台湾覆铜板：PCB需求强劲增长及持续涨价；上调台光电/联茂目标价

Taiwan CCL: robust PCB demand growth &continuous price hike; raise EMC/TUC PO Price Objective Change Ongoing price lifts benefit both EMC and TUCWesee a more favorable pricing environment for CCL industry, evident from the 20-30% 20 April 2026 price hike from Panasonic announced last week, while TUC announced it will raise ASPby 20-40% on select products. With this, we now expect EMC/TUC to record 17%/17%revenue QoQ growth in 2Q26. For EMC, we see a bigger boost (to revenue) from priceincreases that will take place in 2Q26. For TUC, relevant benefits will likely last strongerfor longer given the firm’s higher exposure to low/mid-end market. In tandem, we raisePOs for EMC/TUC to NT$4,600/NT$1,180 (from NT$3,900/NT$1,000), respectively. EquityAsia-PacificTech Hardware Mike Yang>>Research AnalystMerrill Lynch (Taiwan)+886 2 2376 3729mike.c.yang@bofa.com TUC boasts better flexibility in optimizing mix CCL–copper clad laminateTUC–Taiwan UnionEMC–Elite Material Between EMC and TUC, wenote that a more significant capacity addition in 2027comes earlier by TUC (vs by EMC). On upside risk to earnings forecast, we believe thebenefits from continuous ASP hike apply to both names, while there could be a biggerheadroom for TUC to improve its mix. Strong PCB demand growth; favorable CCL S/D into 2028 We reiterate Buy on EMC and TUC in view of their solid growthprofile into 2027-28,thanks to growing traction to high-end CCL market, mainly via AI (artificial intelligence)server and high-end networking switch. In our view, an aggressive expansion plan bydownstream (direct) PCB customers bodes well for both firms’growth outlook. In Exhibit3, we summarize the expansion plans by major PCB (printed circuit board) suppliers forAI servers and/or high-end applications, which could make the overall S/D(supply/demand) situation stay favorable beyond 2027 for CCL suppliers. Valuation base reflects the long-term business visibilityWe raise EMC’s and TUC’s 2026-28E EPS by 1-2% and 10-18%, respectively, mainly reflecting a firmer pricing outlook in the CCL industry. Our PO on EMC remains based on30x P/E but roll over the valuation period to 2H27-1H28E. For TUC, our PO is based on27x 2027E P/E. The difference in the valuation period used can be explained by EMC’sdominant position in high-end CCL market that offers long-term business visibility. This research report provides general information only. No part of this report may be usedorreproduced or quoted in any manner whatsoever in Taiwan by the press or otherpersons without the express written consent of BofA Securities.>> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules.Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions.BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision.Refer to important disclosures on page 7 to 10. Analyst Certification on page 5. PriceObjective Basis/Risk on page 4.12960670 There are several high-end PCBsuppliers aim to expand the capacity with aggressive capex from 2026, and quite a few of them will add capacity in Thailand Exhibit4:Earnings estimate change-EMCWe raise 2026-28E EPS by 1-2% after reflecting the assumption of slightly stronger revenue growth Exhibit5:Income statement-EMCWe expect the firm’s operating margin to be 25+% in 2027-28 Exhibit6:Earnings estimate change-TUCWe raise 2026-28E EPS by 10-18% after baking in the assumptions of stronger revenue growth Exhibit7:Income statement-TUCWe expect the firm’s revenue to grow by ~60% CAGR during 2026-28 Exhibit8:Stocks mentionedPrices and ratings for stocks mentioned in this report Price objective basis & risk Elite Material (ETMCF) Our PO of NT$4,600 is based on 30x 2H27-1H28E P/E, at the high-end of its historical2016-25 range of 6-30x. In our view, the multiple is appropriate, given the market-shareexpansion in server/networking, where we see structural growth in addressable market. Upside risks are (1) share gain at substrate CCL, (2) stronger 5G smartphone shipment,(3) greater 5G smartphone spec upgrades, and (4) favorable FX and raw material costchange. Downside risks are (1) share loss at iPhone, (2) keener competition in high-end CCL, and(3) unfavorable FX and raw material cost change. Taiwan Union Technology Corporation (TWUNF) Our PO NT$1,180 is based on 27x 2027E P/E, which is at the high-end of the historicaltrading range of 8-27x during 2016-2026. In our view, the valuation multiple is justified,given 1) gross/operating margin expansion to 26% and 19-20% in 2026-28E, 2)expanding ROE toward around 45% in 2026-28E, a