Nomura maintains Buy rating on Changfei Optical and highlights upward pricing for China Mobile's optical cable tender
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Nomura maintains Buy rating on Changfei Optical and highlights upward pricing for China Mobile's optical cable tender
China Mobile's 2026-27 standard optical cable centralised procurement has an annualized requirement of about 92.3mn fkm, down 6.6% year-on-year, but Nomura expects the bid price this round to rise significantly versus last year, supported by industry-wide price increases.
- China Mobile's current standard optical cable purchase volume is about 69.2mn fkm, with a nine-month fulfillment period after the procurement result is announced, equivalent to annualized demand of about 92.3mn fkm.
- Annualized demand is down 6.6% from 98.8mn fkm in the 2025-26 procurement, but the tender price ceiling has not yet been announced.
- Nomura expects the price rise in the past six months in the industry spot market to push this round's bid prices above last year, though suppliers may still offer discounts to China Mobile as a large strategic customer.
- Changfei Optical has underperformed the Hang Seng Index sharply over the past two weeks, with shares down nearly 40%; the report sees a trading opportunity if short-term headwinds ease.
- Nomura maintains a Buy rating and HKD266.00 target price on Changfei Optical, with valuation based on FY27F EPS of CNY9.75 at 23.7x.
Report interpretation
Overview
This report reviews China Mobile's 2026-27 standard optical cable centralized procurement tender announced on July 8, 2026. The procurement size is about 69.2mn fiber km, with a fulfillment period of nine months after the procurement result is published, equivalent to annualized demand of about 92.3mn fiber km. Although annualized demand is lower than the previous procurement round, Nomura believes demand structure in optical fiber has clearly shifted from traditional telecom to AI data centers, driving a significant rise in industry spot prices over the past six months.
Core views
Nomura's core view is that, in this round, demand for China Mobile's optical cable tender is down year-on-year, but pricing may become the more important variable. Driven by higher fiber prices recently in the industry, the report expects bid prices this round to rise meaningfully versus CNY53.85/fkm in 2025; however, because China Mobile is a major strategic customer, fiber manufacturers' quotations may still include discounts. For Changfei Optical, the sharp recent stock pullback may create a trading opportunity after short-term pressure fades, but over the medium to long term it remains important to watch whether major optical fiber preform suppliers maintain supply discipline to prevent oversupply from re-emerging.
Analysis framework
The report uses a combination of event-driven analysis and relative valuation: first comparing procurement size and annualized demand between this round and the prior China Mobile optical cable central procurement, then using industry spot price movement to assess the direction of tender pricing, and finally deriving the target price using FY27F EPS and the median P/E of comparable H-share optical cable peers.
Methodology notes
P/E valuation
Nomura's HKD266.00 target price is based on 23.7x FY27F EPS of CNY9.75, a multiple consistent with the median P/E ratio of WIND H-share optical cable companies.
Tender event analysis
The report assesses the impact on Changfei Optical by evaluating China Mobile's 2026-27 standard optical cable central procurement scale, fulfillment period, prior procurement scale, and industry price trend.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Changfei Optical 6869.HKCore coverage target, directly affected by China Mobile cable tender prices and broader optical fiber and cable supply-demand shifts.
- Strengths
- Has leadership characteristics in the optical fiber and cable sector, benefiting from migration of demand to AI data centers and rising industry spot prices; Nomura maintains a Buy rating.
- Weaknesses
- Shares fell nearly 40% in two weeks, reflecting market pressure on near-term tender, supply-demand, or pricing expectations.
- Comparison
- The target multiple of 23.7x FY27F EPS is aligned with the median P/E ratio of WIND H-share optical cable companies.
- Risks
- Telecom operator fiber demand weaker than expected, AI network business expansion weaker than expected, overseas expansion below expectations, and weak supply discipline in the industry.
- China Mobile 00941.HKThe procurer in this standard optical cable central tender and an important strategic customer for optical cable suppliers.
- Strengths
- Large procurement scale with significant influence over industry prices and supplier order flows.
- Weaknesses
- The annualized demand in this round is down 6.6% year-on-year.
- Comparison
- Annualized demand in 2026-27 is about 92.3mn fkm, below 98.8mn fkm in 2025-26.
- Risks
- Uncertainty remains around tender pricing, award allocation, and actual demand realization.
- Changfei Optical 601869.SSA-share related security of Changfei Optical; fundamentals are affected by the same company operations and industry cycle.
- Strengths
- Also benefits from fiber price recovery and AI network demand.
- Weaknesses
- The report's rating and target price are primarily for 6869.HK, and no separate target price is provided for A-shares.
- Comparison
- Represents the same issuer as 6869.HK, but pricing and liquidity conditions differ by market.
- Risks
- Differences in valuation frameworks, market sentiment, and A/H-share discount could lead to divergent performance.
Key data
- China Mobile current procurement sizeabout 69.2mn fkmCentralized procurement size for standard optical cable products.
- Demand fulfillment period9 monthsCalculated from the publication date of procurement results.
- Annualized demandabout 92.3mn fkmDown 6.6% versus 98.8mn fkm in the 2025-26 procurement.
- 2025 weighted-average bid priceCNY53.85/fkmCable product price including VAT; the report says fiber prices are below CNY25/fkm.
- Target priceHKD266.00Unchanged.
- Close priceHKD151.90As of 2026-07-08.
- Valuation basis23.7x FY27F EPS CNY9.75Consistent with the median P/E ratio of WIND H-share optical cable companies.
Impact & implications
If China Mobile tender pricing rises as Nomura expects, it would help validate the optical fiber and cable industry's improving supply-demand balance and price recovery logic, and may ease market concerns after Changfei Optical's sharp short-term sell-off. For investors, near-term focus should be on tender results, pricing, and supplier share allocation; over the longer term, watch whether AI data center demand can continue to absorb capacity and whether major preform suppliers can maintain supply discipline.
Risks
- Demand from Chinese telecom operators for fiber is weaker than expected.
- AI network business expansion is weaker than expected.
- Changfei Optical's overseas expansion underperforms expectations.
- If major optical fiber preform suppliers cannot maintain supply discipline, oversupply could re-emerge.
- If the increase in China Mobile tender pricing is lower than expected, the industry price-recovery thesis may weaken.
What to watch
- China Mobile's tender results for this round are expected to be announced in about one month.
- Whether the final tender price in this round is materially above CNY53.85/fkm in 2025.
- Winning supplier allocation, especially Changfei Optical's share of awarded contracts.
- Whether AI data center-related fiber demand continues to replace traditional telecom demand as a growth driver.
- Whether major optical fiber preform suppliers maintain supply discipline.