For stock investors, analyst research reports are authoritative, professional, timely and comprehensive, helping you uncover potential thematic opportunities! Sources indicate that squeezed by both foreign exchange losses and rising upstream raw material prices, Shenzhen Kinwong Electronic Co.,Ltd. (603228.SH) fell into a dilemma of rising revenue without rising profit in the first half of the year, with the company's net profit attributable to shareholders reaching 602 million yuan, down 7.38% year-on-year.

It has been noted that the company's gross profit margin has declined for two consecutive years, with gross profit margins across all three major RPCB product lines falling across the board. Facing upward cost pressure, the company increased its stockpiling efforts, and inventory levels climbed accordingly, further dragging down cash flow performance. To seize opportunities in AI computing power and high-speed communications industries, the company continued to ramp up high-end PCB capacity construction, but against the backdrop of declining cash generation capability, large-scale investment caused the company's long-term borrowings to double. The company is currently pushing forward with a Hong Kong listing to broaden financing channels, but the large-scale cash-outs by three actual controllers in earlier periods have raised market doubts.

Core product line gross margins decline, foreign exchange losses hit net profit

Public information shows that Shenzhen Kinwong Electronic Co.,Ltd. is mainly engaged in PCB research and development, production and sales, with products covering multilayer boards, HDI, SLP, high-layer boards, FPC, MPCB and rigid-flex boards and other high-performance PCBs, mainly applied in automotive, consumer electronics, data centers, communications and other fields. In the first half of 2026, the company achieved revenue of 8.611 billion yuan, up 21.37% year-on-year; net profit attributable to shareholders was 602 million yuan, down 7.38% year-on-year; non-recurring net profit was 466 million yuan, down 13.33% year-on-year, putting the company in a predicament of rising revenue without rising profit.

It has been noted that the decline in the company's net profit was mainly affected by two major factors: a significant expansion of foreign exchange losses and rising raw material costs. Since the beginning of this year, the accelerated advancement of AI computing infrastructure construction has also driven concentrated release of demand for core upstream PCB raw materials such as copper-clad laminates, prepregs and copper foil, tightening supply in the raw material market and pushing prices continuously higher. Against this backdrop, the company's gross profit margin declined 1.18 percentage points year-on-year to 20.22%, having fallen for two consecutive years. According to the Hong Kong prospectus, Kinwong's products are divided into two major segments: RPCB (including single-sided and double-sided PCB, multilayer PCB, HDI PCB) and FPC. In the first four months of 2026, these two segments accounted for 66.8% and 21.7% of total revenue respectively.

It is worth noting that RPCB, as the company's revenue pillar, saw its gross profit margin decline 8 percentage points year-on-year to 10.8%. Among them, gross margins of the three major products — single-sided and double-sided PCB, MLPCB, and HDI PCB — all declined across the board, standing at 16%, 9.7% and 12.2% respectively, down 6.2 percentage points, 8.3 percentage points and 7.7 percentage points year-on-year. By market, Shenzhen Kinwong Electronic Co.,Ltd. shows a characteristic of being "large but not strong" in the domestic market. In the first four months of 2026, the company's revenue from domestic and overseas markets accounted for 51.7% and 40.4% respectively; gross margins were 8% and 17.8% respectively, down 0.9 percentage points and 10.4 percentage points year-on-year, with both markets declining simultaneously. By comparison, although the domestic market contributed a larger revenue volume, its gross margin level has long been lower than that of overseas markets.

In addition, in the first half of 2026, affected by exchange rate fluctuations, Shenzhen Kinwong Electronic Co.,Ltd. recorded a foreign exchange loss of 123 million yuan, compared with a foreign exchange gain of 38 million yuan in the same period last year, with foreign exchange adversely affecting the company's net profit. It has been noted that in response to rising raw material prices, the company increased its stockpiling efforts, and inventory levels climbed significantly in the first half. As of the end of the reporting period, the company's inventory scale increased 73.47% year-on-year to 3.531 billion yuan. At the same time, affected by increased procurement expenditures, the company's net cash flow from operating activities was 604 million yuan, down 33.8% year-on-year.

Long-term borrowings double, three actual controllers collectively reduce holdings

It has been noted that Shenzhen Kinwong Electronic Co.,Ltd. is increasing strategic investment in high-end capacity, accelerating the layout of high-tier PCB products. In March this year, the company announced an additional investment of no more than 700 million yuan in its Thailand production base, which upon completion will have mass production capability for ultra-high-layer boards of over 40 layers, high-layer boards and HDI products. In August this year, the company announced an adjustment to the expansion investment plan for its Zhuhai Jinwan base, adding investment in an ultra-high-layer PCB intelligent manufacturing project. The investment announcement shows that the company changed the original "key process capacity enhancement investment project" to the "ultra-high-layer PCB intelligent manufacturing project." The project is expected to have a total investment of 4.388 billion yuan, implemented by its wholly-owned subsidiary Kinwong Zhuhai, mainly targeting high-end high-speed ultra-high-layer PCB capacity expansion to meet the needs of downstream customers such as AI and communications infrastructure.

From the perspective of product revenue performance, Shenzhen Kinwong Electronic Co.,Ltd.'s high-end product revenue scale is relatively small. The prospectus shows that in 2025 and the first four months of 2026, the company's HDI PCB revenue for consumer electronics, communications and data infrastructure was 1.238 billion yuan and 373 million yuan respectively, both accounting for less than 9% of total revenue. Moreover, Zhuhai Kinwong, the subsidiary responsible for implementing the "ultra-high-layer PCB intelligent manufacturing project," has poor profitability, recording a loss of 61.4655 million yuan in the first half.

For Shenzhen Kinwong Electronic Co.,Ltd., the Zhuhai Jinwan base is a key support for the company to focus on AI+ to create a new growth curve and increase the proportion of high-end products. As of the end of June 2026, the company had built 3 mSAP production lines at the Zhuhai Jinwan base, built a 4th mSAP production line in August, and will have built 5 mSAP production lines within the year. It has been noted that with the expansion of investment scale, Shenzhen Kinwong Electronic Co.,Ltd.'s net cash outflow from investing activities in the first half reached 2.978 billion yuan, up 237.83% year-on-year. Against the backdrop of declining self-generated cash capability, the company increased bank borrowings, and net cash flow from financing activities in the period surged 784.49% year-on-year to 2.261 billion yuan. As of the end of the reporting period, the company's long-term borrowings surged 319.9% year-on-year to 4.602 billion yuan; while its cash on account and trading financial assets combined were only 2.873 billion yuan, insufficient to cover the funding needs for the construction of the "ultra-high-layer PCB intelligent manufacturing project."

To ease funding pressure and support high-end capacity expansion, Shenzhen Kinwong Electronic Co.,Ltd. continues to advance its Hong Kong listing process. In July this year, Shenzhen Kinwong Electronic Co.,Ltd. submitted its prospectus to the Hong Kong Stock Exchange for the second time, planning to raise funds for expanding AI high-value-added product capacity, investing in research and development, and repaying loans. However, before this Hong Kong IPO, the collective reduction of holdings by Shenzhen Kinwong Electronic Co.,Ltd.'s actual controllers has drawn market attention. The 2026 semi-annual report shows that the company's controlling shareholders are Jinghong Yongtai and Zhichuang Investment, and the actual controllers are Liu Shaobai, Huang Xiaofen and Zhuo Jun. Among them, Liu Shaobai and Huang Xiaofen are husband and wife, and their son is Liu Yu. Huang Xiaofen and her concert party Liu Yu hold 28.41% equity in Shenzhen Kinwong Electronic Co.,Ltd. through Jinghong Yongtai; Zhuo Jun holds 28.39% equity in the company through Zhichuang Investment. In the second half of 2025, Jinghong Yongtai, Zhichuang Investment, Liu Shaobai and Huang Xiaofen collectively reduced 27.8116 million shares of the company, cashing out approximately 977 million yuan. In addition to secondary market reductions, the actual controllers also obtained considerable returns through company dividends. From 2023 to 2025, Shenzhen Kinwong Electronic Co.,Ltd.'s cumulative dividends over three years reached 1.711 billion yuan, with more than half of the dividends flowing to the actual controllers' side.