Analysts at Citi have released a research report reiterating their 'Buy' rating on KINGBOARD HLDG (HKEX: 00148) and have initiated a 30-day catalyst watch on the stock.

The firm has significantly raised its earnings per share forecasts for the company for the years 2026 through 2028 by 16% to 28%. Consequently, Citi has substantially increased its sum-of-the-parts-based target price from HK$89.6 to HK$202 to reflect these upgraded earnings estimates. Additionally, the assumed holding company discount has been narrowed from the previous 45-50% range to 20%.

The frequent upward revisions to the earnings forecasts for KINGBOARD HLDG's 62%-owned subsidiary, Kingboard Laminates Holdings Ltd (HKEX: 01888), are cited as a primary reason. This is due to higher-than-expected average selling price assumptions for copper-clad laminate and electronic glass fiber fabric. Citi believes this positive impact is sufficient to fully offset the recent dilution effect from Kingboard Laminates' share placement, which reduced the parent company's stake from 67% to 62%.

Citi anticipates that KINGBOARD HLDG will structurally evolve into an almost pure-play printed circuit board and copper-clad laminate stock in the AI era. The combined contribution of these two segments to the group's expected total net profit is projected to surge from 63% in 2025 to 87% by 2028.

The bank expects KINGBOARD HLDG to release a strong profit alert for the first half of 2026 next month. It forecasts the company's H1 2026 net profit to grow robustly by 55.6% year-on-year to HK$4.016 billion, with revenue increasing by 33% to HK$28.739 billion. Profit growth in the second half of the year is predicted to accelerate further to 175%, reaching nearly HK$5.01 billion.

Key drivers for this strong growth include an anticipated tripling in the net profit of subsidiary Kingboard Laminates, making it the largest profit contributor this year. Secondly, the printed circuit board business is expected to gain market share and expand its EBIT margin due to vertical integration advantages, ensuring upstream supply amid current CCL shortages. Furthermore, the chemical business's EBIT margin is also projected to expand, supported by a surge in oil prices during the second quarter linked to US-Iran tensions.

Additionally, the share placement of Kingboard Laminates completed on June 16 is expected to increase KINGBOARD HLDG's cash per share by HK$10.6. The net gearing ratio is forecast to decrease from 28% in 2025 to 15% in 2026, which will help partially fund the company's annual capital expenditure plan exceeding HK$6 billion for the 2026-2027 period.