Citi Raises Kingboard Laminates Target Price to HK$120, Bullish on CCL Price Upcycle
N.R. Finch
Citi lifted its Kingboard Laminates (1888.HK) target by 20% to HK$120, implying ~35% upside; the thesis rests on AI-driven fiberglass-cloth shortages fueling a CCL price cycle that is just getting started.
Why did Citi raise the target by this much?
The direct trigger: Kingboard announced a 15% average price hike on CCL and prepreg from June 16, above the 10% increases seen from January to May.
Behind the hike is cost pressure: electronic-grade fiberglass cloth prices rose RMB 0.70–0.95 per meter in June, and Kingboard needs to pass that through.
This means → the price cycle is accelerating, not one-off — from 10% to 15% — and Citi believes full-year ASPs have further room to run.
Why is fiberglass cloth in short supply — and what does AI have to do with it?
Citi says the shortage is worse than expected. The core driver is AI demand — some AI power-supply units also use 1080 cloth, crowding out conventional supply.
In plain terms = the fabric needed for AI servers is the same kind used in ordinary circuit boards; AI is grabbing the capacity.
Non-AI demand (EVs, home appliances, smartphones, PCs) remains weak, creating a stark "AI hot, everything else cold" split.
High-end suppliers like Hongren Electronic are shifting capacity from electronic-grade cloth to AI-grade cloth — the latter sells at RMB 25–200+ per meter versus just RMB 7–10 for electronic-grade. This means → supply is actively tilting toward the higher-priced product, making the electronic-cloth shortage hard to resolve near-term.
How high can CCL prices go?
Citi forecasts 2026 full-year CCL ASP rising 84% YoY to HK$230 per sheet, surpassing the 2021 all-time peak of HK$221.
Spot prices are expected to climb from ~RMB 150 per sheet at end-2025 to ~RMB 270 by end-2026 — nearly doubling.
On fiberglass cloth, Citi projects ASPs will keep rising RMB 0.5–0.7 per month through H2 2026, because loom capacity is limited and expansion lead times are long.
How much did earnings forecasts move — and where does the 92% CAGR come from?
Citi raised Kingboard's 2026–2028 earnings estimates by ~3% per year. Revenue is projected to grow from HK$38.2 bn in 2026 to HK$70.6 bn in 2028.
Net profit rises from HK$8.6 bn to HK$17.5 bn; EPS from HK$2.76 to HK$5.64 — a three-year CAGR of 92%.
In plain terms = Citi expects profits to more than double in three years, driven entirely by sustained CCL price increases.
Is 29× PE expensive? How does Citi justify it?
The HK$120 target is based on 29× 2027E P/E, already above the historical mean + 3 standard deviations.
Citi's core defense: at a 92% earnings CAGR, the PEG ratio — a measure of how much you pay per unit of growth — is only 0.3×, making the valuation look cheap on a growth-adjusted basis.
This means → Citi's logic is "growth fast enough absorbs a high multiple." For context, Citi values Han's Laser at 49× 2027E PE and Shengyi Technology at 56× — Kingboard's 29× is actually the lowest of the three.
Where do the six expansion projects point — and is the Nvidia supply chain the key variable?
Kingboard's parent placed 155 million shares at HK$76, raising US$1.51 bn, earmarked mainly for ~HK$6 bn annual capex.
Six projects span Shaoguan, Qingyuan, Kaiping, Vietnam, Thailand, and Beihai — covering upstream glass yarn/cloth, high-end low-Dk/Q-glass materials for AI servers, advanced PCB/CCL, and overseas capacity. The Kaiping project is the largest at HK$3.4 bn.
From mid-2027, Kingboard will commission 2.4 million sheets/year of M6-and-above advanced CCL capacity, targeting the Nvidia supply chain — but Citi explicitly notes this expectation is not yet in the financial model. This means → whether Kingboard enters Nvidia's chain on schedule will determine if the valuation story can step up again — and it is the biggest upside risk in the current forecast.
Content is for reference only, not financial advice.