Key Takeaways:
- Interim net profit jumped 209% year-on-year to HK$2.887 billion
- UBS raised its target price to HK$66 from HK$58, keeping a Buy rating
- Management secured 50% of Toyota Industries orders for the next two years
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KB Laminates profit surges 209% as AI demand tightens copper-clad supply
KB Laminates reported interim net profit of HK$2.887 billion, up 209% year-on-year, as AI-driven demand tightened copper-clad laminate supply.
"Management remained optimistic about the sustainability of the upcycle in copper-clad laminates," UBS analysts said in a research report, noting the company had already secured 50% of Toyota Industries orders for the next two years.
Revenue rose 55% to HK$14.9 billion, about 7% below UBS's forecast, while gross margin widened 12.3 percentage points to 30.7%, topping the broker's estimate by 2.1 points. Operating expense control and operating leverage came in better than expected. The company declared an interim dividend of HK$0.28 per share, up 87% from a year earlier.
Shares rose as much as 9.7% on the results. UBS lifted its target price to HK$66 from HK$58 and raised 2026-2028 earnings forecasts by 36%, 32% and 31%, citing higher copper-clad laminate average selling prices, faster progress in AI glass fabric and HVLP copper foil, and gross margin gains from vertical integration.
The earnings beat extends a broader upcycle in copper-clad laminates, the core substrate for printed circuit boards used in AI servers, high-speed computing and data centers. KB Laminates' vertically integrated cost base, spanning glass fiber cloth and copper foil, has let it capture more of the price gains flowing through the supply chain.
Citigroup, which also covers the stock, raised its target price to HK$95 and lifted 2026-2028 earnings forecasts by 9% to 10%. The bank estimates KB Laminates trades at 7.7 times 2027 estimated earnings, with earnings per share compounding at a 94% annual rate over three years. July monthly profit of roughly HK$1.1 billion marked a record, and the company raised copper-clad laminate average selling prices by 10% last week, with Citigroup seeing room for another 15% to 20% before year-end.
On capacity, KB Laminates plans to add eight new furnaces by 2028, bringing annual specialty electronic-grade glass fiber cloth capacity to 100 million meters. Two furnaces are expected online in the second half of 2026.
The results signal management expects AI-driven substrate demand to keep accelerating. Investors will watch whether copper-clad laminate price increases hold through the second half and how quickly new furnace capacity ramps.
This article is for informational purposes only and does not constitute investment advice.
