Earnings Estimate Raised 34%, Target Price Lifted to 2070
Sustained AI server and ASIC demand is driving growth at high-end copper-clad laminate maker TUC (6274). A local investment advisor, bullish on rising high-end material penetration and an expanding ASIC customer base, raised its 2027 earnings estimate by 34%, lifting the target price from 1900 to 2070 and maintaining an Overweight rating. The institution forecasts TUC 2026 revenue of 628.09 billion, EPS of 24.16, 2027 revenue of 1042.42 billion, EPS of 47.79, and 2028 EPS further challenging 71.93. Valued on 2027 estimated EPS, versus the report reference share price of 1390, upside potential is large.
Q3 Gross Margin 36.9% Beat Expectations on Improved High-End Mix
The institution noted TUC posted a Q3 gross margin of 36.9% and operating margin of 31%, beating consensus of 31.8% and 25.9%, with net profit of 38.6 billion, 15% above market estimates, reflecting an improved high-end product mix and continued profitability gains. Looking to Q4, the institution expects high-end products to begin raising prices. Although intensifying price competition in mid- to low-end products may lower the revenue share of M7 and M8, a higher high-end material share remains favorable to the product mix, with Q4 earnings momentum expected to continue.
AI Servers Core Growth Driver, T4 and 1.6T Eyed for 2027
AI servers are the core medium- to long-term growth driver for TUC. The institution noted several new large ASIC customers, some already in sampling and qualification, continued shipments for US T3 servers, with T4 expected to secure stable laminate supply in 2027. 800G switch customers are accelerating qualification, with 1.6T demand expected to expand rapidly in 2027. In addition, the share of AI server materials M7 and M8 continues to rise, with the Networking business also benefiting from switch upgrades, driving high-end product penetration. As high-speed transmission demand expands, the product mix is expected to keep improving.
Long-Term Orders Secured With High Visibility, Two Key Risks to Watch
The institution further noted TUC has secured long-term orders with very high customer demand visibility, and its PTFE unit also has opportunities to enter Hybrid solutions, building on 5 to 6 years of R&D and continued investment in new areas. Overall, surging high-end material shipments and expanded ASIC customers are the main growth drivers. However, weaker-than-expected customer demand and faster-than-expected competitor progress remain operational risks. Investors should carefully assess risks in decision-making and bear responsibility for investment results.