By Thomas Kerr, CFA
NASDAQ: KBSX
READ THE FULL KBSX RESEARCH REPORT
Overview
Founded in 1989, FST Corp. (NASDAQ: KBSX) manufactures and sells a full range of golf club shafts, along with other golf-related items. Customers include golf equipment brands, OEMs, distributors, and consumers through the company’s KBS Golf Experience retail outlets and online websites. Founded in Taiwan, they started making golf club shafts in 1992. The company has spent more than three decades carefully crafting high-performance shafts for golfers worldwide.
The company currently produces and sells golf club shafts under its own high-performance “KBS” golf club shaft brand. It also serves as an original equipment manufacturer (OEM) and original design manufacturer (ODM) for other well-known and popular golf equipment brands, golf equipment OEMs, and golf equipment distributors. The company also develops its retail footprint in the U.S. and Japan markets through its KBS Golf Experience stores, which offer retail customers new equipment build services and retro-build services for existing clubs.
Beginning in 2007, the company started using the “KBS” brand as part of a broader initiative to transition from an OEM for other international golf brands to an owner and operator of an independent and competitive brand. The development of the KBS brand was led by renowned golf designer Kim Braly.
The KBS brand was first introduced in the U.S. market through the PGA Tour in 2008. Since its launch, the company has continuously developed the KBS brand through the launch of golf shaft series that are well-regarded in the golf community. These include the KBS Tour shaft series in 2008, KBS C-Taper steel shaft series in 2011, KBS Tour Hybrid series in 2017, KBS Tour-TGI graphite series in 2018, and KBS TD Driver graphite shaft series in 2020. We believe the company can address its customers’ preference for one-stop shopping through the expansion of its product lines to encompass both steel club shafts and carbon fiber shafts.
Since 2016, the FST Corp has supplied golf shafts directly to PGA players. This initiative allows PGA players to test the shafts in competitions and opens up an avenue to receive high levels of feedback. This close interaction with the top professional players also provides the company with opportunities to market its KBS shafts. There are well over 100 professional golfers players were using KBS brand shafts in their professional competitions. As a result of this professional-level endorsement and high market visibility, the company has successfully evolved from being an OEM for international brands to a trusted provider of golf shafts under its proprietary brand KBS.
In an emotional and memorable win, PGA veteran Gary Woodland won the Texas Children’s Houston Open on March 29, 2026, using KBS iron shafts (KBS C-Taper 130 X). Woodland had experienced some difficult medical situations in recent years.
We believe the company will be able to continue to improve its competitive positioning by adhering closely to consumer demand, supported by strong brand development efforts, a comprehensive product line, and online and offline sale touch points.
For calendar year 2025, the company generated approximately $48.0 million in revenues and a net loss of ($7.1) million. However, after excluding listing-related expenses, foreign exchange losses, and unrealized losses on change in fair value of derivatives, the company would have shown a net loss of ($1.9) million for 2025. We expect the company to generate net profits and be free cash flow positive at some point in 2026.
In early 2026, the company sees continued strong growth with new inroads in several new geographic markets as well as in its expanded graphite product lines. The company has also implemented key strategic cost-reduction initiatives, which should result in significant improvements in gross profit and operating income.
The current market capitalization is approximately $59.5 million, and the company had $7.3 million in cash and equivalents at the end of 2025.
Valuation
We believe the company can generate double-digit revenue growth over the next 5 years, scaling down to mid-single digit revenue growth in years 5-10. We believe gross margins can reach the mid 50% range and operating margins can reach the mid-teens range over time.
Our primary valuation tool utilizes a Discounted Cash Flow process. Under the scenario described above, we arrive at a target valuation of $3.00 per share. Our target price may be conservative as it incorporates a high discount rate of 10.0% due to the unpredictability of earnings, prevailing interest rates, and the timeline for reaching higher margins on an annual basis.
The current average price/sales ratio of competitors Acushnet (NYSE: GOLF) and Callaway (NYSE: CALY), and also adding the acquisition price/sales ratio for TaylorMade, is approximately 1.5x. This metric would provide a potential value for KBSX stock of approximately $2.15 per share (based on our 2026 revenue estimates).
We believe the company will reach cash flow breakeven at some point in calendar year 2026 and does not require additional funding to execute on its growth plans.
The current market cap of only $59.5 million appears to be irrational and more reflective of the ongoing microcap stock malaise as opposed to company fundamentals.
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