Electronic materials volume and price both rise; Nan Ya Plastics' July revenue hits a 49-month high

Overview

The report focuses on Nan Ya Plastics Corp's July 2026 operating data and subsidiary NYPCB's second-quarter results. The electronic materials business improved simultaneously in volume, capacity utilization, selling prices, and the share of high-end products, driving growth across the company's four major business segments and lifting July total revenue to a 49-month high. J.P. Morgan believes that multi-year tight supply of printed circuit board materials and the transition to AI-grade specialty electronic materials will create a sustained earnings upcycle, and therefore reiterates its Overweight rating.

Core views

The core view is that the earnings improvement in electronic materials is structural rather than purely seasonal. July electronic materials revenue grew 85% YoY, well above the 39% growth in 1H26, and its MoM increase outperformed Elite Materials and ITEQ, while only slightly lagging TUC. Growth came from both volume and selling prices, capacity utilization of major products exceeded 90%, and certification and ramp-up of high-end products continued to progress. NYPCB benefits from demand for AI, data centers, servers, ASICs, and storage, with tight supply of advanced substrates, and is expanding high-end capacity through debottlenecking existing plants and building a new smart factory. The report expects the electronic materials business to reach a 30% operating margin in 2027, with company ROE exceeding 30% over the next two years and approaching 36% in 2028.

Analysis framework

The report forms its judgment by combining monthly segment revenue and volume-price breakdowns, peer MoM comparisons, NYPCB quarterly results and capacity utilization, product mix upgrade progress, capital expenditure plans, and multi-year financial forecasts. Valuation uses a one-year forward price-to-book methodology, with the uplift in the ROE midpoint from the transition to AI-grade materials serving as the basis for raising the valuation multiple.

Methodology notes

• Valuation methodsOne-year forward price-to-book methodology

  Determine the target price by multiplying the target price-to-book ratio by forward book value per share

  The December 2027 target price of NT$300 is based on a 5x one-year forward P/B, higher than the previous 4x, reflecting the expectation that 2028 ROE will rise significantly from its historical midpoint to nearly 36%.

• Earnings quality analysisVolume-price breakdown

  Break down the MoM change in revenue into volume and average selling price contributions

  July electronic materials revenue increased by NT$2.3bn MoM, with 63% from volume growth and 37% from average selling price improvement, showing that growth does not rely solely on price hikes.

• Operating analysisSegment and capacity utilization analysis

  Assess margin leverage by combining business segments, product structure, and capacity utilization

  Capacity utilization of major electronic materials products has exceeded 90%, and high-end products continue to ramp up; NYPCB's ABF substrate utilization is 80% to 85%, while BT substrate utilization is close to 100%, supporting continued improvement in revenue and margins.

• Relative analysisPeer growth comparison

  Compare monthly revenue growth rates among copper-clad laminate and electronic materials peers

  Nan Ya Plastics Corp's electronic materials revenue grew 15% MoM, higher than Elite Materials' 8% and ITEQ's 13%, and only slightly below TUC's 21%.

Asset mapping & comparison

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

• Nan Ya Plastics Corp (1303.TW)

  Core recommended name

  Strengths

  Electronic materials revenue reached a record high, volume and prices improved simultaneously, and utilization of major products exceeded 90%; the company covers the full industry chain including copper-clad laminates, copper foil, epoxy resin, glass fiber, and printed circuit boards, and is upgrading toward AI-grade specialty materials.

  Weaknesses

  As of 2025, more than 90% of electronic materials sales still came from lower-margin commodity-grade products, and traditional MEG, BPA, plastics, and polyester businesses remain cyclical.

  Comparison

  July electronic materials revenue grew 15% MoM, outperforming Elite Materials' 8% and ITEQ's 13%, but below TUC's 21%.

  Risks

  Weak macro demand, tariffs, slowing AI capital expenditure, failure of price hikes or new product certification, and declining market share in electronic materials.

• Nan Ya PCB Corp (NYPCB, 8046.TW)

  Core electronic materials subsidiary and growth driver

  Strengths

  Demand for AI and data center products is strong, accounting for approximately 60% of ABF substrate sales; BT substrate utilization is close to 100%, second-quarter revenue and margins improved significantly, and the company plans to invest NT$46.8bn in an advanced substrate plant.

  Weaknesses

  The specific capacity and production start date of the new plant have not yet been disclosed, and current utilization of ABF substrates remains at 80% to 85%.

  Comparison

  Second-quarter revenue grew 42% YoY and 21% MoM, and operating margin rose to 21%, the highest since 1Q23.

  Risks

  Cooling demand for advanced substrates, delays in capacity expansion execution, capital expenditure returns falling short of expectations, and lagging progress in high-end product certification.

Key data

• July electronic materials revenueNT$17.4bnReached a record high, up 15% MoM and 85% YoY.
• MoM increase in electronic materialsNT$2.3bnVolume contributed 63%, and average selling price improvement contributed 37%.
• Capacity utilization of major productsOver 90%Utilization rates for epoxy resin and copper foil both improved MoM.
• NYPCB second-quarter revenueNT$13.6bnUp 21% MoM and 42% YoY.
• NYPCB second-quarter operating profitNT$2.9bnUp 114% MoM, with an operating margin of 21%.
• NYPCB investment in new advanced substrate plantNT$46.8bnThe company's largest investment project in history, targeting AI, high-performance computing, and advanced packaging applications.
• 2027 adjusted EPS forecastNT$17.75The report states that its forecast is 25% above market consensus.
• 2027 electronic materials operating margin target30%Jointly driven by product mix upgrade, higher utilization, and price increases.
• 2028 ROE forecast35.5%Close to 36%, significantly above the average of approximately 9% over the past decade.
• Target price and current priceNT$300.00 / NT$178.50The target price horizon is December 2027, implying approximately 68.1% upside.

Impact & implications

The high YoY growth, simultaneous volume and price increases, and high utilization in the electronic materials business indicate that earnings leverage is being released. If certification and capacity expansion for high-end products such as AI-grade copper-clad laminates, specialty glass fiber, and advanced substrates proceed smoothly, product mix improvement will lift electronic materials margins and company ROE significantly above historical levels, thereby supporting a higher valuation multiple. Meanwhile, MoM improvements in chemicals, plastics, and polyester provide broader segment support for this round of revenue growth, but the long-term valuation rerating still mainly depends on the delivery of AI-related electronic materials.

Risks

• Weak macroeconomic conditions or tariff impacts lead to lower-than-expected demand for MEG and BPA.
• Growth in global artificial intelligence and data center capital expenditure slows.
• Price increases for printed circuit board and substrate products fail to be successfully implemented.
• Customer certification of next-generation electronic materials fails or is delayed.
• Market share in electronic materials declines.
• There is uncertainty regarding the capacity, production start date, and investment returns of NYPCB's large-scale advanced substrate investment.

What to watch

• Whether monthly electronic materials revenue can maintain strong YoY and MoM growth.
• Capacity utilization and price changes for epoxy resin, copper foil, copper-clad laminates, and glass fiber.
• Customer certification, shipments, and revenue share of high-grade and specialty electronic materials.
• NYPCB's revenue growth, margin improvement, and progress in debottlenecking existing plants in 2H26.
• Upgrade and production start-up of high-grade product lines at the Jinxing plant.
• Capacity, construction timetable, and equipment investment details for the NT$46.8bn new advanced substrate plant.
• Whether the electronic materials business can achieve a 30% operating margin in 2027.
• Whether company ROE can rise above 30% over the next two years and support a 5x forward P/B.