GO
| HSI1 | 24,169.77 | -110.79 | 65.24B |
| HSCEI1 | 8,085.82 | -43.15 | 16.84B |
| Back Zoom + Zoom - Block Traded | |
|
2026-09-23 11:12:21 JPM released a research report initiating coverage on KB LAMINATES (01888.HK) with an Overweight rating and a target price of HKD65, equivalent to forecast PE ratios of 21x and 13x for 2026 and 2027 respectively, compared with the historical 10-year average of 12.5x. The broker said the company is the world's largest conventional copper clad laminate (CCL) producer and one of only two companies with a fully integrated printed circuit board (PCB) materials supply chain, with the other being Taiwan's Nan Ya Plastics. The broker noted that surging demand for AI and general-purpose servers has led to a significant shortage of glass fiber cloth. Prices of electronic-grade glass fiber cloth have risen more than 100% since the beginning of this year, which is expected to enhance the company's integrated margins and market share. JPM forecast EPS to rise 8x between 2025 and 2028, driven mainly by a cumulative 150% increase in blended ASPs for CCL due to industry shortages and migration toward high-end CCL, capacity expansion projects in Jiangxi and Guangdong, a 75% increase in loom fleet size over the next two years, and ramp-up of HVLP1-3 copper foil as well as potential customer certification for HVLP4. JPM said KB LAMINATES (01888.HK) has secured around 35%-40% of Toyota's loom allocation for the next two years. Its loom fleet is expected to expand from around 3,300 units in 2026 to around 5,800 units in 2028, driving approximately 55% growth in glass fiber cloth output, including specialty products, between 2025 and 2028 and contributing more than HKD5 billion in net profit growth. The broker expected the glass fiber cloth shortage to persist at least until 2027, with price increases likely to continue. For copper foil, the company currently has annual capacity of around 63,000 tonnes. Output of HVLP1-3 products from the new Fogang plant, with annual capacity of 21,000 tonnes, is expected to ramp up from 3Q27. JPM expected processing fees to rise 20% to 60% in 2026. The broker believed the current CCL upcycle could last longer than the cycles in 2015-2017 and 2019-2021 due to accelerated AI specification migration and losses from capacity conversion. Meanwhile, YoY growth in general server shipments is forecast at 22% and 25% in 2026 and 2027 respectively, which is expected to stimulate demand for M4-M7 grade CCL products. In addition, KB LAMINATES (01888.HK) is moving into the AI-grade materials supply chain. The company is expanding production capacity for "T-cloth" by 5x and has begun supplying core CCL customers such as SYTECH (600183.SH). JPM said KB LAMINATES (01888.HK)'s valuation is attractive, while placement risks have already been reflected in the discount to its target price. Although the company lags behind most peers in specification upgrades, it is currently trading at forecast PE ratios of only 15x and 10x for this year and next year respectively, while JPM expected its net profit in 2028 to rise 8x. Investors have been concerned about the founding family's disposal of shares in KINGBOARD HLDG (00148.HK), the parent company of KB LAMINATES (01888.HK), during June to July 2026, which coincided with a 72% decline in KB LAMINATES (01888.HK)'s share price, versus a 12% gain in the HSI over the same period. The broker believed the situation has now passed because any further reduction in the founding family's stake below 30%, currently at 31.8%, could trigger a mandatory general offer requirement under HKEX rules if the family's investment vehicles seek to regain control. Exchange filings showed that the founding family and management resumed purchases of shares in KINGBOARD HLDG (00148.HK) and KB LAMINATES (01888.HK) after strong results in 1H26. JPM's HKD65 target price for KB LAMINATES (01888.HK) is based on a forecast 2027 PE ratio of 20x, in line with the average level of the Asian PCB supply chain, and already incorporates a 30% discount to reflect ongoing investor concerns over changes in the founding family's shareholding.(da/ad)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |