Shenwan Hongyuan has released a research report stating that PHANCY's (06682) current revenue and business development are in line with expectations. The firm maintains its revenue forecasts for 2026-2028 at RMB 10.2 billion, RMB 15.4 billion, and RMB 20.2 billion, respectively. It also maintains its non-adjusted net profit attributable to shareholders forecasts for the same period at RMB 77 million, RMB 455 million, and RMB 900 million. As the company is still in its early investment phase, expanding market share is considered more important than profitability. Therefore, the firm uses a PS valuation method. Based on the average 2026 PS valuation of comparable companies, a 3.6x PS multiple is applied to the 2026 revenue forecast, leading to a reasonable market valuation of approximately RMB 36.3 billion for the company, implying an upside potential of over 80%. The "Buy" rating is maintained. Key points from Shenwan Hongyuan are as follows:
Revenue and gross margin are in line with expectations. On May 22, 2026, the company released its 2026 Q1 business performance announcement. PHANCY Group achieved revenue of RMB 1.458 billion in Q1 2026, a year-on-year increase of 35.4%, with a gross margin of 35.1%.
The API business continues to grow rapidly, with a major contract ensuring future growth momentum. The API token call volume in Q1 2026 was nearly six times that of Q1 2025 and exceeded the full-year 2025 call volume by approximately 40%. In May, the company launched PhanthyMovie, a professional-grade AI video generation platform focused on enhancing the professionalism, controllability, and stability of video creation, aiming to help the industry achieve standardized and large-scale content production. Within just a few days, the product secured a long-term cooperation agreement with MediaCorp Group Limited involving a total token usage contract value of approximately USD 200 million. The two parties will also jointly develop a new AI film and television content production platform, deepening their focus on the AI cultural and creative sector.
The Agentic AI business has made significant progress. As of Q1 2026, the number of orders in hand for Agentic AI increased by 99% compared to the end of 2025. The number of models adapted for domestic chips on the Xinchuan Model Box exceeded expectations. As of the announcement date, over 70,000 AI models adapted and optimized for domestic chip environments have been launched on the Xinchuan Model Box.
Core products are highly aligned with industry policy directions. Since May 2026, relevant AI policies in China have sent positive signals regarding computing infrastructure construction, data element supply, and open-source governance. Policies related to computing resource allocation emphasize cross-regional coordination and improving the accessibility of computing power. HAMi vGPU, with its capabilities for unified scheduling and fine-grained resource partitioning, helps improve computing resource utilization and data center energy efficiency. In terms of data and model governance, policies promote the construction of high-quality datasets and compliance management. The Xinchuan Model Box supports multi-model adaptation and optimization and integrates data traceability and security authentication functions, helping to reduce corporate compliance risks. Additionally, HAMi vGPU supports unified management of multiple chips, which can improve single-card utilization efficiency.
Risk warnings: Downstream AI demand may fall short of expectations, and industry competition may intensify.