During Rebalancing Period, PCB Copper Foil Sector Odds Emerge

English summary

Based on neutral 2027 earnings expectations, Defu Technology is 15X, Hailiang Co. 11X, Zhongyi Technology 16X, and Nuode Shares 15X. From a valuation perspective, Hailiang Co. has a higher safety margin, and Defu Technology has a clearer profit step-up, showing a 'high-elasticity option'. Defu Technology: Current PE (TTM) at 47% historical percentile. Lithium battery copper foil earnings per ton of 7-8k, shipments of 145,000 tons, corresponding to 1.1 billion yuan contribution to 2027 earnings. Considering limited new annual capacity in the copper foil sector, 15X is given, corresponding to 16.5 billion yuan; electronic circuit copper foil plans 50,000 tons of high-end capacity, with phase I capacity of 25,000 tons landing in H1 2027. The company already has HVLP1-3 mass production and shipment capabilities. Neutral expectation for high-value-added products in 2027 is 20,000 tons (including 10,000 tons of RTF), corresponding to 1.3 billion yuan contribution, given 20X, corresponding to 26 billion yuan. Total 42.5 billion yuan, currently oversold bottom market cap, with considerable odds. Hailiang Co.: Current PE (TTM) at 90% historical percentile. Considering equity roll-over, 2027 earnings are revised up to 3.54 billion yuan (previous 3.4 billion).