JPMorgan has launched coverage on KB LAMINATES (01888) with an "Overweight" rating and a target price of HK$65, representing 21 times and 13 times forecast price-to-earnings ratios for 2026 and 2027, compared to the 10-year historical average of 12.5 times. The bank notes the company is the world's largest producer of conventional copper-clad laminates (CCL) and one of only two firms with a fully integrated printed circuit board (PCB) materials supply chain, the other being Taiwan's Nan Ya Plastics.
The bank points out that surging demand from artificial intelligence and general servers has created a significant shortage of glass fabric, with electronic-grade glass cloth prices rising over 100% year-to-date, which is expected to enhance the company's integrated margins and market share. JPMorgan forecasts earnings per share will increase eightfold between 2025 and 2028, driven by industry shortages, a cumulative 150% rise in blended CCL average selling prices from migration to high-end CCL, capacity expansion projects in Jiangxi and Guangdong, a 75% increase in weaving machine fleet size over the next two years, and the ramp-up of HVLP1-3 copper foil with potential customer certification for HVLP4.
JPMorgan states that KB Laminates has secured approximately 35% to 40% of Toyota's weaving machine capacity for the next two years, allowing the fleet to expand from around 3,300 units in 2026 to about 5,800 units by 2028. This would drive glass fabric output (including specialty grades) up by approximately 55% from 2025 to 2028, and contribute over HK$5 billion in net profit growth. The bank expects the glass fabric shortage to persist at least through 2027, with price increases continuing as well.
Regarding copper foil, the company's current capacity stands at roughly 63,000 tonnes per year, with the new plant in Fogang set to begin ramping up HVLP1-3 (21,000 tonnes per year) from the third quarter of 2027. The bank anticipates processing fees could rise by 20% to 60% in 2026. JPMorgan believes this CCL upcycle may be longer than those of 2015-2017 and 2019-2021, driven by accelerated AI specification migration and capacity conversion losses, while general server shipments are projected to grow 22% and 25% year-on-year in 2026 and 2027, spurring demand for M4-M7 grade CCL products.
Additionally, KB Laminates is moving toward the AI-grade materials supply chain, expanding its "T-cloth" capacity fivefold and has begun supplying core CCL customers such as Shengyi Technology (600183.SH). The bank says KB Laminates' valuation is attractive, with placement risks already reflected in JPMorgan's target price discount. Although the company lags most peers in specification upgrades, it currently trades at only 15 times and 10 times forecast price-to-earnings ratios for this year and next, while JPMorgan expects 2028 net profit to rise eightfold.
Investors have been focused on the founding family's reduction of shares in KB Laminates between June and July 2026, which coincided with a 72% decline in the stock price, while the Hang Seng Index rose 12% over the same period. The bank believes the situation has now passed, as further reductions below 30% (currently 31.8%) could trigger mandatory full takeover requirements under Hong Kong Exchange rules if the founding family's vehicles seek to regain control. Exchange filings show the founding family/management has resumed buying shares in KB (00148) and KB Laminates following strong first-half 2026 results. The bank's HK$65 target price is based on 20 times forecast 2027 earnings, in line with the Asian PCB supply chain average, and incorporates a 30% discount to reflect persistent investor concerns over founding family shareholding changes.
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