Nan Ya Plastics (1303): UBS starts Nan Ya Plastics at Buy on a CCL price upcycle and AI-materials mix upgrade

Overview

UBS initiates coverage of Nan Ya Plastics with a Buy and NT$300.00 target price. The central thesis is that the company’s integrated CCL supply chain, a supply-driven conventional CCL pricing cycle, and a shift toward higher-value AI-server materials can turn electronic materials into the dominant earnings driver.

Core views

UBS argues that Nan Ya Plastics' core CCL business has not been fully reflected in its share-price performance, which it believes has been driven largely by the value of listed holdings. The report expects electronic-materials revenue to rise from 46% of group revenue in 2025 to 59% in 2026E and 69% in 2027E, accounting for nearly all EBIT. Within electronic materials, CCL is projected to rise from 24% of segment revenue in 2025 to 31% in 2026E and 43% in 2027E. UBS forecasts 2026E/2027E net profit of NT$108,755m/NT$158,805m, respectively 15%/23% above consensus, mainly because its EBIT forecasts are 21%/30% above consensus. The first earnings driver is a conventional CCL supply-driven price upcycle. UBS forecasts blended CCL ASP growth of 90% in 2026E and 85% in 2027E, comprising roughly 80%/55% from supply-led price hikes and 10%/30% from mix improvement. It cites conventional CCL prices rising nearly 100% year-to-date, monthly price increases of 5-10% for mid- and low-end products, and close to 90% utilization for CCL and glass cloth. The report attributes tight supply to capacity moving to high-end AI materials, greater CCL consumption from more complex AI-server and networking PCBs, and bottlenecks in electronic-grade glass cloth and copper foil. Because new weaving equipment has lead times of one to two years, UBS expects tight industry conditions to persist at least through 2027E. It also notes that announced industry increases may only reach realized ASP as customer contracts reset or prices are renegotiated. The second driver is an AI-led upgrade toward low-loss CCL. More powerful AI chips and faster data transmission require materials that reduce signal loss, making M8/M9 and other higher-end laminates increasingly important in AI servers, switches and rack interconnects. UBS expects M6+ CCL volume to move from zero in 2025 to 2% in 2026E and 5% in 2027E, while its revenue contribution rises from 8% of CCL revenue in Q3 2026E to 25% in 2027E. UBS models M6 and higher-grade products at ASPs 3-10 times conventional FR4, producing 10% and 30% year-on-year increases in blended ASP in 2026E and 2027E. The firm expects NYP to begin M7/M8 shipments while M9/M10 products remain in customer qualification. It flags a potential delay in Nvidia's Kyber rack architecture beyond Rubin Ultra as a factor that could defer part of the material-upgrade cycle, although larger ASIC architectures such as Google TPUv9 and Amazon Trainium 4 could partly offset that effect from late 2027. UBS sees NYP's vertical integration as a differentiator in converting higher prices into profit. The company produces or internally sources glass yarn, glass fibre, epoxy resin, copper foil and CCL, which UBS believes provides supply security, faster formulation changes and customer qualification, and better cost control during upstream shortages. A comparison cited by UBS shows H1 2026 operating margins of 26% for fully integrated Kingboard Laminates, 17% for NYP and 11% for externally sourced ITEQ, although product mixes differ. Based on historical sensitivity, UBS estimates a US$1.00 increase in CCL ASP adds US$0.45 per piece to operating profit in 2026E and US$0.37 in 2027E. It therefore forecasts CCL operating margin to rise from 4.1% in 2025 and about 17% in H1 2026 to 23% in 2026E and 30% in 2027E. The Nittobo partnership is part of the high-end CCL ramp. Under the November 2025 strategic partnership, Nittobo supplies long-term next-generation low-Dk glass yarn and NYP provides specialty glass-cloth weaving capacity. UBS believes this arrangement reduces a scarce-material bottleneck and should speed development and qualification of advanced low-loss CCL. The report notes a target for around 20% of Nittobo's specialty glass fibre cloth supplied to the market by 2027 to be woven with NYP's assistance. Outside CCL, UBS expects the MEG-ethylene spread to turn positive in Q3 2026E, with 2026-2027E petrochemical spreads supported by geopolitical supply tightness. It nevertheless considers petrochemical concerns the principal reason the market discounts NYP's improving CCL economics. UBS estimates that CCL and petrochemicals will contribute about 30% of earnings in 2027E and around 50% by 2030E, versus an implied core-business value currently equal to 33% of market capitalization. UBS values NYP through a sum-of-the-parts framework: NT$1,150 for its 61% stake in Nan Ya PCB; 19x 2027E EV/EBITDA for non-PCB electronic materials; 10x 2027E EV/EBITDA for chemicals, plastics and polyester; and UBS targets, market values or peer multiples for listed investments. Applying a 10% holding-company discount produces the NT$300.00 target, equivalent to 15x 2027E P/E, 0.3x 2027E PEG and 4.4x 2027E P/BV. UBS notes that NYP trades at 12x 2027E P/E and 3.6x 2027E P/BV, compared with 36x and 8.2x, respectively, for electronic-materials peers.

Analysis framework

UBS builds its thesis from CCL supply-demand conditions, AI-material specification trends, NYP’s vertical integration and operating-margin sensitivity to ASP. It then compares profitability and valuation with peers, forecasts earnings against consensus, and applies a sum-of-the-parts valuation to NYP’s operations and listed holdings.

Methodology notes

• Industry AnalysisSupply-demand framework

  CCL supply-demand analysis

  UBS links capacity migration, raw-material bottlenecks, equipment lead times and rising AI-related material demand to continued conventional CCL price increases.

• Competition & strategyValue chain analysis

  Vertically integrated CCL value chain

  The report assesses how in-house production of key upstream materials may improve supply security, qualification speed, cost control and profit capture.

• Valuation methodsSOTP (Sum-of-the-Parts) Valuation

  Sum-of-the-parts valuation

  UBS values electronic materials, petrochemicals and listed holdings separately, then applies a 10% holding-company discount to derive the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Nan Ya Plastics (1303.TW)

  Primary covered company; UBS expects CCL price increases, advanced AI CCL mix and vertical integration to drive earnings growth.

  Strengths

  Integrated production across key CCL inputs, exposure to rising CCL prices, and a Nittobo partnership supporting low-Dk glass supply.

  Weaknesses

  Legacy chemicals, plastics and polyester businesses may weigh on margins and valuation.

  Comparison

  UBS cites NYP at 12x 2027E P/E and 3.6x 2027E P/BV versus electronic-materials peers at 36x and 8.2x.

  Risks

  CCL pricing could reverse, advanced AI CCL qualification could be slower, or chemicals and polyester could weaken further.

• Nan Ya Printed Circuit Board (8046.TW)

  NYP's 61%-owned subsidiary and a material component of UBS's sum-of-the-parts valuation.

  Strengths

  Its UBS price target of NT$1,150 is incorporated into NYP's valuation.

• Nanya Technology (2408.TW)

  NYP holds a 29% stake; UBS includes its expected equity-income contribution in NYP's investment income forecast.

  Strengths

  UBS expects higher equity-income contribution to support NYP's investment income.

Key data

• CCL ASP growth forecast90% in 2026E; 85% in 2027EYear-on-year; approximately 80%/55% from pricing and 10%/30% from product mix.
• CCL operating margin4.1% in 2025; 23% in 2026E; 30% in 2027EH1 2026 was approximately 17%.
• M6+ CCL revenue contribution8% in Q3 2026E; 25% in 2027EHigher-grade product ASPs are modeled at 3-10x conventional FR4.
• 2026E/2027E net profitNT$108,755m / NT$158,805mUBS forecasts are 15%/23% above consensus.
• 2027E valuation12x P/E and 3.6x P/BVCompared with 36x P/E and 8.2x P/BV for electronic-materials peers, according to UBS.

Impact & implications

UBS believes the earnings mix is shifting toward higher-growth, higher-margin electronic materials, particularly CCL. In its view, sustained conventional CCL pricing and successful qualification of advanced AI CCL could narrow the valuation discount attributed to NYP's legacy petrochemical exposure.

Risks

• A reversal in CCL pricing caused by faster supply additions or weaker demand.
• Slower customer qualification or ramp-up of NYP's high-end AI CCL products.
• Further weakening in chemicals and polyester businesses.

What to watch

• Monthly CCL price increases, contract resets and the durability of tight glass-cloth and copper-foil supply through 2027E.
• Customer qualification and potential high-end AI CCL order wins, including a possible catalyst around 31 December 2026.
• The pace of M7/M8 shipments and M9/M10 customer qualification.
• Progress of the Nittobo partnership and availability of next-generation low-Dk glass yarn.
• MEG-ethylene spread recovery and petrochemical margin performance.