Han's Laser steps up investment in optical fiber and preforms; Citigroup reiterates Buy

Overview

This report is Citigroup's quick take on Han's Laser. On June 25, 2026, the company announced that its controlling subsidiary Yongtong Intelligent Manufacturing and Zhangjiagang Han's Laser plan to jointly invest up to RMB 2.52bn to build an optical fiber and optical fiber preform production project, with capacity including 60mn km of optical fiber including hollow-core fiber, as well as 2,000 tons of optical fiber preforms and synthetic quartz. Citigroup believes this project strengthens the logic of the company's expansion into key materials and components for AI networks, and expects the announcement to bring a positive share price reaction.

Core views

Citigroup's core view is that Han's Laser is extending from a traditional laser equipment supplier into AI-related equipment, components, and materials. Compared with standard servers, AI networks rely more on high-fiber-count ribbon cables and advanced connectors to reduce the risk of optical connections between interconnected AI chips being affected by contamination. The company's current optical fiber business is still very small and loss-making, but if the new project is implemented smoothly, it may open up new growth potential on the materials side of AI infrastructure.

Analysis framework

The report mainly uses event-driven analysis, project capacity breakdown, comparable industry chain observation, and a P/E valuation framework. On the event level, it focuses on the investment of up to RMB 2.52bn and its two-phase construction arrangement; on the industry chain level, it compares Corning's optical fiber supply agreement with Amazon and global leading manufacturers such as YOFC; on the valuation level, it derives a 12-month target price based on 55x 2027E P/E and refers to the peak valuation in the previous high-cycle period in 2018.

Methodology notes

• Valuation methodsP/E valuation

  55x 2027E P/E

  Citigroup's 12-month target price of Rmb170 is based on 55x 2027E P/E, set close to the peak P/E during the previous upcycle in 2018, reflecting a 'supercycle' driven by demand for PCB and IT equipment.

• Scenario analysisBull/base/bear multiple scenarios

  65x, 55x, 40x P/E scenarios

  The chart notes that if demand for IT and PCB equipment is stronger, valuation could be revised up to 65x P/E; if demand slows, valuation could be revised down to 40x P/E; the base case is 55x 2027E P/E.

• Event studyAnnouncement impact assessment

  Expansion into AI-related materials

  The report links this optical fiber and preform investment with the previous acquisition of liquid cooling solution supplier Attom-an, concluding that the company is systematically pursuing AI infrastructure-related opportunities.

Asset mapping & comparison

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

• Han's Laser 002008.SZ

  Report subject and Buy-rated stock

  Strengths

  The investment of up to RMB 2.52bn in optical fiber and preforms shows the company's active move into key materials for AI infrastructure; the earlier acquisition of a liquid cooling solution supplier also strengthens its AI-related positioning; Citigroup maintains its Rmb170 target price.

  Weaknesses

  In 2025, the optical fiber business generated only Rmb40.7mn in revenue, accounting for 0.2% of total revenue, and posted a net loss of Rmb69.3mn, indicating a small business base and unproven profitability.

  Comparison

  Compared with global optical fiber manufacturers such as Corning and YOFC, Han's Laser is still in the expansion and validation stage on the optical fiber materials side, but it has a potential narrative of extending from equipment into components and materials.

  Risks

  Project execution failure, Apple orders below expectations, intensified competition compressing margins, weaker auto sales affecting demand for high-power laser equipment, and new technologies replacing laser equipment.

• CORNING INC GLW.N

  Global leading optical fiber manufacturer and industry-chain comparable

  Strengths

  The report mentions that Corning has just signed an optical fiber supply agreement with Amazon, showing that demand for high-grade optical fiber supply from AI networks is increasing.

  Weaknesses

  The report does not provide financial or valuation details for Corning.

  Comparison

  As a mature global optical fiber supplier, Corning provides an industry-chain reference for Han's Laser's new entry into optical fiber and preform materials.

  Risks

  The report does not elaborate on Corning-specific risks.

• YOFC 6869.HK / 601869.SS

  Global leading optical fiber manufacturer and comparable company

  Strengths

  The report lists YOFC as one of the world's leading optical fiber manufacturers.

  Weaknesses

  The report does not provide operating or valuation data for YOFC.

  Comparison

  YOFC represents existing specialized optical fiber manufacturers; Han's Laser's new project will need to compete with mature manufacturers in capacity, technology, and customer validation.

  Risks

  The report does not elaborate on YOFC-specific risks.

• AMAZON COM INC AMZN.O

  Reference point for demand on the AI network optical fiber end

  Strengths

  The report mentions Amazon's optical fiber supply agreement with Corning as an example of AI networks driving demand for high-grade optical fiber.

  Weaknesses

  The report does not discuss Amazon's fundamentals.

  Comparison

  Amazon is not a direct target related to Han's Laser, but rather a downstream reference used to illustrate the strength of AI network infrastructure demand.

  Risks

  The report does not elaborate on Amazon-specific risks.

Key data

• Maximum project investmentRmb2.52bnYongtong Intelligent Manufacturing and Zhangjiagang Han's Laser plan to jointly invest no more than RMB 2.52bn.
• Planned optical fiber capacity60mn kmOptical fiber capacity including hollow-core fiber.
• Planned preform and synthetic quartz capacity2000 tonsTotal planned project capacity.
• Phase I investmentRmb1.52bnCorresponding to 1,200 tons of preform and synthetic quartz capacity and 36mn km of optical fiber capacity, with a 12-month construction period.
• Phase II investmentRmb1.0bnCorresponding to 800 tons of preform and synthetic quartz capacity and 24mn km of optical fiber capacity.
• 2025 optical fiber revenueRmb40.7mnAccounting for 0.2% of the company's total revenue.
• 2025 optical fiber net lossRmb69.3mnShowing that this business is still at an early and loss-making stage.
• Target priceRmb17012-month target price, based on 55x 2027E P/E.

Impact & implications

This investment may enhance the market's perception of Han's Laser's participation in the AI industry chain, extending the company's narrative from laser equipment to optical fiber, hollow-core fiber, preforms, and material links required for AI networks. The short-term impact is more catalytic, with Citigroup expecting a positive share price reaction; the medium- to long-term outlook will depend on project construction, capacity absorption, technology route validation, and whether the loss-making business can improve profitability.

Risks

• Apple orders coming in below expectations could weaken demand related to IT equipment.
• Intensified competition could compress profit margins.
• Weaker auto sales could affect demand for high-power laser equipment.
• Any new investment project failing to be successfully implemented or reach capacity.
• Emerging technologies replacing laser equipment.
• The optical fiber business is currently small and loss-making, and there is uncertainty over the profit ramp-up of the new capacity.

What to watch

• Whether Phase I construction progress of the optical fiber and preform project and the 12-month construction period proceed as planned.
• Progress in customer validation related to hollow-core fiber, high-fiber-count ribbon cables, and advanced connectors.
• Whether the optical fiber business's revenue contribution, gross margin, and net loss improve.
• Demand for PCB and IT equipment, especially changes in Apple orders.
• Auto sales and demand for high-power laser equipment.
• Supply agreements between global optical fiber manufacturers and major cloud vendors, as well as AI network capital expenditure trends.