Fair-Value Report — Delton Technology / 广合科技 (1989.HK)

Insider Signal

Verified Price & Financial Snapshot

All financial data in RMB unless stated. HKD/RMB exchange rate assumed at ~1.08x throughout (1 RMB ≈ HKD 1.08). Share count used: ~423 million (derived from 2025A net profit ÷ RMB 2.40 basic EPS). Total H shares outstanding: ~46 million (based on Fullgoal's 7.15% DI holding of ~3.3 million H shares).

Business Overview

Guanghe Technology (广合科技 / Delton Technology) is a Guangzhou-based multi-layer printed circuit board (PCB) manufacturer focused on high-end, high-density, multi-layer boards for AI computing infrastructure, data centres, 5G, automotive electronics, and industrial control applications. The company was founded in 2002, listed on the Shenzhen Stock Exchange in 2024 (A shares: 001389.SZ), and completed a dual-listing on the HKEX main board on 20 March 2026 (H shares: 1989.HK) raising HKD 3.31 billion at HKD 71.88/share.

Manufacturing footprint spans four bases: Guangzhou, Dongguan, Huangshi (Hubei), and Prachinburi (Thailand) — the Thailand facility provides partial supply-chain resilience against US tariff risk. Headcount: ~5,000 employees.

Growth driver: AI server deployments by hyperscalers (cloud and LLM providers) require significantly higher PCB layer counts and tighter tolerances than commodity servers. Delton is a key supplier into this segment. H1 2026 results confirm the demand is genuine: revenue +81%, net profit +94% — with Q2 2026 standalone profit +124% YoY.

Competitive position: Delton sits below Shennan Circuits (the dominant premium HDI player) in sophistication but above generic volume PCB makers. Its focus on compute-infrastructure boards gives it better pricing power and margins than commodity peers (2025A net margin: 18.5%; H1 2026 net margin: 21.8%).

Valuation

Method: 2026E Earnings-Based Multiples + Reverse Read + Peer Table

A three-scenario P/E framework anchored to 2026E earnings is the primary approach, supplemented by a reverse read of the current price and a sector peer table. DCF terminals are not used as the primary anchor due to extreme sensitivity to long-run growth assumptions and the short H-share listing history (no audited H-share free-float data for WACC calibration).

Key building block: H1 2026 net profit was RMB 956 million on revenue of RMB 4.39 billion. Q2 2026 alone was RMB 563 million (+124% YoY). The full-year 2026 outcome will depend on whether H2 demand remains strong. PCB orders for AI server builds are typically back-half loaded, so the H2 outlook is important and uncertain.

Three-Scenario Analysis (2026E)

Probability-weighted FV = 0.30×176 + 0.50×121 + 0.20×55 = 52.8 + 60.5 + 11.0 = HKD 124.3. Rounded conservatively to HKD 120 for probability-weighted base. The analyst fair value (HKD 145) represents the mid-point between base and bull, reflecting a tilt to the bull case driven by: (a) the H/A structural discount, (b) PEG < 0.3, and (c) the demonstrably strong H1 2026 print. Target P/E rationalization: 28× bull reflects ~0.65 PEG on projected 43% H2-loaded growth; 24× base is in line with upper-growth-quartile China PCB peers on consensus FY2026 estimates; 16× bear reflects sector floor if AI capex decelerates sharply.

Reverse Read (What the Current Price Implies)

At HKD 123.20, the market's implied 2026E forward P/E is 20.9× (per consensus; stockanalysis.com, 20 Aug 2026). This requires 2026E EPS of HKD 5.88 (RMB 5.44) — which corresponds to full-year net profit of ~RMB 2.3 billion (+126% vs 2025A). That is achievable if H2 2026 repeats the H1 run rate, but leaves no room for H2 disappointment. The market is effectively demanding proof, not promise.

PEG Analysis

Using the consensus 2026E forward P/E of 20.9× against 2025→2026 EPS growth of ~120%, PEG = 0.17. Even using a normalised 3-year CAGR of ~40%, PEG ≈ 0.52. Both are materially below 1.0, indicating the stock is cheap relative to its growth rate on a PEG basis. The caveat is that PEG is unreliable for cyclicals where growth may not be sustained.

H/A Discount

A shares (001389.SZ) traded at approximately RMB 165–177 (HKD 178–191) in mid-August 2026. The H shares at HKD 123.20 imply a ~35–45% H/A discount — typical for newly dual-listed A+H companies. As mainland investors access H shares via Stock Connect and the H-share liquidity matures, some discount narrowing is plausible. This provides a structural floor not captured in the simple earnings multiple.

Sector Peer Table

Peer multiples sourced from publicly available data and research reports as of July–August 2026. Forward P/E figures are consensus estimates and may differ from our own scenario analysis. Shennan Circuits' lower P/E reflects its greater scale and less explosive (but more proven) growth profile.

Key observation: The H shares of Delton Technology trade at a meaningful discount to both their own A shares and to the closest HK-listed PCB peer (Victory Giant at ~42× TTM). If Delton H shares re-rated to Victory Giant's multiple (or even its own A-share multiple), the upside would be substantial. The discount reflects H-share illiquidity premium and the stock's post-IPO volatility.

Conclusion

Delton Technology's fundamental story is genuine: it is a beneficiary of the AI compute infrastructure buildout, growing revenue at 80%+ and profits at 90%+ year-on-year in the first half of 2026. The management has demonstrated consistent execution (2023–2026 revenue CAGR ~60%). The H-share listing brings a structural valuation discount versus A-shares that long-only investors can exploit.

The signal from Fullgoal Fund Management (a legitimate active equity manager, not a strategic insider) is consistent with tactical accumulation on pullbacks — they have bought this stock on dips twice in three months. Fullgoal's recent purchase at HKD 148.10, followed by a further drop to HKD 123.20, means they are currently underwater by ~17% — this is not a "smart money bought; follow the trade" situation. It is a shared exposure to a volatile, high-beta growth stock.

At HKD 123.20, the stock trades at 20.9× consensus 2026E earnings — reasonable for the growth rate, cheap on PEG, but dependent on H2 2026 delivery. The base case suggests the stock is near fair value. The bull case (30% probability) offers +43% upside on the thesis that AI demand holds, margins expand further, and the H/A discount partially closes. The bear case (20%) is severe (-55%) and could materialise if AI capex sentiment shifts or the April 2027 lock-up expiry accelerates selling pressure.

Rating: SPECULATIVE BUY — FV HKD 145. Appropriate for investors with high risk tolerance and a 12–18 month horizon who can size position to survive the bear case. This is not a momentum trade.

Key Risks

• April 2027 lock-up expiry: An estimated ~57.55% of total shares (pre-IPO A-share holders from 2024 listing) become freely tradeable. This is the single largest medium-term risk — forced or voluntary selling could cap A-share price and, by proxy, H-share sentiment.
• AI capex cycle: The revenue surge is entirely demand-driven. Any pause in hyperscaler server orders — whether from macro slowdown, US AI export controls, or a training-compute plateau — would directly hit Delton's top line and compress margins as fixed costs are absorbed.
• Competition and capacity glut: Chinese PCB capacity is expanding rapidly across Delton and its peers. If supply outruns demand, ASPs will compress quickly, squeezing the high margins that underpin the bull case.
• H-share illiquidity: Total H shares are ~46 million (very small float for a HKD 52B company). Bid-ask spreads are wide and moves are amplified — as seen in the 3-day -17% drop after the August 17 DI event.
• US export controls on China AI: If US restrictions on AI chip exports to China tighten further, Chinese hyperscaler capex could slow, removing the key demand driver.
• Post-IPO hype unwinding: The stock went from HKD 71.88 (IPO, March 2026) to HKD 222 peak and is now HKD 123. A portion of the early gain reflected IPO euphoria rather than fundamentals. Some further derating to a lower multiple remains possible.
• FX risk: Company reports in RMB; H-share investors receive value in HKD. RMB depreciation versus HKD would erode reported returns.

Sources

• HKEX DI Filings — Fullgoal Fund Management (1989.HK), August 2026 (hkexnews.hk; di.hkex.com.hk)
• SZSE Annual Report 2025 — 广合科技 (001389), filed 28 March 2026 (disc.static.szse.cn)
• H1 2026 Results Announcement — 1989.HK, released 7 August 2026 (HKEX)
• Stock price and TTM metrics — stockanalysis.com (accessed 20 August 2026)
• Peer DI transaction history — 九方智投 / 9fzt.com (accessed August 2026)
• Company overview — delton-tech.com; law.asia IPO coverage; uSMART
• A-share price data — tencent.com/cnstock.com/investing.com (various August 2026 dates)
• PCB sector analysis — Futu News; Great Wall Securities research; TipRanks
• H1 2025 interim and full-year 2025 context — finance.eastmoney.com; finance.sina.com.cn (March 2026)