JPMorgan has turned bullish on Thai printed circuit board manufacturer KCE Electronics Public Company Limited (SET: KCE), moving its rating to Overweight from Neutral and nearly doubling its price target to Bt54 for December 2027, up from a prior Bt30 goal.
The rating change follows a second-quarter 2026 performance that exceeded expectations. Net profit for the period climbed to Bt276 million, marking a 51% increase from the same quarter last year and a 17% rise from the prior quarter. Revenue reached Bt3,575 million, up 15% sequentially and 12% higher in dollar terms. For the first six months of 2026 combined, the company earned Bt455 million, a 10% year-on-year gain that came in ahead of both JPMorgan’s own projections and broader market consensus, covering roughly 49% and 41% of full-year forecasts respectively.
Notably, the earnings improvement was not fueled by higher shipment quantities, which edged up merely 1.4% from the prior quarter. Instead, a currency tailwind from a softer baht and a shift toward product mix, pushing average selling prices 3% higher on a more favorable sales composition.
Profitability also improved, with gross margin climbing to 18.9%—a gain of 1.2 percentage points from the previous quarter and 0.8 points from a year earlier. This came even as the company faced steep increases in raw material costs, which climbed between 30% and 52% year-on-year.
Behind the stronger mix was demand for high-density interconnect (HDI) boards of specialty grade, which climbed 20% year-on-year and 5% sequentially, now making up 31% of total sales compared to 27% twelve months prior. These premium boards command pricing of $18.3 per square foot, well above the company’s blended average of $13.4. Meanwhile, simpler 2-layer PCB products saw sales decline 11% annually, and shipments to China fell 34% amid weaker automotive demand from Europe and the US that had been routed through Chinese assembly operations.
According to JPMorgan, this pattern reflects a shift in product composition rather than genuine growth in overall demand, setting KCE apart from PCB competitors currently riding a wave of artificial intelligence-related orders. Still, the brokerage believes KCE stands to gain market share as larger rivals redirect their production capacity toward AI-related demand, leaving conventional segments underserved.
Cost management played an equally important role in supporting margins. Even though copper foil prices surged 38% and fiberglass costs jumped 52% over the past year, these increases translated into just roughly 4% of total sales impact, since copper represents a relatively small portion of overall expenses.
A key advantage for KCE lies in its ownership stake in Thai Laminate Manufacturer (TLM), an affiliate that produces about 70% of the copper-clad laminate the company needs internally. This arrangement shields KCE from the sharp 15-30% quarterly cost spikes that competitors sourcing laminate externally have had to absorb. The company has additionally fine-tuned its production processes to make more efficient use of raw materials without sacrificing product standards.
Factory utilization stood at only 65% during the quarter, hampered by extended public holidays and power outages in June, meaning the margin gains were achieved despite underused capacity. With new pricing structures set to take effect starting the third quarter, JPMorgan substantially raised its earnings forecasts, lifting projected earnings per share for 2026 through 2028 by between 28% and 40%. Specifically, the 2026 EPS estimate rose to Bt1.01 from Bt0.79, a 28.3% increase, while the 2027 figure increased to Bt1.38 from Bt1.04, up 32.7%.
JPMorgan pointed to three drivers supporting its more optimistic outlook going forward: KCE’s ability to capture business as competitors pivot toward AI production, an ongoing shift toward higher-value HDI products, and sustained cost advantages from its laminate supply integration. The revised Bt54 target is based on a 35 times earnings multiple, up from 28 times previously, a level the brokerage says reflects valuations last seen during an earlier industry upcycle.
