Global fibre price increases, UBS reiterates YOFC-H Buy

Overview

This report is a UBS company research update on Yangtze Optical Fibre and Cable (6869.HK). Its central conclusion is that rising global fibre prices are increasing the visibility of YOFC earnings upgrades. The report focuses on CRU fibre price data and notes that China G652.D bare fibre prices rose sharply month-on-month in Mar 2026, with tightening supply already spilling over into European and US markets. UBS reiterates its Buy rating on YOFC-H.

Core views

UBS's core views are as follows: first, the rapid rise in China's fibre spot prices is consistent with channel checks, showing that this round of fibre upcycle has real price support; second, overseas markets are also seeing rapid price increases, indicating that supply-demand tightness is no longer confined to China; third, rising prices together with product-mix upgrades could drive YOFC into an earnings revision cycle; and fourth, investors are mainly focused on how long the price rebound can last and how much of the spot price increase can be passed through to company profits.

Analysis framework

The report combines industry price tracking, regional price comparisons, channel checks, earnings forecasts, and valuation multiples. At the industry level, it compares price changes across different bare fibre categories in China, Europe, and the US; at the company level, it uses forecast metrics such as revenue, EBIT, net profit, EPS, ROIC, P/E, and EV/EBITDA to assess the impact of rising prices on YOFC's earnings and valuation.

Methodology notes

• Valuation methodsTarget P/E Multiple Method

  Valuing YOFC-H using a target P/E ratio

  In the valuation section, the report states that YOFC-H is valued using a target P/E multiple; the extracted content does not disclose a specific target price.

• Industry trackingCRU fibre price tracking

  Track bare fibre prices by region and product type

  The report tracks bare fibre prices in China G652.D, Europe G652.D, and Europe and US G657.A1 to judge the extent of supply-demand tightness and the spread of price increases.

• Return definitionForecast Stock Return

  Expected share price appreciation plus total dividend yield over the next 12 months

  UBS defines Forecast Stock Return as the expected share price upside plus total dividend yield over the next 12 months, with the equity target price investment horizon set at 12 months.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 6869.HK

  covered name

  Strengths

  Rising global fibre prices, tighter supply, product-mix upgrades, potential overseas market share gains, and 2026E-2028E EPS forecasts that are materially above consensus.

  Weaknesses

  Investors still need to verify the pass-through ratio and duration of spot price increases into company profits, and the stock valuation is already elevated.

  Comparison

  The report notes that China's G652.D bare fibre prices have exceeded European prices since Jan 2026; the last similar episode was in Nov 2018, when FTTH and 4G build-outs in China drove optical cable consumption.

  Risks

  A prolonged downturn in China demand, intensified competition in emerging products, and exchange-rate and geopolitical risks.

• optical fibre and cable industry

  assets related to upstream pricing and industry cycle

  Strengths

  Growth in global data traffic, government-supported digital infrastructure build-out, and improving competition dynamics may drive the industry higher.

  Weaknesses

  Industry pricing and earnings elasticity depend on whether supply-demand tightness can be sustained.

  Comparison

  Rapid price increases have appeared across multiple bare fibre categories in China, Europe, and the US, indicating that the pricing impact is spreading globally.

  Risks

  If data communications demand falls short of expectations or supply recovers quickly, the price rebound could slow.

Key data

• Current priceHK$185.90As of 2026-04-01.
• 12-month ratingBuyThe report reiterates Buy.
• China G652.D bare fibre spot price+165% sequentially in Mar 2026The report says China's G652.D bare fibre spot price rose 165% month-on-month in Mar 2026.
• European G652.D bare fibre priceEUR7.94/fkm (about US$9.1/fkm)March 2026 price; up 136% versus Jan 2026 and 159% year on year.
• European G657.A1 bare fibre price+130% vs Jan 2026Supported by resilient data communications demand and tighter supply.
• US G657.A1 bare fibre price+69% vs Jan 2026Supported by resilient data communications demand and tighter supply.
• Market capHK$154b / US$19.6bDisclosed in the trading data table.
• 52-week rangeHK$197.00-12.82Disclosed in the trading data table.
• Free float49%Disclosed in the trading data table.
• 2026E EPS (UBS, diluted)Rmb4.981.85 above consensus.
• 2027E EPS (UBS, diluted)Rmb8.732.79 above consensus; the body says the stock trades at about 19x 2027E P/E.
• 2028E EPS (UBS, diluted)Rmb8.953.69 above consensus.
• 2027E P/Eabout 19xThe body discloses that the stock trades at 19x 2027E P/E.
• 2027E EBIT margin32.9%Disclosed in the profitability and valuation table.
• 2027E ROIC (EBIT)38.0%Disclosed in the profitability and valuation table.

Impact & implications

If fibre price increases can continue and be effectively passed through to YOFC's profit line, the company's revenue, margins, ROIC, and EPS could all improve significantly. The earnings forecasts in the report show that UBS expects net profit and EPS for 2026E onward to rise noticeably versus historical levels, reflecting operating leverage from rising prices and product-mix upgrades. However, valuation already reflects part of the expectations, so the key follow-up factors are the sustainability of the price rebound, overseas demand, the competitive landscape, and the margins of emerging products.

Risks

• China fibre/cable demand remains weak for longer.
• Competition in emerging products intensifies, pressuring the expansion of high-margin products.
• Exchange-rate and geopolitical risks.
• Global data traffic growth falls short of expectations.
• Price increases cannot be fully passed through to YOFC's profit line.

What to watch

• Whether China G652.D bare fibre spot prices can continue to stay at elevated levels.
• Whether G657.A1 bare fibre price increases in Europe and the US continue.
• YOFC's product-mix upgrade and adoption pace for high-margin emerging products.
• Changes in overseas market share.
• Whether 2026E-2028E EPS continues to be revised upward.
• Whether the company's 2027E P/E valuation matches the pace of earnings revisions.