The printed circuit board equipment maker expects first-half profit to almost quadruple as demand for AI-related products surges, but a rapid expansion in capacity is driving up leverage.
By Doug Young
China’s artificial intelligence infrastructure boom is delivering another windfall for suppliers of the hardware behind high-performance computing, with printed circuit board (PCB) equipment maker Han’s CNC Technology (3200.HK; 301200.SZ) forecasting a sharp jump in first-half earnings as customers expand production for AI applications.
Once considered an anonymous commodity found in electronics like smartphones and personal computers, PCBs have suddenly become hot property due to their role as key components in the high-performance servers and other computing equipment required by AI.
The Shenzhen-based company said it expects net profit for the first six months of 2026 to rise between 242% and 280% year-on-year. The results point to sustained spending on AI servers and networking equipment, where increasingly sophisticated PCBs have become essential components.
The earnings forecast adds to growing evidence that investment in AI infrastructure remains robust despite concerns that enthusiasm for AI-related stocks may have outpaced underlying fundamentals. Han’s attributed its performance directly to rising demand for PCB manufacturing equipment used in AI-related products.
At the same time, the company’s rapid expansion is increasing pressure on its balance sheet. Heavy investment in new production capacity has pushed its gearing ratio sharply higher, highlighting the financial risks facing suppliers seeking to capitalize on one of China’s fastest-growing industrial sectors.
AI demand fuels earnings surge
Han’s said it expects net profit to reach between 900 million yuan ($132 million) and 1 billion yuan in the first half, up from 263 million yuan a year earlier. Excluding non-recurring items, profit growth would have been even stronger, rising by as much as 300%. Revenue more than doubled during the period. That follows first-quarter revenue growth of 104% to 1.96 billion yuan, suggesting sales maintained a similar pace in the second quarter.
“Against the backdrop of the ongoing large-scale deployment of computing infrastructures, including AI servers and high-speed network switches, the PCB industry continues to benefit from structural growth momentum,” the company said in a statement. “As a result, the revenue contribution from the company’s AI PCB-related solutions has increased significantly.”
The announcement came one day after PCB manufacturer Delton Technology (1989.HK; 001389.SZ) also issued an upbeat earnings forecast, saying first-half profit would rise between 85% and 95%, underlining strong demand across the AI hardware supply chain.
Premium valuations reflect high expectations
Investors have rewarded many companies linked to AI infrastructure with valuations more commonly associated with fast-growing internet businesses.
Han’s currently trades at around 54 times earnings. Fellow PCB equipment maker Circuit Fabology (9630.HK; 688630.SH) commands an even richer multiple of about 143 following a strong rally after its Hong Kong listing last month.
PCB manufacturers have also benefited from the enthusiasm. Delton Technology trades at around 47 times earnings, while Victory Giant (2476.HK; 300476.SZ) is valued at about 42 times. Laminate producer Kingboard (1888.HK), another important supplier to the PCB industry, trades at roughly 87 times earnings.
Han’s has also enjoyed a strong market debut. After completing a secondary Hong Kong listing in February that raised HK$4.63 billion ($591 million), the shares roughly doubled from their IPO price before retreating. Even after the pullback, the stock remains about 50% above its listing price.
Expansion comes at a cost
Founded in Shenzhen in 2002, Han’s has grown into China’s largest specialist PCB production equipment manufacturer, with about 10% of the domestic market in 2024. It operates manufacturing bases in Shenzhen and Jiangxi province.
Although the company has no manufacturing facilities overseas, many of its customers are building plants in Southeast Asia and elsewhere as Chinese electronics manufacturers diversify their production footprint. That has helped lift overseas sales from 1.3% of revenue in 2022 to 12.8% in the first 10 months of last year.
Meeting booming demand has required significant investment. The company’s liabilities rose 121% last year, substantially faster than the 48% increase in assets, largely due to growth in the amount owed to suppliers, reflected in a jump in accounts payable and bills payable, linked to expansion projects.
As a result, Han’s gearing ratio climbed to 43% at the end of 2025 from 29% a year earlier, approaching levels that investors often view as more heavily leveraged.
The higher debt burden should remain manageable if demand for AI infrastructure continues to support the company’s current pace of growth. But if spending on AI data centers and related computing equipment slows, the financial risks associated with Han’s aggressive expansion strategy could become more apparent.
Source:
Bamboo Works
