Core Viewpoint - Evergrande Securities predicts that the net profit attributable to the parent company of Kingboard Laminates (01888) will reach HKD 2.17 billion, HKD 3.95 billion, and HKD 4.84 billion from 2025 to 2027, representing year-on-year growth of 64%, 82%, and 22% respectively. The company's stock price of HKD 18.78 corresponds to a PE ratio of 27x, 15x, and 12x for 2025-2027, which is lower than the average PE valuation of comparable companies. The company is a leading manufacturer of copper-clad laminates with a vertically integrated supply chain, excelling in cost control and supply chain stability. The report highlights the company's potential for valuation improvement and rarity as an investment target, initiating coverage with a "Buy" rating [1]. Group 1: Company Overview - Kingboard Laminates is a global leader in the copper-clad laminate manufacturing industry with a vertically integrated supply chain. The company was established in Shenzhen in 1988 and began producing paper-based copper-clad laminates in 1989. After its independent listing on the Hong Kong Stock Exchange in 2006, it has maintained a market share of over 20 years, ranking first in the global copper-clad laminate industry [1]. - The company has over 60 factories globally, primarily located in South China and East China, and is expanding into Southeast Asia. It focuses on producing various types of copper-clad laminates, copper foil, resin, and fiberglass yarn [1]. Group 2: Market Demand and Growth - The demand for copper-clad laminates is driven by the robust growth of the PCB industry, which is expected to reach a total value of USD 94.66 billion by 2029, with a compound annual growth rate (CAGR) of 5.2% from 2024 to 2029. The rapid development of AI servers is anticipated to significantly increase the demand for high-end PCB products, thereby boosting the need for high-frequency and high-speed copper-clad laminates [2]. - In 2024, Kingboard Laminates is projected to hold a 14.4% market share in the global copper-clad laminate market, ranking first among competitors. The company offers economical products like paper-based copper-clad laminates to meet the low-cost demands of consumer electronics, while its FR-4 series epoxy glass fiber laminates serve as the core revenue and profit source in mainstream markets [3]. Group 3: Pricing Power and Cost Management - The company possesses strong bargaining power and cost transmission capabilities, with less than 30% of sales coming from its top five customers. Approximately 78% of its revenue is derived from non-related third-party markets, enhancing its pricing power. The current tight supply in the copper-clad laminate industry, combined with rising copper prices, is expected to drive both prices and profitability upward [4]. Group 4: Strategic Expansion - Kingboard Laminates is strategically expanding its upstream raw material production, including a new factory in Guangdong for low-dielectric fiberglass yarn, which is expected to alleviate capacity bottlenecks. The company has also fully launched a new copper foil production capacity of 1,500 tons per month in Guangdong, responding to the increasing demand from data centers and cloud computing. This vertical integration helps mitigate risks associated with raw material price fluctuations and opens up growth opportunities in high-value low-dielectric fiberglass yarn [5].