The markets experienced a notable shift as the major stock indices showcased a collective recovery approaching the closing bellOn January 17, the A-share market exhibited a bouncing trajectoryThis uptick was predominantly fueled by the semiconductor sector, with major indices finishing in the green at the midday breakThe Shanghai Composite Index registered a gain of 0.4%, while the Shenzhen Component Index rose by 0.68%, and the ChiNext Index climbed 0.74%. However, the trading volume reflected a dip, amounting to 679.74 billion yuan, which was a reduction of over 180 billion yuan compared to the same period the previous day.

As the trading day neared its conclusion, the semiconductor sector experienced a swift rallyNotably, Ruixin Microelectronics hit the daily limit, with Shengbang Coand Xinpeng Microelectronics rising over 10%. Leading the charge, SMIC saw its A and H shares surge significantly, with A-shares jumping 5.9% and Hong Kong shares amplifying by 10.56%.

Within the larger context of market movements, the PCB (Printed Circuit Board) sector emerged triumphantly, leading the markets across both exchanges

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This uptick can be largely attributed to the surging demand spurred by artificial intelligence (AI). During the early hours of trading on January 17, the PCB sector dominated with a remarkable upswing in share pricesIndividual stocks such as Australia Hong Electronics, Siyi Technology, and Jin'an Guoji experienced trading halts at their upper limits, with Jin'an Guoji achieving a commendable four consecutive trading limit increasesStrongda Circuit soared by 12.35%, closely followed by stocks like Sichuan Fushi and Guanghe Technology, both displaying impressive gains.

The flourishing market is reflective of the global printed circuit board sector, which is currently entering an upswing, primarily due to an explosion in AI demandIn the realm of AI servers, cloud service providers are ramping up their procurement of servers and other hardwareThe ongoing increase in shipments of high-performance servers significantly propels the demand for advanced PCBs, indicating an anticipated rise in both value and volume

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Moreover, the demand for consumer electronics is recovering steadily, as evidenced by a projected year-on-year increase of 8.6% in smartphone shipments in the fourth quarter of 2024. Initiatives such as consumer subsidy policies are likely to further bolster this surge, facilitating sustainable growth in the industry.

Beyond AI-related advancements, the automotive sector's growing reliance on electronic components is notableAs developments in autonomous driving technology and its respective market penetration continue to evolve, the average number of electronic products per vehicle — including lenses and radars — is expected to rise significantlyResearch from Huaxin Securities suggests that most automotive PCBs currently consist of four to eight layers, and self-driving systems frequently adopt high-density interconnect (HDI) boards that come at a premium, as their costs can reach up to three times that of standard PCBs

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The price of LIDAR technology associated with level 3 or higher autonomous driving systems can reach several dozen dollars, indicating a substantial area for future growth in automotive PCB value.

Longjiang Securities forecasts a substantial growth trajectory for the AI sectorThe swift advancement of AI technologies coupled with the burgeoning demand for high-speed network systems boosts the need for large, multilayer PCBsAs computational power demands intensify, this, in turn, necessitates enhancements to PCB-related products, especially those in the HDI category.

According to projections from the China Commercial Industry Research Institute, the global PCB market is expected to hit a noteworthy 88 billion USD by 2024, further climbing to 96.8 billion USD by 2025. A particularly pronounced increase in demand for PCBs will manifest in high-performance computing and AI-related sectors, serving as the primary growth drivers for the PCB industry over the coming years.

Among the players within the PCB domain, valuations are generally elevated, with a median rolling P/E ratio reaching 47.87. Only a handful of stocks exhibit lower ratios, with just seven trading below the 30 benchmark, including companies like Aoshikang and Yidun Electronics.

Aoshikang, holding the lowest valuation, sports a current P/E ratio of 22.15. The company has stated on investor platforms that it focuses on high-value-added products in key areas such as AI servers, automotive electronics, and high-frequency communication technologies.

From the perspective of institutional interest in the PCB sector, three stocks have drawn institutional scrutiny this year

Shennan Circuit stood out with the highest number of institutional inquiries, totaling 31, followed by Yibo Technology and Huadian Shares at 9 and 3 institutions, respectively.

During these investigation activities, Shennan Circuit indicated a growing urgency driven by rapid advancements in AI technology, alongside deepening applications necessitating high computational power and fast network infrastructureThis surge has propelled demand for large, multilayer, high-frequency PCBs, with the company's offerings in fields such as high-speed communication networks, data center switches, and AI acceleration cards experiencing heightened interest.

Simultaneously, the pet economy is fascinatingly catching market attentionOn January 17, indices associated with the pet economy surged by 3.49%, buoyed by significant performances from leading stocks such as Zhongchong Coand Shitoucheng Co., both hitting upper trading limits

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Companies like Petty Shares, Gudang Pet, and Yuann Fei Pet also recorded increases exceeding 5%.

In terms of market-moving news, Zhongchong Co., the second-highest in market capitalization within the pet economy sector, announced its performance forecast for 2024, projecting a net profit attributable to shareholders of 360 million to 400 million yuan, reflecting a year-on-year growth of approximately 54.4% to 71.55%. This performance is anticipated to mark a new pinnacle since the company's public listingThe announcement highlighted the firm’s commitment to brand development, resulting in ongoing improvements in profit margins and overall profitabilityTheir overseas brand expansion remains vibrant, accelerating globalization efforts.

Other noteworthy entities in this sector, such as Yiyi Shares, Shitoucheng, and Zhongmu Co., also revealed favorable profit outlooks, with Yiyi Shares forecasting earnings growth ranging from 91.76% to 117.91% year-on-year, with net profits expected to land between 198 million to 225 million yuan.

In recent years, China's pet industry has been on a steady upward trajectory