YOFC Maintained at Buy: AIDC Demand Supports Optical Fiber Upcycle, While Capacity Expansion by New Entrants Brings Mid-term Competitive Variables

Overview

This report focuses on recent capacity expansion events in China’s optical fiber industry, with emphasis on the impact of Han’s Laser and Hoshine entering the optical fiber preform and high-end optical fiber sectors on YOFC. Nomura believes these projects reflect strong optical fiber demand driven by AIDC infrastructure construction; in the short term, the optical fiber preform segment still has high technological barriers and tight supply, allowing YOFC to continue benefiting from relatively high spot prices and expansion in AIDC-related business.

Core views

The core view is that the short-term supply-demand structure remains favorable to YOFC, but mid-term competitive risks are rising. Han’s Laser and Hoshine are both relatively new entrants to the optical fiber market, and their expansion plans reinforce the signal of strong industry demand; however, if they can make breakthroughs in high-end products such as hollow-core fiber and multi-core fiber and effectively release capacity, incumbent manufacturers including YOFC may face more intense competition and margin pressure.

Analysis framework

The report adopts a combination of event-driven and industry supply-demand analysis: it first reviews the expansion announcements of companies such as Han’s Laser and Hoshine, and then assesses the impact on YOFC’s share price and profitability from AIDC demand, technological barriers in optical fiber preforms, the existing supply landscape, and the execution risks of potential new capacity. In terms of valuation, the target price is based on FY27F EPS and the P/E multiples of comparable H-share cable companies.

Methodology notes

• Valuation MethodRelative Valuation Method

  Target price based on 23.7x FY27F EPS

  Nomura’s HKD266 target price is based on 23.7x rolling FY27F EPS of CNY9.75, consistent with the median P/E of WIND H-share cable companies.

• Industry AnalysisSupply-Demand and Competitive Landscape Analysis

  AIDC demand and optical fiber preform supply constraints

  The report evaluates the pace of industry supply expansion and its impact on YOFC’s margins through new project announcements, existing capacity, technological barriers, and progress in high-end products.

Asset mapping & comparison

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

• YOFC (6869.HK)

  Core covered name

  Strengths

  Benefits from AIDC demand, short-term supply constraints, relatively high spot prices, and technological barriers in high-end optical fiber preforms.

  Weaknesses

  If new entrants execute smoothly in high-end products and capacity ramp-up, margin expansion may come under pressure.

  Comparison

  The report places YOFC alongside incumbent optical fiber preform leaders such as Corning and Fujikura, believing the industry is still currently dominated by these existing manufacturers.

  Risks

  Telecom operator demand weaker than expected, AI network business expansion weaker than expected, overseas expansion weaker than expected, and intensified competition from new entrants.

• Han’s Laser (002008.SS)

  Potential new entrant and signal of industry capacity expansion

  Strengths

  Plans to invest heavily in optical fiber preforms and synthetic quartz, and to acquire a controlling stake in Linfiber(Nantong), which has hollow-core fiber technology.

  Weaknesses

  As a relatively new entrant, there is still uncertainty around project execution, technology mass production, and customer validation.

  Comparison

  Compared with incumbent manufacturers such as YOFC, it has less accumulated experience in the optical fiber market, but its expansion scale is large.

  Risks

  High-end product R&D, capacity construction progress, and commercialization may fall short of expectations.

• Hoshine (603260.SS)

  Potential new entrant and new source of supply

  Strengths

  Targets annual production of 3,200 tons of optical fiber preforms, showing a clear intention to enter the optical fiber sector.

  Weaknesses

  It is not rated by Nomura, and as a new entrant it faces technological and execution uncertainties.

  Comparison

  If the project materializes, it will become an important variable in new industry supply and may alter the supply landscape of incumbent manufacturers.

  Risks

  There is uncertainty in construction progress after approval, product quality, customer certification, and profitability.

Key data

• YOFC RatingBuyThe rating remains unchanged.
• YOFC Target PriceHKD266.00The target price remains unchanged.
• YOFC Closing PriceHKD250.60The price date is June 26, 2026.
• Valuation Assumption23.7x FY27F EPS CNY9.75Consistent with the median P/E of WIND H-share cable companies.
• Han’s Laser Expansion InvestmentNo more than CNY2.52bnThe project will produce 2,000 tons of optical fiber preforms and synthetic quartz annually, equivalent to about 60mn fkm of optical fiber, and will be built in two phases.
• Han’s Laser Acquisition PlanCNY306mn acquisition of 51% equity in Linfiber(Nantong)Linfiber has high-end hollow-core fiber technology that can be used for large-scale AI networks.
• Hoshine Expansion TargetAnnual production of 3,200 tons of optical fiber preformsThe project received government approval on June 8, 2026.
• Far East AIDC ProjectCNY2,000mn; 1,800 tons of optical fiber preformsThe table shows the project is in the planning stage.

Impact & implications

For YOFC, the new expansion announcements carry both positive and negative implications: the positive side is that AIDC-related optical fiber demand is strong and short-term supply remains constrained by technological barriers, supporting prices and margins; the negative side is that new entrants are accelerating their布局 in high-end optical fiber and preform capacity, and if product breakthroughs and capacity ramp-up proceed smoothly, future industry competition may intensify and weaken the margin elasticity of existing leaders.

Risks

• China telecom operators’ optical fiber demand is weaker than expected.
• AI networking business expansion is weaker than expected.
• YOFC’s overseas market expansion is weaker than expected.
• If new entrants such as Han’s Laser and Hoshine successfully develop high-end products such as hollow-core fiber and multi-core fiber and smoothly expand capacity, they may intensify market competition and pressure YOFC’s margins.
• Achievement of the target price may also be affected by factors such as macro market trends, company earnings, and deviations from estimates.

What to watch

• Construction progress and capacity ramp-up pace of Han’s Laser’s two-phase optical fiber preform and synthetic quartz projects.
• Construction, product certification, and commercialization progress of Hoshine’s annual 3,200-ton optical fiber preform project.
• The penetration speed of high-end AI network products such as hollow-core fiber and multi-core fiber.
• The sustainability of optical fiber demand from AIDC infrastructure rollout.
• Changes in YOFC’s spot prices, AIDC business mix, and profit margins.
• Recovery in Chinese operator optical fiber demand and progress in YOFC’s overseas market expansion.