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Tuesday, Goldman Sachs initiated coverage on Zhen Ding Technology Holding Limited (4958:TT) (OTC:HASGF) with a Buy rating and set a price target of NT$115.00. The firm’s analysts expect Zhen Ding Technology to significantly benefit from the growing demand for ABF substrates, particularly from Chinese integrated circuit (IC) design companies focusing on computing chips.
According to Goldman Sachs, the allocation of ABF substrates in China’s IC design houses is projected to increase to 43% by 2027 from 18% and 31% in 2024 and 2025, respectively. This forecast suggests an approximate 150% compound annual growth rate (CAGR) in ABF revenue from 2023 to 2027. The analysts believe that this expansion will position Zhen Ding Technology as a primary beneficiary within the sector.
Additionally, Goldman Sachs presented a "Blue sky scenario" where they anticipate Zhen Ding Technology could see further upside from the foldable smartphone market. The analysts estimate that if foldable iPhone shipments reach 32 million and 66 million units in 2026 and 2027, respectively, the potential revenue increase for Zhen Ding could be 10% and 16% above their base case projections.
The optimism from Goldman Sachs is partly due to their expectation that Zhen Ding Technology will become a major supplier of flexible printed circuits (FPCs) used in high-end foldable smartphones. The analysts’ valuation is based on a 12-month sum-of-the-parts (SOTP) methodology, which underscores the diverse sources of potential growth for the company.
The coverage initiation and the positive outlook from Goldman Sachs could influence investor sentiment and market activity surrounding Zhen Ding Technology shares on the stock exchange.
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