Shares of HANS CNC (03200) rose more than 7% in early trading. At the time of writing, the stock is up 3.30%, currently trading at HK$137.70 with a turnover of HK$149 million.

Recently, Citigroup published a research report expressing continued optimism for China's PCB equipment sector. The report suggests that AI PCB production capacity is creating a squeeze effect on non-AI segments. Furthermore, the ongoing expansion of Chinese PCB manufacturers into high-end products is expected to bring potential upside. The bank's preference is for Han's Laser, followed by the H-shares of HANS CNC, and then its A-shares. Citigroup views Han's Laser as having diversified growth drivers, while noting that HANS CNC H-shares trade at a discount of over 50% compared to its A-shares.

Citigroup noted that if HANS CNC's main competitor in the mechanical drilling equipment market, Great Technology, were to allocate all its capacity to AI-related products, its monthly output could potentially drop from 300 to 200 units. Similarly, if HANS CNC were to fully dedicate its capacity to AI-related products, its drilling equipment output would also shrink by one-third. The bank anticipates that this capacity squeeze effect will lead HANS CNC to prioritize non-AI customers who can offer higher profit margins. Citigroup currently assigns a "Buy" rating to HANS CNC H-shares with a target price of HK$325.