Nomura Orient International: Fastprint’s third-quarter gross margin jumps, earnings forecasts raised sharply

Why did third-quarter results exceed expectations?

In the third quarter of 2026, Fastprint reported revenue of 2.732 billion yuan, up 40.3% year on year and 23.1% quarter on quarter; net profit was 328 million yuan, up 219.77% year on year and 257.7% quarter on quarter.
Revenue was slightly above Nomura Orient International’s previous forecast, while net profit far exceeded expectations. The key was a rise in gross margin to 30.5%, up 8.2 percentage points year on year and 8.1 percentage points quarter on quarter: product price increases and an improved product mix made revenue more profitable.
Improved operating efficiency also reduced the expense burden: the third-quarter operating expense ratio fell by 2.0 percentage points year on year and 0.5 percentage points quarter on quarter.

Nomura Orient International expects continued growth in CSP packaging substrate sales volume and average selling prices, a breakthrough in mSAP substrates for optical modules, and faster operational improvements at Yixing Silicon Valley. It therefore raised its revenue forecasts for 2026–2028 by 4%, 7% and 8%, respectively.
The firm also expects higher capacity utilization to help spread fixed costs. Together with an improved product mix, this led it to raise its gross margin assumptions for the three years by 3.3, 3.0 and 3.2 percentage points, respectively; economies of scale and improved operating efficiency led it to lower its expense ratio assumption for each year by 0.8 percentage points.
After the combined adjustments to revenue and margin assumptions, net profit forecasts for 2026–2028 rose to 715 million, 972 million and 1.266 billion yuan, respectively, increases of 105%, 90% and 76% from the previous forecasts.

Nomura Orient International maintained its buy rating but cut its target price from 39 yuan to 37 yuan, implying 30.9% upside from the 2 November 2026 closing price of 28.27 yuan.
The firm shifted its valuation basis from forecast 2026 revenue to forecast 2027 revenue, deriving its target price by multiplying forecast revenue per share of 6.2 yuan by a target price-to-sales multiple of 6 times. The 6-times multiple exceeds the peer average forecast price-to-sales multiple of 4.5 times for 2027, justified by the growth potential of high-value-added businesses and improving profitability.
The firm expects Fastprint’s compound annual revenue growth rate over 2026–2028 to be approximately 22%, below the peer average. Raw material price volatility, weaker-than-expected downstream demand, a slower ramp-up of new capacity and intensifying competition are all risks to its assessment.