Net profit surged 307%, gross margin rose to 53.46%: What is driving the growth of Guangdong Dtech Technology (01377)?

AI computing power demand continues to be released, and the PCB industry chain is welcoming new growth opportunities. As an important supplier in the field of PCB precision manufacturing, the performance of Guangdong Dtech Technology (01377) is becoming a window through which to observe this trend. According to the company's latest disclosed 2026 third-quarter report, Guangdong Dtech Technology's revenue in the first three quarters reached RMB3.487 billion, up 139.25% year on year; net profit attributable to shareholders reached RMB1.15 billion, up 307.44% year on year; and net profit attributable to shareholders after deducting non-recurring gains and losses was RMB1.14 billion, up 333.97% year on year. The high performance growth also drove attention in the Hong Kong stock market. On October 28, Guangdong Dtech Technology's share price closed at HK$175.8, up 8.99%, with a market value of approximately HK$74.61 billion. Against the backdrop of continued growth in demand for AI servers and high-end PCBs, how much more room for growth can this global leader in PCB drill needles open up? AI PCB orders surged, and performance in the first three quarters increased sharply It is understood that Guangdong Dtech Technology's core business is to provide products such as precision tools, grinding and polishing materials, functional film materials, and intelligent CNC equipment for PCB manufacturing. Among them, precision tools are the company's most important source of revenue and also an important support for current performance growth. According to the financial report, the company's revenue in the first three quarters reached RMB3.487 billion, up 139.25% from the same period last year; net profit attributable to shareholders reached RMB1.15 billion, up 307.44% year on year; and net profit attributable to shareholders after deducting non-recurring gains and losses was approximately RMB1.14 billion, up 333.97% year on year. Basic earnings per share were RMB2.78, and the weighted average return on equity reached 28.63%, up 17.88 percentage points from the same period last year. According to the company's statement in the third-quarter report, the growth in operating revenue was mainly driven by AI PCB demand, which led to a substantial increase in orders for precision tools, grinding and polishing materials, and other products. In other words, the company's AI-related orders are being converted into actual revenue. On a single-quarter basis, the company's third-quarter revenue reached RMB1.544 billion, up 179.13% year on year; net profit attributable to shareholders reached RMB471 million, up 284.41% year on year; and net profit attributable to shareholders after deducting non-recurring gains and losses reached RMB470 million, up 309.11% year on year. From the perspective of revenue structure, precision tools are Guangdong Dtech Technology's core business. In 2025, the company's precision tool revenue was approximately RMB1.74 billion, accounting for 83.5% of that year's operating revenue. It is understood that this business mainly serves the PCB manufacturing process, and product performance is closely related to processing precision, production efficiency, and finished product quality. As PCBs required for AI servers develop toward higher layer counts and high-density interconnection, demand for precision drill needles and related processing materials has also increased. Among them, AI servers have higher requirements for PCBs than many traditional application scenarios. The increase in circuit board layers, reduction in hole diameters, and higher processing precision requirements all place higher demands on the stability, durability, and processing capability of drill needles. As key consumables in PCB production, precision tools are expected to continue benefiting from the growth in manufacturing demand for high-end products. It is understood that in terms of technology, Guangdong Dtech Technology's drill needle processing precision can reach 0.001 mm, the diameter of mass-produced drill needles can reach 0.02 mm, and it has high aspect ratio drilling processing capability. Soochow further mentioned in its third-quarter report review released on October 28 that the company has broken through the design and manufacturing process for ultra-high aspect ratio drill needles of more than 60 times diameter. The accumulation of relevant technology will help the company continue to expand high-end PCB application scenarios. From a longer time dimension, Guangdong Dtech Technology's revenue scale has also continued to expand. The company's operating revenue grew from RMB1.295 billion in 2023 to RMB1.553 billion in 2024 and reached RMB2.084 billion in 2025. Revenue further increased to RMB3.487 billion in the first three quarters of 2026, with the pace of growth clearly accelerating. Profitability improvement and capacity expansion advanced simultaneously In addition to rapid revenue growth, improved profitability is also an important highlight of Guangdong Dtech Technology's third-quarter report. In the first three quarters of 2026, the company's gross profit margin reached 53.46%, up 12.84 percentage points year on year; the net profit margin reached 32.94%, up 13.66 percentage points year on year. In the third quarter alone, the gross profit margin was 50.36%, up 7.49 percentage points year on year; the net profit margin was 30.48%, up 8.41 percentage points year on year. Among them, profit growth in the first three quarters mainly came from the expansion of revenue scale, the improvement in gross profit margin, and the decline in the period expense ratio. With the growth of AI-related orders, the company's economies of scale are gradually becoming apparent. In terms of expenses, the company's period expense ratio in the first three quarters was 13.39%, down 4.22 percentage points year on year. Among them, the selling expense ratio was 2.60%, the administrative expense ratio was 4.96%, and the R&D expense ratio was 4.57%. The decline in the period expense ratio reflects the diluting effect of revenue growth on expenses and provided support for profit growth to outpace revenue growth. At the same time, the company continued to increase R&D investment. The third-quarter report shows that R&D expenses in the first three quarters were approximately RMB159 million, up 77.51% year on year. The company stated that R&D investment is mainly carried out around its main business, new products, and new technologies. The growth in R&D expenses reflects that the company, while rapidly expanding its business, is still continuously advancing product technology upgrades. For precision tool companies, R&D capability is closely related to high-end product development. It is understood that with the continued development of applications such as AI servers and high-multilayer PCBs, customer requirements for micro-hole diameters, high aspect ratios, and processing stability are constantly increasing. Continuous investment in R&D will help the company improve its product system, expand application fields, and consolidate its competitive advantage in the field of precision processing. The third-quarter report also shows that as of September 30, 2026, the company's contract liabilities were approximately RMB38.6969 million, up 599.01% from the end of 2025, mainly related to an increase in advance receipts. This change provides another reference indicator for observing the company's business progress. As related business continues to advance in the future, how contract liabilities are subsequently converted into revenue is also worth continuing to monitor in conjunction with quarterly operating conditions. In terms of capacity, the company is advancing capacity expansion around business needs. The third-quarter report shows that as of the end of September, the company's fixed assets were approximately RMB1.759 billion, up 57.69% from the end of 2025; other non-current assets were approximately RMB390 million, up 208.12%. The company explained that this was mainly related to the increase in unaccepted fixed assets due to capacity expansion, reflecting that the company is increasing the construction of manufacturing capacity and preparing for subsequent business development. It is understood that Guangdong Dtech Technology has three major production bases in China and has also established a presence in the Thai and German markets. Soochow's third-quarter report review mentioned that the Thai base has a monthly capacity of 8 million units, the related business of Germany's MPK has been integrated, and the company has also strengthened links with the supply chains of Japanese customers through its Japanese subsidiary. Overseas layout helps the company get closer to international customers and improve localized service and delivery capabilities. With the globalization of the PCB industry chain, suppliers with large-scale production capacity, technological accumulation, and overseas service networks are expected to further expand into international markets. Layouts in Thailand, Germany, and Japan also provide new support for Guangdong Dtech Technology to expand customer coverage. Overall, the growth in AI PCB-related orders in the first three quarters drove rapid revenue expansion at Guangdong Dtech Technology, while gross profit margin, net profit margin, and return on equity all improved. From the perspective of industry trends, continued development in demand for AI servers and high-end PCBs brings new market opportunities for precision tools and grinding and polishing materials. With the continuous development of the AI server and high-end PCB industries, Guangdong Dtech Technology is expected to continue benefiting from the growth in precision processing demand. In the future, whether the company's competitiveness in core products can be further transformed into business scale expansion, and whether its overseas layout can continue to contribute to growth, will become important directions for observing its subsequent operating performance.