Citi Research has released a report indicating that KB LAMINATES (01888), which has plunged over 60% from its June peak, now presents a timely entry point, with expectations of accelerating profit growth in the second half of this year. The bank anticipates that the company's net profit for the second half will surge by 2.8 times year-on-year (compared to an approximate 2-fold increase in the first half). Based on a price-to-earnings ratio of 22 times (1.5 standard deviations above the historical average), the target price has been lowered by about 29% from HK$130 to HK$92, with the rating adjusted from "Buy" to "Buy/High Risk."

Citi highlights three positive catalysts for the company. First, following the aggressive rise in electronic fiberglass cloth costs since early August, the average selling price of copper-clad laminates (CCL) is expected to jump by approximately 10% to 15% in August. Second, after the company's earnings announcement on August 24, market focus will shift to the expected acceleration of profit growth in the second half of the year. Third, KB LAMINATES initiated production of T-type fiberglass cloth (T-cloth) in August.

The report also notes that due to the company's profit warning falling short of the bank's expectations, coupled with heightened market concerns about major data center operators' AI capital expenditures and Nvidia's (NVDA.US) "closed-loop financing," Citi has lowered its earnings forecasts for KB LAMINATES for the 2026 to 2028 period by 9% to 14%.