Key Takeaways
HONG KONG – Citi reiterated its Buy rating on KB Laminates (01888.HK), suggesting any price pullback from a competitor's expansion news should be seen as a buying opportunity after the stock has surged 256 percent year-to-date.
"Any share price pullback would present a good buying opportunity, as supply bottlenecks in the electronic fiber industry remain," a Citi research report said, setting a price target of HKD51 for the company.
The note followed an announcement from competitor CJS (600176.SH) detailing a major investment in a new production base with an annual capacity of 50,000 tonnes of electronic glass fiber yarn and 320 million meters of electronic fabric. While this news could negatively affect KB Laminates' short-term sentiment, Citi believes industry supply growth will remain constrained over the next two years due to slow growth in the availability of weaving machines.
Citi's HKD51 price target suggests notable upside from its recent trading levels. The bank's thesis hinges on weaving machine supply acting as a bottleneck, a factor that it believes will protect industry pricing power despite the new capacity announcement from CJS.
The report highlights a key tension in the electronics component market: while individual companies are aggressively expanding, the entire industry's growth is tethered to the production capacity of specialized equipment. For KB Laminates, this dynamic could shield its margins even as new supply is announced. The company itself expects to increase its own monthly electronic fabric production capacity by about 14 percent to 65 million meters before the end of 2026.
Investors will be closely watching for any signs of easing in the weaving machine supply chain, which would challenge Citi's bullish thesis. The next major catalyst will be KB Laminates' upcoming earnings report, where management's commentary on pricing and equipment procurement will be scrutinized.
This article is for informational purposes only and does not constitute investment advice.
