles, the pressure on the capital chain will significantly increase. Finally, there is industry competition.
Although Shenghong Technology is currently a leading player in the high-end PCB field, there are over 2,000 companies in China manufacturing circuit boards.
Competitors like Shenzhen South Circuit and Huadian Technology are also eyeing the AI pie. A slight lag in technological iteration could lead to being surpassed by newcomers. Revelations from the Rise of a New Manufacturing Power The rise of Shenghong Technology serves as a wake-up call for traditional manufacturing:
Transformation and upgrading do not necessarily have to be grand but must find the right direction.
Chen Tao’s choice is very pragmatic—he does not chase trendy concepts but focuses on the technical needs of leading clients.
From the H100 to the B200 server, Shenghong Technology has followed NVIDIA’s technological roadmap step by step, ultimately securing a golden seat in the AI industry chain. However, for ordinary investors, while such tenfold stocks look tempting, the timing of entry must be carefully considered.
After all, the current price-to-earnings ratio is already 53 times, with a market value of 194.7 billion, which is equivalent to preemptively exhausting the expectations for the next three to five years.
At this time, chasing high prices carries far greater risks than rewards. Ultimately, Shenghong Technology’s story tells us:
There is no eternal sunset in manufacturing, only continuously evolving new powers.
As for how far it can go, it depends on whether it can truly turn the AI boom into its own technical moat.
(End of article)