‘Lu’s View’ Judging from the recent performance of Hong Kong stocks, the market trend is clearly weak, especially shares related to artificial intelligence (AI), as market concerns over a liquidity squeeze have made their performance even weaker. Although the market rebounded over 200 points at today’s opening, I still believe this correction wave is not yet over, and the market still has the chance to test lower levels. A market downturn does not mean the end of the world, but rather a time to do homework—waiting for lower levels to accumulate quality stocks.
Kam Tin Laminates (01888) recently announced its interim results, with operating revenue surging 55% year-on-year to RMB14.904 billion, and net profit tripling to RMB2.887 billion. The profit for the first half alone was already 18.2% higher than the full-year profit of last year. In addition, the group's products have been raised in price multiple times, and gross margin in the first half increased significantly by 12.3 percentage points year-on-year to 30.7%. Currently, the group has evolved beyond being merely one of the world’s largest copper-clad laminate (CCL) producers, becoming one of the leaders in the electronic vertical industrial supply chain. Its products now include electronic glass yarn, electronic fiberglass cloth, copper foil, epoxy resin, and CCL—precisely the materials most needed for the current development and upgrading of the AI industry, all of which are bottlenecks in the supply chain. For those who have been following the development of the AI industry, the construction of AI data centers and the emergence of AI-related end products have driven demand for CCL.
*Persistent supply shortage*
Additionally, AI servers and high-speed switches are driving printed circuit boards (PCBs) toward higher layer counts and faster speeds, increasing demand. This has prompted the market’s CCL to upgrade toward lower loss, further fueling a surge in demand for upstream materials such as electronic glass yarn, electronic fiberglass cloth, and copper foil, leading to persistent supply shortages. Kam Tin Laminates’ biggest moat lies in its deep control over key upstream materials over the years. Its vertically integrated model not only provides cost advantages but, when the industry enters a supply-tight phase, also translates into stronger pricing power.
In fact, operating data released by the group in the first half shows that despite partial shutdowns in the CCL division, it maintained near-full production through its own supply chain and achieved sales growth, driving profits in the electronic glass yarn and electronic cloth businesses to rise about twofold year-on-year to approximately RMB1 billion. At the same time, thick copper foil required for AI, as well as high-frequency, high-speed, low-loss reverse/ultra-low roughness copper foil, remain in short supply. All these facts have already been reflected in this interim result.
This time, the group’s share price has corrected along with the AI sector, partly due to market speculation that AI development might slow down. However, the arrow has been released and cannot be taken back—slowing down still means development. Demand for upstream infrastructure components remains strong. Therefore, as the share price pulls back on this sentiment, now is actually an opportunity to wait and accumulate on weakness. ‘Independent Stock Analyst, Chan Wing Luk’
*The author holds shares in Kam Tin Laminates (01888)
*Articles published in ‘Economic Times’ under named or anonymous authorship reflect the authors’ personal opinions and do not represent the stance of ‘Economic Times’. ‘Economic Times’ plays the role of providing a free platform for expression.
Kam Tin Laminates (01888) recently announced its interim results, with operating revenue surging 55% year-on-year to RMB14.904 billion, and net profit tripling to RMB2.887 billion. The profit for the first half alone was already 18.2% higher than the full-year profit of last year. In addition, the group's products have been raised in price multiple times, and gross margin in the first half increased significantly by 12.3 percentage points year-on-year to 30.7%. Currently, the group has evolved beyond being merely one of the world’s largest copper-clad laminate (CCL) producers, becoming one of the leaders in the electronic vertical industrial supply chain. Its products now include electronic glass yarn, electronic fiberglass cloth, copper foil, epoxy resin, and CCL—precisely the materials most needed for the current development and upgrading of the AI industry, all of which are bottlenecks in the supply chain. For those who have been following the development of the AI industry, the construction of AI data centers and the emergence of AI-related end products have driven demand for CCL.
*Persistent supply shortage*
Additionally, AI servers and high-speed switches are driving printed circuit boards (PCBs) toward higher layer counts and faster speeds, increasing demand. This has prompted the market’s CCL to upgrade toward lower loss, further fueling a surge in demand for upstream materials such as electronic glass yarn, electronic fiberglass cloth, and copper foil, leading to persistent supply shortages. Kam Tin Laminates’ biggest moat lies in its deep control over key upstream materials over the years. Its vertically integrated model not only provides cost advantages but, when the industry enters a supply-tight phase, also translates into stronger pricing power.
In fact, operating data released by the group in the first half shows that despite partial shutdowns in the CCL division, it maintained near-full production through its own supply chain and achieved sales growth, driving profits in the electronic glass yarn and electronic cloth businesses to rise about twofold year-on-year to approximately RMB1 billion. At the same time, thick copper foil required for AI, as well as high-frequency, high-speed, low-loss reverse/ultra-low roughness copper foil, remain in short supply. All these facts have already been reflected in this interim result.
This time, the group’s share price has corrected along with the AI sector, partly due to market speculation that AI development might slow down. However, the arrow has been released and cannot be taken back—slowing down still means development. Demand for upstream infrastructure components remains strong. Therefore, as the share price pulls back on this sentiment, now is actually an opportunity to wait and accumulate on weakness. ‘Independent Stock Analyst, Chan Wing Luk’
*The author holds shares in Kam Tin Laminates (01888)
*Articles published in ‘Economic Times’ under named or anonymous authorship reflect the authors’ personal opinions and do not represent the stance of ‘Economic Times’. ‘Economic Times’ plays the role of providing a free platform for expression.
