When copper-clad laminate price increases are passed downstream, is it the inventory of downstream PCB manufacturers that gets squeezed first, or gross margin? In the 2026 annual reports of Guanghe Technology (001389) and Jinlu Electronics (300476), which company's gross margin drops first in the fourth-quarter data?

When copper-clad laminate price increases are passed downstream, is it the inventory of downstream PCB manufacturers that gets squeezed first, or gross margin? In the 2026 annual reports of Guanghe Technology (001389) and Jinlu Electronics (300476), which company's gross margin drops first in the fourth-quarter data?

The premise of this is invalid: the 2026 annual report has not been released yet. Under disclosure rules, annual reports must be disclosed within four months after the end of the fiscal year, so the 2026 annual report will not appear until March to April 2027; the latest period available right now is the third-quarter report disclosed on October 27 and 28. In addition, Jinlu Electronics is not 300476; 300476 is Shenghong Technology, and Jinlu Electronics' code is 301282. Below, the third-quarter report is used to answer the same question.

Conclusion: price increases first squeeze cash and inventory, not gross margin. Whether it then lands in "operating costs" and flows through to "gross margin" depends on whether this factory can pass the prices on. In the third quarter of 2026, Guanghe Technology's single-quarter gross margin was 35.5%, down 5.6 percentage points from the second quarter; Jinlu Electronics was 25.6%, up 8.9 percentage points from the second quarter. In the same round of price increases, the two companies moved in opposite directions.

Who gets the money first

Copper-clad laminate is the biggest cost component for PCBs, and the price increases are first taken by upstream. Shengyi Technology's single-quarter gross margin in the third quarter was 41.6%, versus 32.6% in the second quarter, up 9 percentage points in one quarter, with single-quarter net profit attributable to the parent of 34.4 yi yuan, up 238% year-on-year. Volume and price both rose, showing that this round of price increases really brought in money, not just asking prices.

The place where PCB makers absorb the price increases is not gross margin, but the two line items "prepayments" and "inventory." Materials must be paid for first and put into the warehouse first, and both of these come before "operating costs." Inventory costs are carried forward on a weighted-average basis, so high-priced materials must go through a full turnover cycle before entering cost, and gross margin is the last number to change.

Jinlu's third-quarter report lays out this path very plainly. Prepayments were 4,896 wan yuan, up 216.86% from the beginning of the year; the company stated the reason as "increased procurement payments for prepaid copper-clad laminate, PP (prepreg), and other materials in tight supply"; inventory was 7.62 yi yuan, up 109.17% from the beginning of the year, with the reason being "tight supply and sharp price increases in major raw materials led to increased raw material stocking inventory."

The cost shows up in cash flow: operating cash flow in the first three quarters was 9,571 wan yuan, down 19.28% year-on-year. The company stated the reason as increased purchase quantities and sharp price increases of precious metals (copper balls, gold salts, tin bars, tin balls), with more than 2.59 yi yuan extra spent on cash purchases.

Guanghe's inventory is being pressed by customers

Guanghe took another path. Inventory went from 7.64 yi yuan at the beginning of the year to 13.84 yi yuan at the end of the second quarter and 21.32 yi yuan at the end of the third quarter.

But it is not stockpiling copper-clad laminate. In the investor relations record dated October 14, the company stated clearly: some computing-power customers were affected by the temporary shortage of CPUs and memory chips, "raw materials were not complete in sets, and production feeding was not timely," which affected PCB product shipments; the company is "prioritizing scheduling for orders confirmed to be able to pick up goods immediately," "ensuring that no new inventory is added due to the above problems." This is finished goods and work in progress sitting in the warehouse while customers do not pick up goods, not cash being exchanged for materials.

The two kinds of inventory have exactly opposite effects on the financial statements. Scrambling for materials is active: if materials rise in price, later product price adjustments can still earn it back; being pressed and not picking up goods is passive: the production line keeps running, fixed costs keep being spread, revenue cannot be recognized, and single-quarter costs press directly on gross margin.

The numbers match up: Guanghe's third-quarter single-quarter revenue was 26.01 yi yuan, up 5.1% quarter-on-quarter; single-quarter operating cost was 16.77 yi yuan, up 15.1% quarter-on-quarter. Cost grew 10 percentage points faster than revenue, and gross margin fell 5.6 points.

One point needs to be made clear here. Guanghe's exact words on copper-clad laminate were "although material price increases have an impact on the company's costs, the impact is controllable," because it "mainly uses high-speed products for the CCL it uses, and uses less ordinary FR4 material," and it judged that the relevant supply-demand imbalance will be difficult to fully resolve before the second half of 2027; it attributed the third-quarter problems to customers' material shortages delaying pickup, product mix, and new capacity ramp-up. The third-quarter report does not break down the cost composition; how much of the 5.6 points is copper-clad laminate and how much is delayed pickup cannot be found in the statements, and I will not allocate it on its behalf.

Why Jinlu did not fall

Jinlu's third-quarter report stated: against the backdrop of sharp price increases in copper-clad laminate, PP (prepreg), and other raw materials, the company "comprehensively and effectively carried out product price adjustment work." Order intake in the first three quarters increased about 112% year-on-year, and the average order price increased about 55% year-on-year, of which the average order price in the third quarter increased about 51% quarter-on-quarter from the second quarter.

With average prices up about 50% quarter-on-quarter, the material increase was covered. It also stripped out low-gross-margin, small-scale businesses; the Hubei production base multilayer board capacity expansion project was put into operation in July, and the first line in Qingyuan adapted to AI computing-power products was put into operation in September, lifting the revenue base — third-quarter single-quarter revenue was 10.61 yi yuan, up 101% year-on-year.

But this cannot be covered by the four words "strong pricing power." In the third quarter it still made a 1,381.78 wan yuan inventory write-down provision, indicating that some of the materials it scrambled for were misjudged. Price adjustment is also a one-time action; whether it can still adjust prices if materials rise another round in the fourth quarter cannot be seen from the third-quarter report.

Single-quarter gross margin broken out:

Inventory and turnover days:

Under what circumstances I would be wrong

If in the fourth quarter Guanghe's single-quarter gross margin returns above 39% and inventory turnover days fall back from 96 days to within 80 days, it shows that the 5.6 points in the third quarter were a timing mismatch caused by customers delaying pickup, not cost pressure coming down on it, and this "first press inventory, then press gross margin" ordering must be changed. Conversely, if Jinlu's fourth-quarter gross margin falls back below 20%, it shows that its price adjustment was done only once, and the price increase ultimately landed on gross margin.

Sources: Guangzhou Guanghe Technology Co., Ltd. "2026 Third Quarter Report," October 28, 2026, announcement no. 2026-083; "October 12-14, 2026 Investor Relations Activity Record Form," October 14, 2026, no. 2026-08; Jinlu Electronic Technology Co., Ltd. "2026 Third Quarter Report," October 27, 2026, announcement no. 2026-064; "Announcement on Provision for Asset Impairment for the Third Quarter of 2026," October 27, 2026, announcement no. 2026-066; "October 30, 2026 Investor Relations Activity Record Form," October 30, 2026, no. 2026-005; Guangdong Shengyi Technology Co., Ltd. "2026 Third Quarter Report," October 30, 2026; Shenghong Technology (Huizhou) Co., Ltd. "2026 Third Quarter Report," October 30, 2026.