UBS: Raises the target price for KB LAMINATES (01888) to HKD 66, with earnings forecasts for this year and next year increased by up to 36%.

UBS released a research report stating that the target price for KB LAMINATES (01888) has been raised from HKD 58 to HKD 66, maintaining a "Buy" rating. UBS has increased its earnings forecasts for 2026, 2027, and 2028 by 36%, 32%, and 31% respectively, reflecting the rise in the average selling price of copper-clad laminates, accelerated progress in AI glass fabric and HVLP copper foil, as well as the enhanced gross margin driven by vertical integration advantages. KB LAMINATES reported a year-on-year increase in interim profit of 209% to HKD 2.9 billion, with a gross margin of 30.7%, widening by 12.3 percentage points compared to the same period last year and exceeding the bank's expectations by 2.1 percentage points, mainly benefiting from cost advantages due to vertical integration and the increase in average selling prices of copper-clad laminates and upstream materials. During the period, revenue grew 55% year-on-year to HKD 14.9 billion, which was 7% lower than the bank's expectations, but operating expenses were controlled well and operational leverage was better than expected. The core operating profit of copper-clad laminates and upstream businesses reached HKD 3.8 billion in the first half of the year, with the operating profit margin rising from 12.3% in the same period last year to 25.9%. The management is optimistic about the sustainability of the upward cycle in copper-clad laminates and revealed that it has secured 50% of the Toyota automatic loom orders for the next two years.