The analysis conducted by Zheshang Securities underscores that the supply-demand dynamics for Huazheng New Material's Copper Clad Laminate (CCL) remain constrained, with its fundraising endeavors poised to inject fresh growth momentum for the upcoming year. Projections indicate that the company's net profit attributable to shareholders for the first half of 2026 will soar to RMB 173 million, marking a substantial year-on-year surge of 305.28%. Specifically, the second quarter is expected to yield a profit of RMB 142 million, representing a remarkable quarter-on-quarter increase of 359.3%, thus signaling a notable acceleration in profit expansion.
Presently, the high-end CCL market is grappling with a supply-demand imbalance, characterized by escalating raw material costs and product structure enhancements that are collectively propelling prices beyond initial expectations, thereby bolstering the company's profitability. The proliferation of AI-related equipment upgrades has further spurred demand for high-speed materials. Huazheng New Material's Ultra Low Loss products have already achieved mass sales within AI data centers, while its Extreme Low Loss products are progressing through terminal verification stages.
Moreover, the company's fundraising projects are primarily geared towards expanding the production capacity of high-grade CCL, a move anticipated to alleviate the prevailing supply constraints. Concurrently, Huazheng New Material has ventured into the CBF advanced packaging materials sector, facilitating the substitution of domestic alternatives. Currently, the company's respective Price-to-Earnings (PE) ratios stand at 61.46, 41.23, and 34.18 times. Given these factors, Zheshang Securities reaffirms its 'Buy' recommendation for Huazheng New Material.