The analyst rating for KB LAMINATES (01888.HK) was influenced by several factors outlined in the Citi research report. The company's 1H25 net profit growth of 28% to HKD933 million was in line with Citi's forecast, which is a positive indicator. However, the core earnings growth of only 10% YoY to HKD860 million fell short of expectations due to rising costs outpacing average selling prices.
Despite this shortfall in core earnings, Citi raised its target price for KB LAMINATES from HKD14 to HKD20.5, primarily due to the company's anticipated entry into Nvidia's supply chain by the end of 2025. This potential development is seen as a significant growth opportunity, prompting Citi to adjust its stock preference within the Chinese copper-clad laminate supply chain, favoring KB LAMINATES over its previous top pick, SYTECH.
