Citigroup raises Kingboard Laminates Holdings target price to HK$100, bullish on AI glass fiber fabric profitability and rising e-glass ASP

Overview

After meeting Grace Fabric (603256.SS), a leading Chinese AI glass fiber fabric company, during its industrial AI infrastructure and robotics research, Citigroup believes Kingboard Laminates Holdings (01888.HK) will benefit from two key themes: first, limited loom supply means electronic-grade glass fiber fabric ASP still has upside in 2H26E; second, AI glass fiber fabric profitability is higher than expected and will contribute more gross profit after 2027E. The report maintains a Buy rating and raises the target price to HK$100.

Core views

The core view is that KBL is shifting from a traditional copper clad laminate cycle recovery to an AI infrastructure materials re-rating story. Citigroup expects 1H26E revenue to grow 80% YoY and net profit to grow 297% YoY, with net margin rising from 9.7% in 1H25 to 21.4%. For AI glass fiber fabric, KBL's three furnaces in phase two are expected to commence production by the end of 2Q26, and it plans to build another eight furnaces by end-2026 or early 2027, bringing 2027E capacity to about 85m meters, exceeding Grace Fabric's about 33m meters. On valuation, KBL's roughly 16x 2027E P/E is significantly below Grace Fabric's roughly 178x, and Citigroup believes there is still room for re-rating.

Analysis framework

The report combines supply chain research, capacity expansion pathways, ASP changes, gross margin forecasts, earnings upgrades, and relative valuation in its assessment. Its key evidence comes from Grace Fabric's feedback on AI glass fiber fabric capacity, pricing, and profit structure, as well as projections of KBL's own furnace expansion, customer expansion, and copper clad laminate ASP cycle.

Methodology notes

• Valuation methodsP/E valuation

  25x 2027E P/E, 2 standard deviations above the historical mean

  The HK$100 target price is based on about 25x 2027E P/E, reflecting volume ramp-up in the new AI glass fiber fabric business from 2H26E and a gross margin expansion cycle.

• Growth valuationPEG

  0.3x PEG

  The target price corresponds to about 0.3x PEG, which Citigroup believes is supported by a three-year EPS CAGR of 90% through 2028E.

• Scenario analysisBull-base-bear scenario valuation

  Bull case HK$120, base case HK$100, bear case HK$40

  The bull case comes from stronger-than-expected demand and profitability for AI-related products; the bear case comes from slower-than-expected gross margin expansion under cost pressure.

• Industry chain researchAI infrastructure supply chain field research

  Validating AI glass fiber fabric ASP, capacity, and loom bottlenecks through Grace Fabric research

  The report uses Grace Fabric's capacity plan, and the higher ASP and profitability of AI glass fiber fabric relative to e-glass, to extrapolate KBL's post-2027E capacity advantage and earnings elasticity.

Asset mapping & comparison

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

• Kingboard Laminates Holdings (01888.HK)

  Research subject; Citigroup maintains Buy and raises target price

  Strengths

  Has about 15% global and over 30% China market share in rigid copper clad laminates; vertically integrated into upstream materials such as glass yarn, glass fiber fabric, and copper foil; AI glass fiber fabric capacity expansion and rising ASP provide earnings elasticity.

  Weaknesses

  Historically still affected by demand cycles in consumer electronics, autos, home appliances, smartphones, and PCs; the share price has already risen sharply YTD, so further valuation support will require earnings delivery.

  Comparison

  Citigroup prefers KBL over Kingboard Holdings, and within the AI infrastructure chain prefers KBL over Han’s Laser and Shengyi Tech; KBL's 2027E AI glass fiber fabric capacity is expected to exceed Grace Fabric's.

  Risks

  Weaker-than-expected demand for AI-related upstream materials, cost pressures leading to slower-than-expected gross margin expansion, and weaker China macro and end-electronics demand.

• Grace Fabric (603256.SS)

  Supply chain research target and comparable company in AI glass fiber fabric

  Strengths

  A leading player in China's AI glass fiber fabric industry; the report expects capacity to rise from about 5m meters in 2025 to 25m meters in 2026E and at least 33m meters in 2027E.

  Weaknesses

  Loom supply remains a bottleneck to expansion, and valuation is already at a high level.

  Comparison

  Grace Fabric's about 178x 2027E P/E is significantly higher than KBL's about 16x; Citigroup uses its capacity and ASP information to validate KBL's re-rating logic.

  Risks

  If capacity construction, customer onboarding, and AI end-demand fall short of expectations, industry pricing and earnings elasticity will weaken.

• Kingboard Holdings (0148.HK)

  KBL's controlling shareholder and related asset within the group

  Strengths

  Holds about 67% equity interest in KBL and indirectly benefits from KBL's earnings upside.

  Weaknesses

  The report explicitly prefers KBL, implying a possible mixed-business structure or valuation discount at the holding-company level.

  Comparison

  Preference ranking is KBL over Kingboard Holdings.

  Risks

  If KBL's earnings delivery falls short of expectations, the holding company will also be affected.

• Han’s Laser (002008.SZ) and Shengyi Technology (600183.SS)

  Comparable equipment and copper clad laminate assets in the AI infrastructure chain

  Strengths

  Benefit from AI infrastructure capex and demand across the PCB/CCL supply chain.

  Weaknesses

  The report gives them lower preference than KBL, implying relatively weaker earnings elasticity or valuation appeal.

  Comparison

  Citigroup prefers KBL over Han’s Laser and over Shengyi Technology.

  Risks

  Volatility in AI infrastructure demand, or weaker-than-expected equipment orders or material prices.

• NVIDIA Corp (NVDA.O) and the ASIC ecosystem

  Downstream demand driver for KBL's penetration into high-end materials

  Strengths

  KBL is entering the NVIDIA and ASIC chip supply chain through high-end glass fiber fabrics such as low-Dk, low-CTE, and Q-glass.

  Weaknesses

  The report does not recommend them directly, but treats them as sources of demand supporting KBL's growth thesis.

  Comparison

  Customer and ecosystem expansion support KBL's re-rating from a traditional copper clad laminate company to an AI materials supplier.

  Risks

  If AI server or ASIC demand slows, KBL's high-end material orders and ASP may come under pressure.

Key data

• Current priceHK$65.60As of 2026-06-12 16:10.
• Target priceHK$100.00Raised from HK$80.
• Expected returnShare price return 52.4%; dividend yield 2.0%; total return 54.5%Corresponding to the Buy rating and 12-month target price.
• Market capitalizationHK$206,715mAs disclosed in the report.
• Earnings forecast revision2026E/2027E/2028E raised by 7%/12%/16%, respectivelyMainly reflects stronger-than-expected profitability of AI glass fiber fabric.
• 1H26E revenue and net profitRevenue HK$17.3bn; net profit HK$3.71bnExpected to rise 80% and 297% YoY, respectively.
• Margins1H26E net margin 21.4%; 2026E blended gross margin 34.6%1H25 net margin was 9.7%; 2025 blended gross margin was 19.6%, versus a 2021 peak of 34.0%.
• ASP changese-glass fabric ASP up 60%-95% YTD; FR4 CCL ASP rose to Rmb180-190/sheetFR4 CCL price in 2025 was about Rmb110/sheet; Citigroup expects full-year 2026 ASP to increase 80% YoY to HK$225/sheet.
• Gross profit contribution from AI glass fiber fabric6.9% in 2026E; 17.4% in 2028EReflecting the structural contribution after upward revisions to AI glass fiber fabric profitability.
• AI glass fiber fabric capacity comparisonKBL about 85m meters in 2027E; Grace Fabric at least 33m meters in 2027EKBL plans to build a total of 12 furnaces by end-2026.
• Relative valuationKBL about 16x 2027E P/E; Grace Fabric about 178x 2027E P/ECitigroup uses this to support further re-rating potential for KBL.
• Catalyst watchPositive, through 2026-08-02The report believes there are short-term positive catalysts.

Impact & implications

If Citigroup's view plays out, KBL's investment thesis will expand from a pure copper clad laminate cyclical recovery to an AI infrastructure materials growth stock: tight e-glass supply-demand supports short-term profits, while AI glass fiber fabric capacity and customer expansion support medium-term earnings upgrades, with valuation potentially moving closer to the upper end of historical cycle peak ranges.

Risks

• Demand for upstream materials such as glass fiber fabric and copper foil used in AI-related products may be faster or slower than expected, both of which could affect share price performance relative to the target price.
• If China's macro growth is slower than expected, it may suppress end-demand in autos, home appliances, smartphones, PCs, and other sectors.
• The strength of China's stimulus policies will affect the recovery in demand for consumer electronics and cyclical products.
• A weaker-than-expected recovery in end-electronics demand will drag on KBL's traditional copper clad laminate and materials businesses.
• If cost pressures are higher than expected, gross margin expansion may be slower than Citigroup's base-case assumptions.
• There is a risk that catalyst-watch events and share price reactions do not materialize as expected.

What to watch

• Whether a positive 1H26E profit alert is released in mid-July 2026.
• Whether 1H26 results in mid-August 2026 deliver on revenue, net profit, and net margin forecasts.
• Whether 2H26E e-glass fabric ASP continues rising by more than Rmb3+/meter.
• The production progress of KBL's three furnaces in phase two, and the construction progress of eight additional furnaces by end-2026 or early 2027.
• Progress in expanding AI glass fiber fabric customers from EMC and Panasonic to Doosan, Shengyi, and TUC.
• Whether gross profit contribution from AI glass fiber fabric rises from 6.9% in 2026E toward 17.4% in 2028E.
• The sustainability of demand from NVIDIA and the ASIC ecosystem for high-end materials such as low-Dk, low-CTE, and Q-glass.