報告_Citi_臻鼎4958_20261007

PDF 原檔：報告_Citi_臻鼎4958_20261007_original.pdf

圖片清單（已驗證 2026-10-09）

原始內容

[讀者資訊已遮蔽] citi

07 Oct 2026 15:44:06 ET │ 15 pages

Zhen Ding Technology (4958.TW)

New businesses taking off; Buy

CITI'S TAKE

Zhen Ding's (ZDT) AI infra business (server/optical/substrate) is tracking better-than-expected YTD. These businesses all carry high GM profiles of >30% vs consumer electronics products' of 20-25%, which bodes well for ZDT's profitability growth in 2027. Looking into 2H26, we expect AI infra business to bear more fruit and would help mitigate the season impact in 1Q27, especially for the bottom line. Meanwhile, given HDI/mSAP capacity supply tightness, we observe that Apple suppliers show less willingness to support iPhone/Mac demand, which would help increase ZDT's bargaining power in consumer electronics products. We raise our 2027/28E earnings forecasts to factor in fast-growing AI infra business and lift our TP to NT$750 (27x 2027E EPS) from NT$600 (25x 2027E EPS), as we sense that the market views ZDT more as an ABF substrate maker. Buy.

3Q26 results preview: GM of 25-26% - We forecast 3Q26E GM of 25.6% (+2.5ppt QoQ) vs consensus forecast of 25.2%, supported by high-season for iPhone, ABF/BT and optical module which more than offset rising depreciation burden from initial ramp of HDI capacity for AI server business in 2H26. AI infra business (server/optical/substrate) accounted for 23% of total 8M26 sales already (vs 21.6% in 1H26), which is tracking well and would likely reach 25% in 2026. We expect AI infra business to gain more traction from 3Q26E onward till 4Q27E, helping mitigate the seasonality difference in 1H/2H. Meanwhile, the management thinks AI infra sales mix could reach 30%/45-50% in 2027/28 which is far ahead of its initial target reaching 45-50% mix by 2030. We expect 4Q26E GM to further improve to 26.1% (+0.5ppt QoQ), close to historical peak levels.

ABF/BT substrate: 2027/28 capacity fully sold out - As with other ABF peers, ZDT's ABF capacity in 2027/28 has been fully sold out. We expect Nvidia, Mediatek and likely an AI ASIC project will be the key drivers to its ABF business, along with China AI demand till 2030. As per the management, US customers would likely account for up to 70% of its ABF sales next year vs 50% in the past. The company's current ABF expansion pace is ramp-up of one new fab in China every year till 2030. For BT substrate, the company would pause its capacity expansion and enhance its product mix first. Considering other BT peers' recent price hike action and improving S/D status, we expect its BT UTR/GM to further improve. In our view, mid-term ABF/BT GM profile of 45-50%/30-35% in 2H27 is achievable for ZDT. We currently forecast 94%/105%/57% YoY sales growth in its ABF+BT segment in 2026/27/28E.

Earnings Summary

Source: Powered by dataCentral

See Appendix A-1 for Analyst Certification, Important Disclosures and Research Analyst Affiliations.

n Buy

Price (07 Oct 26 13:30)

NT$595.00

Target price NT$750.00↑

from NT$600.00

Expected share price return

26.1%

Expected dividend yield

1.2%

Expected total return

27.3%

Market Cap NT$674,371M

US$21,211M

Price Performance (RIC: 4958.TW, BB: 4958 TT)

Jack Chen AC

+886-2-8726-9091 jack1.chen@citi.com

Laura (Chia Yi) Chen +886-2-8726-9090 laura.cy.chen@citi.com

Nicholas Lai +886-2-8726-9093 nicholas.lai@citi.com [讀者資訊已遮蔽] [讀者資訊已遮蔽] Server/optical module: gaining more traction - For server business, the company would focus more on Nvidia, Google and AWS from 2027 onward. Meanwhile, given higher HDI content value for the next-gen AI servers, we expect ZDT's aggressive HDI capacity expansion would bear more fruit and gain share from peers (eg, Unimicron plans to focus less on its capacity expansion for Nvidia's AI compute boards). The industrywide GM profile for AI HDI products is at least >30% levels, which we believe would drive ZDT's server profitability. Meanwhile, for optical module, the company expects 1.6T demand to outgrow 800G in 2027 (vs 50%/50% demand come from 800G/1.6T in 2026). Given optical modules' high GM profile of up to 40% levels, we expect ZDT's GM profile would benefit from it from 2H26 onwards. To note that, considering Apple suppliers (eg, Unimicron and Compeq) now show less willingness to support iPhone/Mac demand, we expect ZDT's consumer electronics business to leverage on improving competition landscape and likely see some profitability upside from better bargaining power in 2027.

Earnings/TP raise; Buy - We adjust 2026E earnings by -6% to factor in weak 2Q26 OPM results but raise our 2027/28E earnings by +24%/+31% to factor in strong growth from AI infra business and better bargaining power against Apple in 2027 onward. We lift our TP to NT$750 (27x 2027E EPS) from NT$600 (25x 2027E EPS). We raise our PE multiple as we gradually sense that the market views ZDT more as an ABF substrate maker (now generally trading at >30x on Bloomberg consensus). Further, we believe the market is willing to pay higher premium for fast-growing optical module business and market share gain story in AI PCB server business. Reiterate our Buy rating.

Figure 1. ZDT - 3Q26 Results Preview

© 2026 Citigroup Inc. No redistribution without Citigroup's written permission.

Source: Citi Research Estimates, Bloomberg, Company reports [讀者資訊已遮蔽]

Figure 2. ZDT - Earnings Revisions

© 2026 Citigroup Inc. No redistribution without Citigroup's written permission.

Source: Citi Research estimates

Figure 3. ZDT - Key Earnings Estimates

© 2026 Citigroup Inc. No redistribution without Citigroup's written permission.

Source: Company data, Citi Research estimates [讀者資訊已遮蔽] [讀者資訊已遮蔽]

Bull/Bear: Zhen Ding Technology (4958.TW)

Current Price and expected returns (upside/downside) as of 07 Oct 2026

Spread 50pp

BULL Assumptions

• Stronger market share gains in SLP/HDI
• More progress in Al business, especially in GB200
• Better ABF demand from China market

BASE Assumptions

• 2027/28E sales growth of +35%/+27% YoY
• 2027/28E GM of 29.4%/33.1%

BEAR Assumptions

• Harsher margin dilution from stronger capex
• Worse-than-expected ABF demand from China market

[讀者資訊已遮蔽]

Zhen Ding Technology

Company description

Established in 2006 and headquartered in Shenzhen, China, Zhen Ding Technology (ZDT) is one of the world's key flexible PCB makers. ZDT's manufacturing sites are all in China: Shenzhen, Qinhuangdao, Yingkou, and Huai'an. ZDT manufactures flexible PCB, HDI, conventional PCB, and substrates. FPCB accounts for >50% of revenue, HDI around 20%, and conventional PCB the rest.

Investment strategy

We rate ZDT shares a Buy. While the largest US smartphone brand, to which Zhen Ding has close to 70%+ sales exposure (e.g., iPhone/Mac/iPad), will not be able to avoid the impact of high memory prices, we think Zhen Ding's share gains in HDI/SLP this year could partially offset the pricing pressure. On BT substrates, we expect ZDT to benefit from price hikes due to the T-glass shortage and strong memory demand. On ABF substrates, thanks to its capacity ramp in Taiwan, we believe the ABF plant will benefit from AI ASIC in 2026. On China ABF demand, considering the limited ABF capacity owned by China players, we think Zhen Ding will enjoy China ABF demand in the medium to long term (especially given domestic AI demand).

Valuation

We set a DCF-based TP of NT$750. We use a DCF-based valuation to reflect ZDT's ability to generate stable cash flows. Key assumptions of our DCF model include a risk-free rate of 5.2% (10-year government bond rate), a market risk premium of 7%, and an equity beta of 0.89 (1-year weekly share price), deriving a WACC of 10.7%. Our model assumes high-single-digit longterm growth after 2028E and an 21.6% EBIT margin from 2028E with a gradual annual increase. Our TP is equivalent to 27x/17x 2027E/28E EPS and 4.5x/3.8x 2027E/28E BVPS.

Risks

Key downside risks that could cause the stock to trade below our target price include: 1) lower-than-expected iPhone/Mac/iPad end-demand; 2) lower content value for new smartphone models or pricing pressure; 3) ZDT losing market share from its FPC/HDI peers; 4) a slower demand in the substrate industry; 5) failure to pass the qualifications of major AI GPU or ASIC customers.

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Appendix A-1