Citigroup: Downgrades KB LAMINATES (01888) target price to HK$92, rating adjusted to "Buy/High Risk."

Citi released a research report stating that KB LAMINATES (01888) has declined over 60% from its high in June, and now is a time to re-enter. Profit growth is expected to accelerate in the second half of this year. The bank forecasts that pure profit for the company in the second half will increase by 2.8 times year-on-year (with a projected year-on-year increase of about 2 times). Based on a price-to-earnings ratio of 22 times (which is about 1.5 standard deviations above the historical average), the target price has been lowered from HK$130 to HK$92, a decrease of about 29%, and the rating has been adjusted from "Buy" to "Buy/High Risk." The bank noted three major positive catalysts to pay attention to for the company: (1) After the greedy price increase of electronic fiberglass fabric starting in early August, the average selling price of copper clad laminate (CCL) is expected to soar by approximately 10% to 15% in August; (2) Following the announcement of performance on August 24, market focus will shift to the expected accelerated profit growth in the second half of this year; (3) The production line for T-type fiberglass fabric (T fabric) will start in August. The report states that due to the company's disappointing loss instead of the expected profit, coupled with heightened market concerns regarding AI capital expenditures from major data center operators and Nvidias (NVDA.US) "closed-loop financing," the profit forecast for KB LAMINATES for 2026 to 2028 has been lowered by between 9% to 14%.