Key Takeaways:
Citi opened a 30-day catalyst watch on KB Laminates, reiterating a Buy rating and HKD95 target on fiber price hikes.
Citi expects another electronic-grade glass fiber cloth price increase in early September, with KB Laminates potentially announcing higher copper clad laminate prices in early October, the broker said in a report.
KB Laminates recorded a record monthly profit of HKD1.1 billion in July, with management expecting margins to remain sustainable through the end of 2026, exceeding Citi's conservative forecast of HKD9.3 billion full-year earnings for 2026. Citi forecast EPS CAGR of 94 percent for 2026-28 and a dividend yield above 5 percent in 2027.
The Cheung family, via KB Investment, bought 1 million shares on Aug 25 and 575,000 shares on Aug 26, raising its stake from 5.05 percent to 5.1 percent. Citi viewed the purchases as a good start to boosting market confidence, indicating management's positive view toward the company.
The catalyst watch comes as Kingboard Laminates issued another price increase notice as shortages of core materials such as fiberglass cloth and copper foil intensify and prices surge. The July profit record reflects rising contributions from new AI glass fiber cloth businesses, a segment Citi said could drive further earnings upgrades.
The price hikes are part of a broader wave across the global chemical industry. Nanya Plastics raised copper clad laminate and prepreg prices by 20 percent to 25 percent from Sept 1, citing sharp rises in upstream raw materials including copper foil, glass fiber cloth and core resins. Allnex Resins and Wanhua Chemical also announced increases across resin and solvent product lines, while BASF lifted nylon and neopentyl glycol prices in North America and Europe.
KB Laminates shares traded down 0.133 percent on the day, with a short selling ratio of 8.18 percent. The stock has drawn institutional attention as AI infrastructure demand lifts the electronics supply chain. The controlling shareholder's sister company, Kingboard Holdings, reported first-half net profit of HKD2.711 billion, up 5 percent, with an interim dividend of HKD0.73 per share.
The catalyst watch and insider buying signal management conviction in sustained AI-driven demand for glass fiber cloth. Investors will watch for the September fiber price announcement and any early-October CCL price hike, which could trigger further earnings upgrades.
This article is for informational purposes only and does not constitute investment advice.
