Citi: Taiwan PCB & Laminates — ABF/BT Sector: Unaudited Dec EPS Surprised Upside; Buy
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Citi highlights that Unimicron (3037.TW) and Nan Ya PCB (8046.TW) released unaudited December EPS on January 20 that exceeded expectations. While a weaker New Taiwan dollar provided some FX tailwinds, Citi attributes the solid gross margin performance primarily to an improved high-end ABF product mix, selective ABF/BT price increases, and favorable foreign exchange. The bank believes these December results signal an accelerating gross margin expansion trajectory starting in the first quarter of 2026, maintaining a bullish outlook on the ABF/BT substrate cycle.
For Unimicron, the HDI drag should ease as its Taiwan factory ramps from 2Q26E, while ABF demand remains robust due to its dominance across major ASIC programs—including AWS Trainium, Google TPU, and Meta MTIA—and steadily increasing share in Nvidia AI GPUs. For Nan Ya PCB, typical seasonal PCB weakness was effectively mitigated by strong management of utilization, product mix, and pricing. Furthermore, parent company Nan Ya Plastics helps secure scarce T-glass, offering a competitive edge.
Citi raised Unimicron's 2026/27E earnings by 38%/81% and lifted its DCF target price from NT$217.75 to NT$400, maintaining a Buy rating. Nan Ya PCB's 2026/27E earnings increased by 12%/41%, with the DCF target price moving from NT$360 to NT$450, also rated Buy.