覆铜板-定价前景向好，AI 项目订单超预期；上调联茂、台光电目标价约 15%，给予买入评级CCL_ Better pricing outlook and the stronger-than-expected AI projects orders; Buy on EMC_TUC, with ~15% TP upward revision

Summary of Conference Call Notes Company and Industry Overview - Companies Involved: Elite Material Co., Ltd. (EMC) and Taiwan Union Technology Corp. (TUC) - Industry: High-end Circuit Carrier Laminate (CCL) market, particularly focusing on AI server components and high-speed applications Key Points and Arguments Revenue Growth - EMC reported January revenue of NT$10,863 million, reflecting a 25% month-over-month (MoM) and 55% year-over-year (YoY) increase, while TUC reported NT$3,533 million, showing a 9% MoM and 75% YoY increase. These figures represent 41% and 39% of Bloomberg consensus for Q1 2026 revenue, indicating a stronger-than-expected performance for both companies in Q1 2026 [1][2] Pricing Dynamics - The solid revenue growth for high-end CCL players is attributed to stronger-than-expected pricing hikes across both mid- to low-end CCL products (estimated +10-15% quarter-over-quarter (QoQ) in Q1 2026) and high-end CCL products (estimated +5-10% QoQ) [2] Demand and Market Share - There is a gradual improvement in demand for AWS T3, with a total addressable market (TAM) projected to exceed US$700 million in 2026. T3 CCL orders have been improving weekly since December 2025, with mass production expected to start in late March/early April, which should enhance momentum in Q2 2026. EMC and TUC are expected to capture 70% and 30% of the total AWS AI server CCL market share in 2026, contributing 16% and 20% to their respective revenues [3][4] Capacity and Utilization - Both EMC and TUC are expected to experience a smooth ramp-up of new production capacity with minimal impact on gross margins during the transition. Demand is anticipated to remain strong not only from AI server customers but also from low Earth orbit (LEO) and general server customers, supporting high utilization rates and a favorable gross margin outlook [4][5] Industry Outlook - The high-end/high-speed CCL industry is viewed as undersupplied, particularly for high-quality products. EMC and TUC are expected to maintain full capacity utilization in the foreseeable future, with improving pricing and product mix leading to continued revenue and profitability upside. Proactive pricing strategies initiated in the second half of 2025 are expected to bolster financial performance in 2026 and beyond [5] Earnings Estimates - EMC: 2025 earnings estimate revised down by 1% due to rising copper prices, with 2026 revenue estimates revised up by 4%. Gross margin forecasts for 2025/26/27 were revised down by 0.2/0.6/0.6 percentage points (ppt) [10] - TUC: 2026/27 earnings estimates revised up by 5%/1% despite ongoing copper price increases, with gross margin forecasts revised down by 0.8/0.5 ppt [13] Price Targets - EMC: Price target revised to NT$2,585 (from NT$2,250), implying a 33% upside based on a 25x P/E multiple [17] - TUC: Price target revised to NT$740 (from NT$650), implying a 42% upside based on a 20x P/E multiple [28] Risks and Considerations - Key downside risks for both companies include: - Potential replacement of high-end smartphone HDI designs by RCC - Rising trade tensions affecting smartphone and server shipments - Increased competition from mainland China peers [23][26] Conclusion - Both EMC and TUC are positioned favorably within the high-end CCL market, with strong revenue growth driven by pricing power and demand for AI-related products. The proactive strategies and market dynamics suggest a positive outlook for their financial performance in the coming years.