Morgan Stanley: Gives KB LAMINATES (01888) an "Overweight" rating with a target price of HK$75

Morgan Stanley: Gives KB LAMINATES (01888) an "Overweight" rating with a target price of HK$75 Morgan Stanley released a research report stating that KB LAMINATES (01888)'s feedback at the China BEST conference indicated that capacity growth for printed circuit board (PCB) fiberglass cloth and copper foil is constrained by equipment supply. The company expects the fiberglass cloth shortage to continue until 2027 and sees good potential for price increases; the bank gives KB LAMINATES an "Overweight" rating with a target price of HK$75. The bank noted that KB LAMINATES expects to add 450 to 500 Toyota looms in 2026 and about 1,100 more in 2027 (about 100 per month). Surface treatment equipment for high-end HVLP copper foil is mainly procured from Mitsufune, with lead times currently about 9 to 12 months; for lower-grade copper foil products, the company may consider procuring equipment from local suppliers. The price increase for thin E-glass (1080) in September was larger than that for thick E-glass (7628), while in August the price increases for both were roughly similar. The bank noted that KB LAMINATES expects to add 4 special fiberglass cloth (LDK1/2/CTE) production lines from mid-2026, and 2 more new lines by the end of the year; the special fiberglass cloth has already been certified by 6 new CCL customers. HVLP1/2/3 copper foil has passed customer certification, and the company is attempting HVLP4. In terms of gross margin, LDK1 is about 40%, LDK2 about 50%, and low CTE over 50%.