Bank of America: Data-center PCB revenue could rise to 55% of Kinwong’s total; free cash flow expected to turn negative in 2026

How will Kinwong’s revenue mix change?

BofA expects data-center-related revenue to rise from 10% in 2025 to 25% in 2026 and 55% in 2028; the share of automotive electronics is expected to decline from 45% in 2025 to 26% in 2028. This does not mean the automotive business is disappearing; rather, AI server and optical transceiver businesses are expanding faster.
Under BofA’s model, total revenue will rise from RMB 15.308 billion yuan in 2025 to 43.021 billion yuan in 2028, representing a compound annual growth rate of 38% over 2026–28. Disclosed revenue for the third quarter of 2026 was RMB 6.621 billion yuan, up 40% quarter over quarter and 66% year over year; gross margin was 33.7%, an increase of 12.3 percentage points quarter over quarter.

BofA says Kinwong began small-batch production of Nvidia GB300 switch trays at the end of 2025 and entered the Rubin platform in the second quarter of 2026, supplying switch trays and midplanes. As board layers, materials and midplane configurations are upgraded, BofA estimates the PCB value of the Rubin platform at about 3 times that of GB200/GB300, and expects Nvidia-related business to contribute 23% of the company’s revenue in 2027.
BofA expects optical transceiver PCB revenue to rise from RMB 1.083 billion yuan in 2026 to 4.889 billion yuan in 2027 and 7.511 billion yuan in 2028, accounting for about 15% of total revenue in 2027. However, BofA expects the related capacity expansion to ease supply significantly in 2027. If prices for 1.6T products decline as supply increases, whether higher volumes can offset price pressure will affect revenue and profit performance.

BofA expects the gross margin of the data-center business to rise from 15.8% in 2025 to 42.2% in 2027, reaching 41.5% in 2028; the company’s overall gross margin is expected to increase from 21.6% in 2025 to 33.1% in 2028. A rising share of high-value AI PCBs is an important source of overall gross-margin improvement.
Automotive electronics remains a pillar of the business, but end-market demand has been weak recently. BofA expects the pass-through of rising CCL costs to customers to support year-over-year automotive business revenue growth of 38% in 2026; as traditional PCB supply gradually recovers, revenue growth for this business is expected to return to 5%–9% in 2027–28.

BofA expects net profit to rise from RMB 2.958 billion yuan in 2026 to 9.063 billion yuan in 2028, a compound annual growth rate of 75% over 2026–28. Compared with market consensus, BofA’s net profit forecast is 6% higher for 2026, and 29% and 36% higher for 2027 and 2028, respectively, with the gap concentrated mainly in the latter two years.
In its initial coverage of Kinwong, BofA assigned Buy ratings to both the H shares and A shares: a target price of HK$82 for the H shares, based on a forecast P/E of 12 times for 2027; and a target price of RMB 98 yuan for the A shares, corresponding to a forecast P/E of 17 times for 2027.

BofA expects the company’s capital expenditure to be RMB 7 billion yuan, 6 billion yuan and 5 billion yuan, respectively, over 2026–28. Corresponding free cash flow is expected to be negative RMB 4.599 billion yuan in 2026, turn positive at 518 million yuan in 2027, and rise to positive 4.908 billion yuan in 2028. In other words, profit growth does not mean that cash flow will also turn positive in the short term.
The model also forecasts net debt rising from RMB 515 million yuan in 2025 to 3.127 billion yuan in 2027. Improved cash flow depends on whether growth in profit and operating cash flow can cover capacity expansion spending; if project ramp-up or order growth falls short of expectations, funding pressure could persist for longer.