KB LAMINATES (01888) saw its shares drop more than 7% during the trading session. At the time of writing, the stock was down 2.8%, trading at HK$41.72 with a turnover of HK$965 million.
The decline follows an announcement from global fiberglass leader China Jushi Co.,Ltd. (600176) that it will invest an additional RMB 4.431 billion in Huai'an, Jiangsu to construct a new production line. This facility is expected to have an annual capacity of 50,000 tons of electronic yarn and 320 million meters of electronic fabric. This marks the company's second major project at its Huai'an base slated for 2026. Earlier in March, another production line with a designed annual capacity of 100,000 tons of electronic-grade fiberglass and 390 million meters of electronic fabric commenced operations, which is reportedly the largest single production line of its kind globally.
In a research note, Citi suggested that the news of China Jushi's capacity expansion could negatively impact short-term market sentiment towards KB LAMINATES, given the latter's stock has already surged 256% year-to-date. However, Citi views any resulting share price pullback as a favorable entry point. The bank argues that supply bottlenecks in the electronic fiber industry will persist, constrained by the slow growth in the number of available looms.
Citi also forecasts that KB LAMINATES' own monthly production capacity for electronic fabric will increase by approximately 14% to 65 million meters by the end of 2026. Despite this, considering the limitations in loom supply, overall industry supply growth is expected to remain limited over the next two years.
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