[Top 100 Insight] KB Laminate Holdings (01888.HK) has plunged 65% from its peak—has the PCB industry cycle topped out?

On July 24, amid a broadly weak Hong Kong market, the PCB sector came under significant pressure, becoming one of the hardest-hit segments in today’s market correction.

Among them, KB Group Holdings$KB LAMINATES (01888.HK)$plummeted, closing down 7.32% at HK$37.72 per share. Since peaking at HK$107.2 on June 25—the stock’s all-time high—it has now fallen a cumulative 64.81%, far exceeding a 50% decline.

Behind this sharp price correction is a fundamental divergence in the market’s assessment of where the PCB industry stands in its cycle. Bullish and bearish views have completely split, with pessimistic sentiment continuing to intensify—becoming the core factor weighing on the sector.

Bearish arguments center primarily on three points:First, concerns about long-term overcapacity: leading players such as Unimicron, Wus Printed Circuit, and Sunway have been investing billions in advanced AI PCB production lines over the past two years. This new capacity is expected to come online en masse between the second half of 2026 and 2028, raising fears of a reversal in supply-demand dynamics;

Second, structural overcapacity is already emerging in the upstream copper foil industry: China’s total copper foil capacity stands at 1.8 million metric tons, while annual actual demand is only around 1.15 million metric tons, resulting in a capacity utilization rate below 65%. This upstream glut could soon exert downward pressure on the entire value chain;

Third, the after-effects of earlier large-scale share sales by major shareholders have yet to dissipate. Following substantial divestments by KB Group’s controlling shareholders, the stock’s ownership structure has become unstable, fueling strong investor appetite to exit positions.

A deeper concern lies in the expectation that the cycle is peaking.The current PCB rally has been driven by price-increase dynamics stemming from AI server demand. As the leading laminated board manufacturer, KB Laminate has raised product prices multiple times since the second half of last year, fully realizing its earnings elasticity. However, the market is now pricing in the view that 'the price-increase cycle is nearing its peak,' with investors implicitly treating this year's profit of around HK$10 billion as the earnings ceiling. Should profits subsequently decline, the current valuation would be passively elevated.

Nevertheless, amid prevailing pessimism, bullish arguments remain equally compelling.In a research report dated July 23, Citi argued that the market has overemphasized concerns about overcapacity. AI PCBs entail significantly higher technical barriers than traditional products, and not all production capacity can access high-end supply chains. KB Laminate’s cost advantages and client moat as an industry leader remain intact.

According to Citi’s estimates, KB Laminate’s net profit for the first half of this year will surge more than threefold year-over-year, potentially reaching HK$4 billion, underscoring that the company’s fundamentals remain firmly within a strong cyclical upswing. Current share prices have already overly reflected pessimistic expectations.

Overall, KB Laminate currently exhibits a divergence between robust earnings growth realization and premature valuation compression, intensifying the tug-of-war between bulls and bears and likely sustaining high stock price volatility.Going forward, the market should closely monitor trends in copper-clad laminate pricing, the sustainability of AI server end-demand, and the actual supply-demand balance following the ramp-up of new capacity, to assess the turning point of the industry cycle.

It is also worth noting that preparations for the 13th 'Top 100 Hong Kong Stocks' awards are progressing steadily. As a sector leader in the Hong Kong-listed PCB space, whether KB Laminate can secure a spot on this year’s Top 100 list based on its strong financial performance warrants close attention.

37K Views