Track Hyper | DChain Core: VGT Explodes in Q1

Author: Zhou Yuan / Wall Street News

In the first quarter of 2025, VGT's market examination continued the overall performance of 2024, achieving high scores once again, with a very impressive report card.

VGT specializes in the research, development, production, and sales of high-density printed circuit boards, with products covering the entire range of rigid circuit boards (multi-layer boards with HDI as the core) and flexible circuit boards (single-sided boards, multi-layer boards, and rigid-flex boards).

According to Prismark data, VGT ranks 13th among global PCB suppliers and 4th among domestic PCB manufacturers in mainland China; the 2024 annual report states that the company holds the largest market share globally in AI computing cards and AI Data Center UBB & switches.

Records from the investor relations event in March this year show that VGT improved the HDI yield from less than 50% in the early stages to 85% (industry average 70%) through process optimization and equipment upgrades, with unit costs 12% lower than competitors.

The improvement in yield directly drove a 122% quarter-on-quarter increase in net profit for the first quarter of 2025, with gross profit margin rising to 33.37%.

Since 2015, VGT has maintained a compound annual growth rate of nearly 30% in revenue and net profit, far exceeding the global PCB industry average, and has become a leading enterprise in the PCB industry, particularly excelling in the AI PCB field, completing a horizontal integration layout in the PCB industry and achieving full category coverage.

In the first quarter of this year, VGT's total operating revenue reached 4.312 billion yuan, a year-on-year surge of 80.31%; net profit attributable to the parent company was 921 million yuan, a year-on-year increase of 339.22%; net profit excluding non-recurring items was 924 million yuan, a year-on-year growth of 347.20%; the total revenue for the entire year of 2024 is expected to be 10.731 billion yuan, a year-on-year increase of 35.3%; net profit attributable to the parent company is expected to be 1.161 billion yuan, a year-on-year increase of 72.96%; net profit excluding non-recurring items is expected to be 1.141 billion yuan, a year-on-year increase of 72.40%.

The performance in the first quarter not only set a new record for the company's quarterly profit but also significantly surpassed the industry average growth rate—domestic PCB leader Shenzhen Deep South Circuit's net profit growth rate during the same period was 45.6%, while the global PCB industry average growth rate was about 20%.

In terms of profitability, VGT's gross profit margin in the first quarter of this year rose to 33.37% (25.6% for the entire year of 2024), an increase of 13.89 percentage points year-on-year; the net profit margin reached 21.35%, a year-on-year increase of 12.58 percentage points, significantly higher than the global PCB industry average of 10%-15% (data source: Prismark "PCB Industry Financial Analysis Report").

This leap in indicators is mainly attributed to product structure optimization: the revenue share of high-margin products such as AI server PCBs increased from 35% in 2024 to over 60%, while the gross profit margin of these products is 20-35 percentage points higher than that of traditional PCB businesses.

In the first quarter of 2025, the net cash flow from operating activities was 424 million yuan, and the debt-to-asset ratio was 52.54%, a decrease of 3.56 percentage points from 56.1% at the end of 2024.

The underlying logic of Shenghong Technology's performance growth can be summarized as a dual-driven model of "AI computing power + technological barriers."

The financial report shows that the performance growth in the first quarter of 2025 is mainly attributed to market opportunities brought by global AI computing power technological innovations and data center upgrades.

With its technological accumulation in the high-end PCB (printed circuit board) field, Shenghong Technology has successfully entered the supply chain of high-value products such as AI servers and high-speed optical modules. During the reporting period, the scale of high value-added orders significantly increased, driving a notable improvement in profitability.

According to publicly available data and financial report data for 2024-2025, Shenghong Technology has become a core supplier of NVIDIA's GB200 server PCBs.

In 2025, the global AI server market size is expected to reach USD 31.79 billion (data source: IDC); the PCB value of a single NVIDIA GB200 server is 5-8 times that of traditional servers, which can directly drive Shenghong Technology's revenue growth.

Additionally, according to the 2024 annual report, Shenghong Technology continues to increase its R&D investment, focusing on breakthroughs in key technologies such as high-layer PCBs and high-frequency high-speed materials, with its technological advantages becoming the core competitiveness supporting order growth.

In the first quarter of this year, Shenghong Technology's AI server PCB delivery exceeded 2 billion yuan, with NVIDIA GB200 supporting products accounting for over 60%+ (data source: Everbright Securities, CITIC Construction Investment).

Currently, Shenghong Technology is one of the first manufacturers in the world to achieve mass production of 28-layer accelerator cards, and its 5th/6th generation HDI technology meets the demand for high-layer boards in NVIDIA's GB200 NVL72 architecture.

The 6th generation HDI technology is mastered by only five companies globally; Shenghong Technology achieves line width and spacing reduction to IC substrate levels through nano-level etching precision and AI simulation technology; the combination of high-layer and HDI technology (such as 30+ layer high-layer + 6th generation HDI) meets cutting-edge standards like PCIe 6.0 and 1.6T optical modules.

The NVIDIA GB200 NVL72 architecture (liquid-cooled rack-level expansion system) imposes extremely high requirements on PCBs. Firstly, the number of layers is increased from the traditional 12-16 layers to 24-40 layers, which must meet high-speed signal transmission (above 112Gbps) and heat dissipation requirements.

In addition, materials are upgraded, requiring the use of high-frequency high-speed materials (such as PTFE composite boards) to reduce signal loss; 5th/6th generation HDI (high-density interconnect) technology has become standard.

In 2024, Shenghong Technology completed breakthroughs in 5th/6th generation HDI technology, becoming one of the first manufacturers in the world to achieve mass production of 28-layer accelerator card PCBs.

In terms of high-frequency material processes, the company has overcome the yield issues of PTFE composite boards, achieving a yield of over 85% for NVIDIA GB200 server boards (industry average is about 70%); in terms of capacity matching, the Huizhou base has specially set up production lines for high-layer boards, with high-layer boards (24-40 layers) and HDI boards significantly dominating AI server PCB orders in the first quarter of 2025.

Shenghong Technology's next-generation technology reserves include 10th generation 30-layer HDI and 1.6T optical module PCBs, which have entered the customer certification stage, and are jointly developing the next-generation AI server boards with NVIDIA According to horizontal comparisons, VGT has formed significant differentiation in technological leadership and profitability in the high-end PCB field (see the table below).

From a global competitive landscape perspective, VGT is one of the few domestic companies that can stably deliver AI server PCBs, and its deep binding with leading customers such as NVIDIA and AMD further consolidates its market position.

VGT forecasts that its net profit in the second quarter of 2025 will increase by no less than 30% quarter-on-quarter, and the year-on-year growth rate of net profit in the first half of the year will exceed 360%.

With the "technology + capacity + customers" model, VGT has established its industry position in the wave of AI computing power.

Despite risks such as inventory turnover and technological iteration, the scarcity and order visibility of VGT in the high-end PCB field still make it a part of the current market's most certain growth targets