Bank of America Securities has released a research report stating that specification upgrades and demand growth for copper-clad laminates (CCL) used in printed circuit boards (PCBs) remain on track, and the bank maintains a positive view on continued specification enhancement and strong demand in 2027 to 2028. It believes that concerns related to CPO adoption have largely been reflected in CCL stock valuations.

The bank reiterates its "Buy" rating on KB Laminates (01888), favoring its strong pricing cycle and high-end product mix improvement. It also sees attractive opportunities in Taiwan Union Technology (2383.TW) and ELITE MATERIAL (6274.TW), both rated "Buy", and has raised earnings forecasts while maintaining target prices of NT$8,200 and NT$2,600 respectively.

For mainland A-share Shengyi Technology (600183.SH), Bank of America Securities holds a relatively conservative view due to lower growth forecasts and less attractive valuation. It has raised EPS forecasts for the next two years by 21% and 18% respectively, lifted the target price from RMB 83 to RMB 99, and reiterated its "Underperform" rating.

The bank notes that specification migration is clear across multiple areas including AI GPU/ASIC, network switches, and optical modules. CCL revenue growth will be driven by capacity expansion, product mix improvement, and cost-push price increases, with gross margins also expected to expand. The pricing environment remains benign, and rising copper foil and fiberglass cloth costs are expected to be passed through.

The bank believes that hydrocarbon resin and PTFE solutions will coexist and complement each other at the M9/M10 grade CCL level, with Rubin Ultra customer feedback and specifications being key observation points from late 2026 to early 2027. Bank of America Securities also reiterates its "Buy" rating on Doosan (000150.KS), favoring its NVIDIA GPU and Amazon switch positioning.

The bank provides scenario analysis assuming future CCL price increases are mainly driven by fiberglass cloth tightness and that copper foil and resin input costs remain relatively stable. Assuming a 100% CCL price increase, KB Laminates' gross margin could expand by approximately 28 percentage points, with EPS growth exceeding 200% compared to 2026 levels.

Specifically, assuming a pre-increase gross margin of approximately 20% and that price increases can be fully transmitted to earnings growth, a 100% CCL price increase could boost KB Laminates' EPS by 217%. Even if CCL prices only rise by 20% or 40%, it could still boost its EPS by 67% and 105% respectively.

Bank of America Securities adds that year-to-date, low-end CCL and high-end CCL prices have already increased by more than 40% and more than 20% respectively. Due to expectations of continued copper price increases from the end of this year into next year, further CCL price hikes cannot be ruled out. In terms of fiberglass cloth, under supply shortages, second-generation low dielectric fiberglass cloth (Low Dk2) has potential for price increases, while low-end electronic fiberglass cloth prices remain on an upward trend, potentially reaching RMB 15 to 16 per square meter by the end of this year. The bank believes these conditions all point to a benign pricing outlook for CCL producers.