Victory Giant Technology Update: Target Price Cut to RMB389—Are Rubin Delays and Market-Share Concerns Overdone?
目录
The Bad News First: The Concerns Are Not Unfounded
Why Market-Share Concerns May Be Overstated
ASIC and Optical-Module PCBs Are a Second Growth Driver, but Should Not Yet Be Fully Priced In
3Q26 Remains the Real Inflection Point
Capital Expenditure Must Ultimately Be Justified by Free Cash Flow
View: Conditionally Constructive, but No Linear Extrapolation
本内容基于公开资料和研报数据整理，不构成任何投资建议，不代表任何个人观点，仅供学习参考，请理性阅读
Nomura maintained its Buy rating after cutting Victory Giant Technology’s earnings forecasts and target price. The investment case now hinges on the 3Q26 ramp-up, margins for high-density interconnect products, and the realization of 2027 cash flow.
The Bad News First: The Concerns Are Not Unfounded
While remaining constructive on the medium-term outlook, Nomura made meaningful forecast cuts. It lowered its 2026–2028 revenue forecasts by 7%–13% and attributable net profit forecasts by 7%–14%. Its new revenue forecasts are RMB27.85bn, RMB49.16bn, and RMB70.94bn, with attributable net profit of RMB7.50bn, RMB14.16bn, and RMB20.93bn.
The reasons are straightforward: the ramp-up of Rubin-related high-density interconnect (HDI) products has been slower than previously expected, while a key AI customer is onboarding additional suppliers, potentially leaving Victory Giant with a smaller order share than assumed in the previous model. Nomura therefore cut its target price from RMB417 to RMB389 and lowered its 2027 EPS anchor from RMB15.44 to RMB14.41.
However, Nomura left its target P/E multiple unchanged at 27x. Based on the July 10 closing price of RMB272, the new target implies 43% upside. This suggests that the target-price reduction primarily reflects a lower earnings base, rather than a loss of valuation support for the company’s advanced manufacturing capabilities.
Why Market-Share Concerns May Be Overstated
The market’s most bearish scenario is that Rubin rack delays, combined with customer supplier diversification, ultimately lead to technological slippage and substantial order losses. Nomura offers a more measured rebuttal: adding suppliers primarily reflects AI customers’ efforts to diversify their supply chains amid severe shortages and does not automatically mean that leading suppliers are being displaced.
Nomura believes Victory Giant may have begun shipping Rubin GPU-related PCBs around mid-2026, with shipments set to accelerate in the second half. More importantly, HDI capacity is not simply a matter of adding conventional floor space. High-end process barriers and shortages of materials and equipment mean that suppliers with both technology and capacity already in place remain scarce. Even after reducing its market-share assumptions, Nomura still expects HDI revenue to grow at an 82% CAGR from 2026 to 2028 and account for 63% of total revenue by 2028.
The most notable evidence lies in margins. Despite lowering its assumed HDI mix, Nomura cut its 2026–2028 gross-margin forecasts by only 0.2–0.4 percentage points, leaving the revised estimates at 40.6%, 43.8%, and 45.7%. In other words, Nomura acknowledges that the order mix is weaker than previously expected but sees no collapse in the profitability of high-end products. This is the critical distinction between market-share volatility and a loss of competitiveness.
ASIC and Optical-Module PCBs Are a Second Growth Driver, but Should Not Yet Be Fully Priced In
Victory Giant cannot reduce volatility from its dependence on a single GPU customer merely by citing customer diversification. Nomura identifies application-specific integrated circuit (ASIC) customers and PCBs for 800G and 1.6T optical modules as incremental growth opportunities. It expects AI and high-performance computing revenue to grow at a 77% CAGR from 2026 to 2028 and account for 77% of total revenue by 2028. The report also expects ASIC customers to increase their adoption of HDI beginning in 2028.
This business could allow other customers to absorb advanced capacity during GPU platform transitions, making it more valuable than a simple source of incremental revenue. However, the report currently demonstrates only that Victory Giant has made progress; it does not disclose sufficient information to verify customer share, mass-production scale, or profit contribution. ASIC and optical-module PCBs can therefore reduce customer concentration over the medium term, but they cannot offset a Rubin ramp-up shortfall in the 2026 model.
3Q26 Remains the Real Inflection Point
Nomura forecasts 2Q26 revenue of RMB6.18bn, attributable net profit of RMB1.56bn, and a gross margin of 38.6%. By 3Q26, it expects these figures to rise to RMB7.42bn, RMB2.02bn, and 40.9%, respectively, followed by further increases in 4Q26 to RMB8.73bn, RMB2.64bn, and 45.6%. This represents a very steep sequential improvement trajectory.
The view that concerns are overdone must therefore be validated in the third quarter. If revenue growth recovers, profit once again grows faster than revenue, and gross margin exceeds 40%, then the second quarter will look more like a temporary slowdown caused by a platform transition and product-mix changes. If there is still no synchronized acceleration in the third quarter, supply-chain diversification may already have translated into genuine market-share losses and can no longer be explained solely by Rubin delays.
Victory Giant Technology In-Depth Update: How Rubin High-Layer-Count PCB Delays, New TPU Orders, and RMB20bn of Capex Will Validate Effective AI PCB Capacity
Capital Expenditure Must Ultimately Be Justified by Free Cash Flow
Nomura forecasts Victory Giant’s 2026 capital expenditure at RMB15bn and free cash flow at negative RMB8.23bn. It expects capital expenditure to decline to RMB10bn in 2027, with free cash flow turning positive at RMB9.81bn. In 2028, capital expenditure is forecast to fall further to RMB5bn, while free cash flow rises to RMB15.74bn.
These figures clearly frame the risk. 2026 remains a period of heavy investment, and profit growth does not mean shareholders are already receiving cash returns. Positive free cash flow in 2027 depends on incremental HDI, ASIC, and optical-module PCB capacity being fully utilized by orders, with collections, inventories, and depreciation remaining appropriately aligned. If capital expenditure stays elevated without an improvement in cash flow, supposedly scarce capacity will become an asset burden.
View: Conditionally Constructive, but No Linear Extrapolation
Nomura’s report does not overturn the previous investment view. Instead, it defines the validation criteria more clearly: Rubin delays and additional suppliers have indeed reduced near-term earnings, but there is not yet evidence that Victory Giant has lost its competitiveness in high-end PCBs. ASIC and optical-module PCBs provide a second growth driver, but still require validation through orders and profits.
Four factors now warrant the closest attention: whether revenue accelerates materially in 3Q26, whether gross margin exceeds 40%, whether new customers translate into advanced-product revenue, and whether free cash flow turns positive in 2027. Sustained underperformance in any of these areas could undermine the RMB389 target price. Conversely, if all four are delivered sequentially, the current debate will look more like market-share redistribution during a platform transition than a reversal of Victory Giant’s long-term investment thesis.
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目录
The Bad News First: The Concerns Are Not Unfounded
Why Market-Share Concerns May Be Overstated
ASIC and Optical-Module PCBs Are a Second Growth Driver, but Should Not Yet Be Fully Priced In
3Q26 Remains the Real Inflection Point
Capital Expenditure Must Ultimately Be Justified by Free Cash Flow
View: Conditionally Constructive, but No Linear Extrapolation
本内容基于公开资料和研报数据整理，不构成任何投资建议，不代表任何个人观点，仅供学习参考，请理性阅读
Nomura maintained its Buy rating after cutting Victory Giant Technology’s earnings forecasts and target price. The investment case now hinges on the 3Q26 ramp-up, margins for high-density interconnect products, and the realization of 2027 cash flow.
The Bad News First: The Concerns Are Not Unfounded
While remaining constructive on the medium-term outlook, Nomura made meaningful forecast cuts. It lowered its 2026–2028 revenue forecasts by 7%–13% and attributable net profit forecasts by 7%–14%. Its new revenue forecasts are RMB27.85bn, RMB49.16bn, and RMB70.94bn, with attributable net profit of RMB7.50bn, RMB14.16bn, and RMB20.93bn.
The reasons are straightforward: the ramp-up of Rubin-related high-density interconnect (HDI) products has been slower than previously expected, while a key AI customer is onboarding additional suppliers, potentially leaving Victory Giant with a smaller order share than assumed in the previous model. Nomura therefore cut its target price from RMB417 to RMB389 and lowered its 2027 EPS anchor from RMB15.44 to RMB14.41.
However, Nomura left its target P/E multiple unchanged at 27x. Based on the July 10 closing price of RMB272, the new target implies 43% upside. This suggests that the target-price reduction primarily reflects a lower earnings base, rather than a loss of valuation support for the company’s advanced manufacturing capabilities.
Why Market-Share Concerns May Be Overstated
The market’s most bearish scenario is that Rubin rack delays, combined with customer supplier diversification, ultimately lead to technological slippage and substantial order losses. Nomura offers a more measured rebuttal: adding suppliers primarily reflects AI customers’ efforts to diversify their supply chains amid severe shortages and does not automatically mean that leading suppliers are being displaced.
Nomura believes Victory Giant may have begun shipping Rubin GPU-related PCBs around mid-2026, with shipments set to accelerate in the second half. More importantly, HDI capacity is not simply a matter of adding conventional floor space. High-end process barriers and shortages of materials and equipment mean that suppliers with both technology and capacity already in place remain scarce. Even after reducing its market-share assumptions, Nomura still expects HDI revenue to grow at an 82% CAGR from 2026 to 2028 and account for 63% of total revenue by 2028.
The most notable evidence lies in margins. Despite lowering its assumed HDI mix, Nomura cut its 2026–2028 gross-margin forecasts by only 0.2–0.4 percentage points, leaving the revised estimates at 40.6%, 43.8%, and 45.7%. In other words, Nomura acknowledges that the order mix is weaker than previously expected but sees no collapse in the profitability of high-end products. This is the critical distinction between market-share volatility and a loss of competitiveness.
ASIC and Optical-Module PCBs Are a Second Growth Driver, but Should Not Yet Be Fully Priced In
Victory Giant cannot reduce volatility from its dependence on a single GPU customer merely by citing customer diversification. Nomura identifies application-specific integrated circuit (ASIC) customers and PCBs for 800G and 1.6T optical modules as incremental growth opportunities. It expects AI and high-performance computing revenue to grow at a 77% CAGR from 2026 to 2028 and account for 77% of total revenue by 2028. The report also expects ASIC customers to increase their adoption of HDI beginning in 2028.
This business could allow other customers to absorb advanced capacity during GPU platform transitions, making it more valuable than a simple source of incremental revenue. However, the report currently demonstrates only that Victory Giant has made progress; it does not disclose sufficient information to verify customer share, mass-production scale, or profit contribution. ASIC and optical-module PCBs can therefore reduce customer concentration over the medium term, but they cannot offset a Rubin ramp-up shortfall in the 2026 model.
3Q26 Remains the Real Inflection Point
Nomura forecasts 2Q26 revenue of RMB6.18bn, attributable net profit of RMB1.56bn, and a gross margin of 38.6%. By 3Q26, it expects these figures to rise to RMB7.42bn, RMB2.02bn, and 40.9%, respectively, followed by further increases in 4Q26 to RMB8.73bn, RMB2.64bn, and 45.6%. This represents a very steep sequential improvement trajectory.
The view that concerns are overdone must therefore be validated in the third quarter. If revenue growth recovers, profit once again grows faster than revenue, and gross margin exceeds 40%, then the second quarter will look more like a temporary slowdown caused by a platform transition and product-mix changes. If there is still no synchronized acceleration in the third quarter, supply-chain diversification may already have translated into genuine market-share losses and can no longer be explained solely by Rubin delays.
Victory Giant Technology In-Depth Update: How Rubin High-Layer-Count PCB Delays, New TPU Orders, and RMB20bn of Capex Will Validate Effective AI PCB Capacity
Capital Expenditure Must Ultimately Be Justified by Free Cash Flow
Nomura forecasts Victory Giant’s 2026 capital expenditure at RMB15bn and free cash flow at negative RMB8.23bn. It expects capital expenditure to decline to RMB10bn in 2027, with free cash flow turning positive at RMB9.81bn. In 2028, capital expenditure is forecast to fall further to RMB5bn, while free cash flow rises to RMB15.74bn.
These figures clearly frame the risk. 2026 remains a period of heavy investment, and profit growth does not mean shareholders are already receiving cash returns. Positive free cash flow in 2027 depends on incremental HDI, ASIC, and optical-module PCB capacity being fully utilized by orders, with collections, inventories, and depreciation remaining appropriately aligned. If capital expenditure stays elevated without an improvement in cash flow, supposedly scarce capacity will become an asset burden.
View: Conditionally Constructive, but No Linear Extrapolation
Nomura’s report does not overturn the previous investment view. Instead, it defines the validation criteria more clearly: Rubin delays and additional suppliers have indeed reduced near-term earnings, but there is not yet evidence that Victory Giant has lost its competitiveness in high-end PCBs. ASIC and optical-module PCBs provide a second growth driver, but still require validation through orders and profits.
Four factors now warrant the closest attention: whether revenue accelerates materially in 3Q26, whether gross margin exceeds 40%, whether new customers translate into advanced-product revenue, and whether free cash flow turns positive in 2027. Sustained underperformance in any of these areas could undermine the RMB389 target price. Conversely, if all four are delivered sequentially, the current debate will look more like market-share redistribution during a platform transition than a reversal of Victory Giant’s long-term investment thesis.