UBS has released a research report stating that AI demand is tightening supply for copper-clad laminates and upstream raw materials. As the world's largest supplier of traditional FR4 copper-clad laminates, KB Laminates (01888) is expected to be a major beneficiary of this trend. The firm initiated coverage with a Buy rating, viewing the stock's roughly 60% decline from its June high as an attractive opportunity, with a target price of HK$58.

The report indicates that even if the current upcycle for traditional copper-clad laminates ends, the company's earnings are not expected to decline as sharply as in past cycles. This is attributed to its expansion into AI-related upstream materials and copper-clad laminate businesses, which will introduce new structural growth drivers. Its vertically integrated business model is also highlighted as a key competitive advantage.

UBS believes KB Laminates offers exposure to both a short-term profit upcycle for traditional copper-clad laminates and long-term growth opportunities from the AI materials business. The firm projects that traditional FR4 copper-clad laminates will remain the primary profit driver for 2026-2027, forecasting a net profit of approximately HK$6.654 billion in 2026 and HK$10.465 billion in 2027. Meanwhile, specialty or AI-related fiberglass fabric, ultra-low profile copper foil, and high-end copper-clad laminates are expected to begin making a more significant contribution from 2027 onwards.