CITIC SEC: Copper clad laminate prices continue to rise, optimistic about future profit growth elasticity.

CITIC SEC released a research report stating that since April, many leading copper foil companies have intensively issued price increase notices, and the profit ability of copper foil is steadily increasing. By analyzing the changes in prices upstream and downstream, CITIC SEC believes that the profit ability of copper foil in Q1 2026 is expected to remain stable, with the potential to begin to rise in Q2 2026. From the perspective of industrial logic, the clear logic of traditional copper foil exceeding price increases in favorable cycles, profit margin improvements are expected to be gradually reflected in the first half of 2026, copper foil is a sector that combines price increases and AI volume logic, and there is potential for larger-than-expected price increases and duration in Q2 to the second half of the year. Key points of CITIC SEC: Event overview: The copper foil industry enters a new phase of intensive price increases. Since early April, many leading copper foil companies have issued price increase notices: 1) On April 3, Jiantao announced a price increase of 10% for sheet metal + PP, 2) On April 7, Goldenmax International announced a 10% increase in copper foil prices, and specifically mentioned that three major raw material prices are high and difficult to decrease, with uncertain external factors, and there is the possibility of further price increases for copper foils, 3) On April 9, Panasonic Electric issued a price increase notice, with price increases ranging from 15%-30% for different types of products, to be officially implemented from May 1. 4) In addition, according to PCB World, Taiflex, Taitrong, and Lianmao have recently started to implement price increases, with increases of about 10% (starting in Q2), 20%-40% (starting from April 25), and 10% (starting from April). At the same time, AI-related copper foil boards have also begun to increase in price, with Taiflex indicating that M6+ products will increase by 15%, and the industry is expected to follow suit. In the short term, with the background of significant increases in raw material prices, the certainty of CCL price increases is high, and the gross profit margin of Q1 2026 is expected to remain stable, with potential for improvement in Q2 2026. In the recent market, concerns are mainly focused on the impact of sharp increases in raw material prices on the profit ability of copper foil. As of April 9, the price of 7628 electronic cloth has increased by nearly 40% since the beginning of the year. The price of epoxy resin has increased by about 30% since March, but the price of copper has remained stable since the beginning of the year. Although the pace of price increases for copper foil is slower compared to upstream, we have also observed that the price of FR4 copper foils has generally increased by more than 15% since the beginning of the year, with some leading companies increasing by more than 20%. In summary, we estimate that the profit ability of copper foil in Q1 2026 is expected to remain stable. If this round of copper foil price increases lands and subsequent costs/prices remain stable, we estimate that the profit ability of copper foil in Q2 2026 is expected to increase. In the medium to long term, the logic of traditional copper foil exceeding price increases in favorable cycles is clear, and the gross profit margin still has the potential to increase by 10 percentage points. Referencing the "Electronic Industry Copper Foil Industry Tracking Report - Copper Foil Expected to Continue to Increase in Price, Bullish on Future Gross Margin and Performance Elasticity" (January 28, 2026), we believe that with the background of upward demand and continuous increase in raw material prices, the copper foil industry is expected to undergo multiple rounds of increased prices, with a profit margin increase potential of more than 10 percentage points. Due to the sharp increase in raw material prices, the price increases of copper foils in late 2025 and Q1 2026 are mainly driven by price increases, and as the rate of increase in raw material prices slows down, we believe that the profit margin increase brought by exceeding price increases for copper foils is expected to gradually manifest in the first half of 2026, with the potential for exceeding expectations in price increases and duration from Q2 to the second half of the year. We remain optimistic about the future accelerated release of profits for traditional copper foil industry. Risks: The risk of copper foil price increases being lower than expected, the risk of downstream demand growth being lower than expected, the risk of raw material price increases being greater than the increase in product selling price, market competition intensification risk, risk of high-end copper foil iteration being lower than expected, and geopolitical risk. Investment strategy: In the short term, despite the significant increase in raw material prices, leading copper foil manufacturers continue to push for price increases with strong bargaining power, and the gross profit margin is expected to remain stable. Looking ahead, with the clear logic of traditional copper foil exceeding price increases in favorable cycles, the profit margin increase is expected to gradually manifest in the first half of 2026. Copper foil is an area with both price increase and AI volume logic, and there is potential for larger-than-expected price increases and duration from Q2 to the second half of the year. We are optimistic about the future accelerated growth of leading copper foil manufacturers.