Bank of America Securities has initiated coverage on KB Laminates (01888.HK) with a "Buy" rating and a price target of HK$53. This valuation reflects a forward price-to-earnings (P/E) ratio of 12 times for the period from the second half of this year to the first half of next year, representing a 0.5 standard deviation premium over the historical average trading multiple of 9 times.

The bank noted that the stock is currently trading at a forward P/E ratio of approximately 7 times for the next fiscal year, which is below its historical average. Bank of America Securities believes that KB Laminates will benefit significantly from copper-clad laminate (CCL) price increases and spillover effects from a shortage of high-end fiberglass fabric, leading to a substantial expansion in earnings.

It forecasts that the company's revenue and earnings will achieve compound annual growth rates of 44% and 62%, respectively, from 2026 to 2028. The bank's earnings per share (EPS) estimates for KB Laminates for the years 2026, 2027, and 2028 are HK$2.67, HK$6.16, and HK$7.01, respectively.

Bank of America Securities stated that KB Laminates' vertical integration capabilities have significantly enhanced its earnings sensitivity to upstream material shortages and price increases. The CCL price hikes in 2025 primarily reflected rising copper prices, whereas more frequent increases since the start of 2026 have been largely driven by a shortage of fiberglass fabric.

The bank pointed out that the structural imbalance in the fiberglass fabric industry, caused by rapidly increasing AI demand and long equipment lead times, is expected to sustain this upcycle through 2027. The bank anticipates that KB Laminates' average selling price (ASP) for CCL will expand by 130% and 40% this year and in the first half of next year, respectively. Its analysis indicates that a 100% expansion in CCL ASP would boost the company's CCL gross margin by 28 percentage points this year, generating a 200% increase in EPS.