(PCPG SP / PCT.SI)
The Server Pivot Paints the Next Growth Story
Technology Hardware
1H26 revenue rose only 1.5%, yet GPM expanded 5.9ppt to 16.5% and PATMI increased 117.9%. The print was driven by ASP and product mix, not units: own-brand VGA volume fell 18.4%, while OEM/ODM volume fell 38.4% but revenue rose 73.9% on a 181% ASP increase.
Management now targets servers at more than 15% of 2H26 revenue after describing FY26 contribution as minimal in March. Our rebuilt schedule underwrites HK$1.86bn of FY26 server revenue, or 21.5% of 2H26—above management’s low-single-digit group-growth frame.
The 6U ZRS-326SV2 and 4U ZRS-MGX-R1 are public barebone products supporting eight RTX PRO GPUs. PC Partner is entering enterprise and industrial AI through standard PCIe/MGX designs; it is not yet a named Vera, HGX or NVL72 system builder.
We reiterate our OUTPERFORM rating with a 12-month DCF value of S$6.33, implying 127.8% upside from S$2.78. The output uses 11.0% WACC and 2.0% terminal growth.
Key downside risks include weaker VGA sell-through, component inflation, 4U qualification/timing, server working-capital intensity, route-mix dilution, Section 301 exposure, and failure to convert NPN access into supportable US/EU wins.
