Kingboard Laminates Slumps Amid Concerns Over Earnings Outlook

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By Justina Lee

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Shares of Kingboard Laminates Holdings Ltd. fell to their lowest level since August 2020 in Tuesday trade amid concerns over the company’s earnings outlook after it projected a sharp drop in first-half profit.

The company’s shares slid as much as 9.6% to 7.61 Hong Kong dollars (US$0.97), and were last 9.3% lower at HK$7.64.

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The laminates maker said late Friday that it expects first-half net profit to drop 40% to 49% to a range of HK$1.7 billion-HK$2.0 billion from a year earlier. It said that earnings were likely weighed down by declines in both the selling prices and quantity of its laminate products.

Profit was also likely hit by an allowance for credit losses on bonds, though to a lesser extent, Kingboard said.

The full-year outlook for laminates doesn’t seem too bright to Citi analysts, who expect margins to be squeezed by demand headwinds.

“Margins on laminates may come under pressure due to softer demand as Covid restrictions have been a drag on consumption, particularly for big-ticket items such as smartphones, PC/servers, home appliances and autos,” that account for around 80% of Kingboard’s laminates sales, Citi analysts say in a note, adding that such items.

Citi cuts the stock’s target price to HK$35 from HK$48, but maintains a buy rating on expectations of a better performance from Kingboard’s chemicals segment following recent oil price rises.

Write to Justina Lee at [email protected]

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Credit: www.marketwatch.com /

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