台湾科技：ABF 与 BT 基板 10 月起涨价迹象更明朗-Taiwan Technology_ Better sign of ABF & BT substrate pricing hike from October; Buy on NYPCB with new TP of NT$310

Summary of Conference Call Notes Industry Overview - The conference call discusses the Taiwan ABF (Ajinomoto Build-up Film) and BT (Bismaleimide Triazine) substrate industry, focusing on pricing trends and supply chain dynamics. Key Companies Mentioned - NYPCB (Nanya PCB) - Unimicron Technology - Kinsus - Ibiden Core Insights and Arguments 1. Pricing Hike Expectations: - A pricing hike for both ABF and BT substrates is anticipated in October, driven by a ~30% increase in T-glass related raw material costs, which accounts for ~5% of ABF and ~15% of BT substrate COGS [1][4] - Expected pricing increases: ABF substrate by 10%+ and BT substrate by 15%+ [1][4] 2. Demand and Supply Dynamics: - Solid demand for AI ABF substrates is expected, aligning with capacity expansion plans from Ibiden [2] - A supply shortage for ABF and BT substrates is projected due to lengthening raw material lead times and low inventory levels among suppliers [4][7] 3. Earnings and Price Target Revisions: - NYPCB's price target raised from NT$280 to NT$310, reflecting a positive outlook on revenue and gross margin improvements [3][14] - Unimicron's price target increased from NT$130 to NT$144, maintaining a Neutral rating due to high exposure to LTA business [3][20] 4. Market Share and Competitive Position: - NYPCB is expected to benefit significantly from the pricing uptrend, with a projected earnings CAGR of 175% from 2025 to 2027 [21][22] - Unimicron holds a 27% market share in ABF substrates but may lose market share in the AI server PCB segment due to production yield issues [24] 5. Long-term Supply Constraints: - T-glass supply is expected to remain tight until new capacity comes online in 1Q27, leading to sustained pricing pressure [11][12] - The shift in T-glass usage from BT to ABF substrates is anticipated due to higher demand from AI applications [8][9] Additional Important Points 1. Raw Material Shortages: - The shortage of T-glass could limit growth in BT applications and impact AI ASIC shipments, as T-glass is crucial for high-layer count ABF substrates [8][10] 2. Earnings Estimates: - NYPCB's 2025 earnings estimate revised down by 7% due to higher production costs, despite a 2% increase in revenue expectations [14] - Unimicron's earnings estimates for 2025-2027 revised up by 1-7% based on improved pricing outlook [19][20] 3. Risks and Methodology: - Key risks for NYPCB include slower-than-expected demand recovery and pricing upgrades [23] - Unimicron faces risks related to market share loss and demand recovery in the PC segment [25] 4. Valuation Metrics: - NYPCB's target price based on a 3.8x 2026E P/B, while Unimicron's target price based on a 2.1x blended 2026E P/B [22][25] This summary encapsulates the critical insights from the conference call, highlighting the dynamics of the ABF and BT substrate market, the performance outlook for key players, and the implications of raw material shortages on future growth.