Shengyi Tech (600183.SS): 3Q26 NI guidance beat with strong QoQ growth; Strong AI CCL demand with specification upgrade; Buy (on CL)

Shengyi reported 3Q26 net income guidance far above our previous estimates and implying strong sequential growth. We attribute the better-than-expected net income to (1) strong CCL shipment riding on both shipment and ASP growth, (2) higher-than-expected gross margin on product mix upgrade and better pricing, and (3) higher-than-expected non-operating profit. Looking into 4Q26E/2027E, we expect the strong CCL demand to sustain, riding on the Gen-AI trend and the company's client expansion. We reiterate our positive view on Shengyi and view the company as a key beneficiary of the rising AI CCL end demand, and model the company's net income to grow at a strong CAGR in 2026E-30E, driven by (1) AI CCL price increase due to rising end-demand and (2) specification upgrade of rack-level AI servers towards higher speed leading to rising penetration of M9+ products. We factor in Shengyi's 3Q26 guidance and revise up our earnings forecasts on higher AI CCL revenues, gross margin expansion from p