Goldman Sachs | Shenghong Technology: Thailand Tech Site Visit, Capacity Diversification Continues | Buy (Conviction List)

After visiting the company's Thailand factory, we noted that capacity expansion is progressing smoothly — the A1 plant has entered mass production, and the A2 plant is targeted to commence production in Q3 2026. We remain optimistic about the company's growth trajectory, which is benefiting from the ramp-up in AI infrastructure buildout and AI PCB spec upgrades, driving higher unit value and customer expansion. Although production costs in Thailand are currently 10%–20% higher than in mainland China, customers are willing to bear this premium, and management plans to achieve gross margin breakeven in the medium term by improving automation levels and labor efficiency. 12-month target price: 550 RMB. Allen Chang