A HKD50 price target and an Overweight rating landed on PHANCY (06682.HK) on Sept. 24, when JPMorgan became the first major broker to publish on the Chinese AI infrastructure name, valuing it at 15 times projected 2028 EV/EBITDA.
The thesis rests on a business that has moved beyond enterprise AI software deployment into heterogeneous computing optimization and Token production. "APIs monetize computing power, model adaptation and service capabilities through Token production, opening up a larger usage-based revenue pool," JPMorgan analyst Olivia Xu wrote in the initiation note.
The numbers behind that claim are concentrated in one line item. API revenue reached about RMB464 million in the first half of 2026, up 861 percent from a year earlier, while AI platform revenue rose 30 percent year on year. JPMorgan expects API to become the fastest-growing business from 2026 through 2028, with gross margin on that segment approaching roughly 30 percent as utilization and service efficiency improve.
The firm models a 36 percent revenue compound annual growth rate across 2026-2028 and forecasts adjusted net profit of RMB900 million in 2028, 37 percent above the market consensus. JPMorgan said earnings could exceed expectations as API expansion and operating leverage emerge.
The structural case is that China's computing power environment is becoming more fragmented, creating demand for optimization work that spans different chip architectures. JPMorgan holds a constructive view on the broader Chinese AI value chain, favoring BABA-W, TENCENT and Z.AI, which gives the PHANCY call a sector read-across rather than a standalone bet.
The constraint is capital. PHANCY still needs computing power, equipment and working capital to fund expansion, and JPMorgan flagged operating cash flow, free cash flow and return on incremental invested capital as the key indicators to watch. Those metrics will determine whether the 861 percent API growth converts into the RMB900 million profit figure the target price depends on.
PHANCY traded down 0.29 percent at the time of the note, with short selling at $4.46 million, or 8.589 percent of turnover, according to AASTOCKS data as of Sept. 24. The stock's next test is whether API gross margin tracks toward the 30 percent level JPMorgan assumes, which would show up in the company's next interim results.
This article is for informational purposes only and does not constitute investment advice.
