China Postal Securities: Upgrades South Asia New Materials to a Buy rating

China Post Securities Co., Ltd. Wu Wenji recently conducted research on South Asia New Material and released the research report “High-end Products Accelerate Volume Growth,” giving South Asia New Material a “Buy” rating.

South Asia New Material (688519)

Investment Highlights

The increase in sales proportion of high-margin products drives performance growth. The company recently announced its 2025 performance quick report. In 2025, it achieved revenue of 5.228 billion yuan, up 55.52% year-on-year; net profit attributable to shareholders of 241 million yuan, up 378.65%; and net profit after deducting non-recurring gains and losses of 219 million yuan, up 679.35%. The performance growth is mainly due to the recovery in demand for copper-clad laminate industry. The company actively seizes market opportunities, continuously strengthens market development, and promotes product sales growth. Meanwhile, the company optimized marketing strategies and adjusted product structure, increasing the sales proportion of high-margin products. In 2025, high-speed products are expected to double their share of total revenue year-on-year. As the company deepens cooperation with more clients in the high-end market, sales volume and revenue of high-speed products are expected to continue growing in 2026.

Traditional products maintain a solid foundation, while high-end products open new growth poles. The company focuses on core business, continuous innovation, and targets the core copper-clad laminate business. It deepens R&D and mass production breakthroughs in high-frequency high-speed, IC packaging substrates, and other high-end materials, continuously advancing domestic substitution. The company’s M8 and below-grade high-speed products have passed material certification from multiple domestic and overseas end customers, with mass supply already achieved domestically. In IC packaging substrates, the company mainly focuses on BT-type materials, with product planning for storage and RF chip fields. Storage products have entered mass production, and RF is in sampling stage, expected to be mass-produced in 2026. The “Annual Production of 3.6 Million Square Meters of IC Substrate Materials Intelligent Factory Construction Project” for this type of product has been built at the Jiangsu production base, expected to be completed and put into operation by the end of 2026. ABF-type materials are developed by the company’s equity joint venture Jiangsu Xingnan Chuangxin Material Technology Co., Ltd., which is currently undergoing orderly certification. Additionally, the company accelerates global capacity layout, steadily advancing the construction of Nantong and Thailand production bases, further improving the global supply chain system.

Investment Advice

We expect the company to achieve revenues of 5.2 billion, 6.5 billion, and 8.0 billion yuan in 2025/2026/2027, respectively, with net profits attributable to shareholders of 241 million, 486 million, and 803 million yuan, maintaining a “Buy” rating.

Risk Tips

Risks of technological innovation, risks of technology confidentiality breaches and loss of core technical personnel, raw material supply and price fluctuations, quality control risks, inventory devaluation and turnover rate decline, accounts receivable bad debt risks, industry competition risks, and macroeconomic environment risks.

Latest profit forecast details are as follows:

In the past 90 days, three institutions have issued buy ratings for this stock.

The above content is compiled by Securities Star based on public information, generated by AI algorithm (Wenxin Algorithm Backup 310104345710301240019), and does not constitute investment advice.