Citi has released a research report expressing continued optimism for China's PCB equipment sector. The bank believes the allocation of production capacity for AI-related PCBs is creating a squeeze effect on non-AI segments. This, coupled with Chinese PCB manufacturers' ongoing expansion into high-end products, is expected to generate potential upside. The firm shows a preference for Han's Laser Technology Industry Group Co., Ltd. (SZ: 002008), followed by the H-shares of HANS CNC (HK: 03200), and then the A-shares of Shenzhen Han'S Cnc Technology Co.,Ltd. (SZ: 301200). Citi views Han's Laser as having diversified growth drivers, while noting that HANS CNC's H-shares trade at a discount of over 50% compared to its A-shares. Citi currently assigns a 'Buy' rating to HANS CNC's H-shares with a target price of HK$325.

Citi further notes that if Taiwan's Dah-Lih Industrial Co., Ltd. (TW: 3167), a key competitor of HANS CNC in the mechanical drilling equipment market, were to dedicate all its capacity to AI-related products, its monthly output could potentially drop from 300 units to 200 units. Similarly, if HANS CNC were to allocate all its capacity to AI-related products, its drilling equipment production would also shrink by one-third. The bank anticipates that this capacity squeeze effect will likely lead HANS CNC to prioritize non-AI customers who can offer higher profit margins.