Nomura maintains a Buy rating on YOFC and highlights a price-upside opportunity from China Mobile's 2026-27 cable tender

Overview

This report is a Nomura quick note on YOFC (6869.HK), with the core event being China Mobile's July 8, 2026 announcement of the 2026-27 standard optical cable centralized procurement. The procurement size is about 69.2 million core-kilometers, which translates to annualized demand of about 92.3 million core-kilometers over a nine-month fulfillment period, down 6.6% year-on-year from the prior procurement round. Although China Mobile has not disclosed bid caps, Nomura expects this tender price to rise materially versus last year based on the recent upward trend in optical fiber prices.

Core views

Nomura's core view is that while telecom-end demand for standard cable is down slightly year-on-year, fiber demand structure has shifted from traditional telecom markets to AI data centers, which has driven spot prices to rise clearly over the past six months. As the large strategic customer, China Mobile is likely to still receive some discounting from suppliers in this bid, but the overall winning price is still expected to be significantly above last year. YOFC has fallen nearly 40% in the past two weeks, while the Hang Seng Index was broadly flat; the report sees YOFC potentially presenting a trading opportunity if short-term suppressive factors ease. Over the long term, it remains important to watch whether major optical fiber rod vendors can maintain supply discipline to avoid a return to oversupply conditions.

Analysis framework

The report uses a combination of event catalyst and relative valuation analysis: it first assesses China Mobile's tender scale, annualized demand, and price trend, then combines demand migration in the industry, spot fiber prices, YOFC stock drawdown, and supplier-side discipline to evaluate short-to-medium-term investment implications. Target price valuation uses FY27F EPS and an H-share optical cable peer multiple benchmark.

Methodology notes

• Valuation methodsPE multiple valuation

  Target price is based on 23.7x FY27F EPS CNY9.75

  Nomura sets YOFC's target price at HKD266.00, with valuation multiple aligned to the median P/E ratio of WIND H-share cable companies, and uses the Hang Seng Index as the stock's benchmark index.

• Event-drivenOperator procurement pricing and share allocation monitoring

  China Mobile 2026-27 cable procurement

  The report expects procurement results within about one month, at which point bid price and winning supplier share allocation will be key evidence to validate sector price increases and YOFC's order opportunity.

• Industry supply-demandDemand migration and supply discipline analysis

  Fiber demand shifted from telecom to AI data centers

  The rise in spot fiber prices over the past six months is explained by demand-structure changes; long-term investment judgment still depends on whether major optical fiber rod vendors maintain supply discipline and avoid oversupply.

Asset mapping & comparison

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

• YOFC 6869.HK

  Covered company and principal beneficiary name

  Strengths

  Buy rating; target price of HKD266.00; benefits from rising optical cable prices, AI data center demand migration, and potential improvement in China Mobile tender pricing.

  Weaknesses

  Traditional telecom operator fiber demand remains under year-on-year decline pressure, and recent stock volatility has been high.

  Comparison

  The report notes YOFC is down nearly 40% over the past two weeks while the Hang Seng Index is broadly flat; valuation reference is the median P/E ratio of WIND H-share cable companies.

  Risks

  Telecom operator demand in China is weaker than expected, AI network business expansion is weaker than expected, overseas expansion is weaker than expected, and major optical fiber rod vendors fail to maintain supply discipline.

• China Mobile 941.HK

  Large strategic customer and tender initiator

  Strengths

  Large procurement size with important signaling significance for cable sector pricing and order allocation.

  Weaknesses

  As a large strategic customer, suppliers may offer discounts in the tender.

  Comparison

  The annualized equivalent demand for 2026-27 procurement is about 92.3 million core-kilometers, lower than 98.8 million core-kilometers in 2025-26 procurement.

  Risks

  Final price, share allocation, and execution pace of procurement still need to be confirmed after tender results are released.

Key data

• Report date2026-07-09China Mobile issued the related tender announcement on 2026-07-08.
• China Mobile 2026-27 standard optical cable procurement sizeabout 69.2 million core-kilometersThe fulfillment period is 9 months after procurement results are published.
• Annualized equivalent demandabout 92.3 million core-kilometersDown 6.6% versus 98.8 million core-kilometers in 2025-26 procurement.
• 2025 weighted-average winning bid price for cable productsCNY53.85/core-km (including VAT)The report also notes that fiber prices at that time were below CNY25/core-km.
• RatingBuyNomura maintains its Buy rating on YOFC.
• Target priceHKD266.00Target price unchanged.
• CloseHKD151.90Price date: 2026-07-08.
• Implied upsideabout 75.1%Calculated using target price HKD266.00 versus close HKD151.90.
• Valuation assumption23.7x FY27F EPS CNY9.75The multiple is consistent with the median P/E ratio of WIND H-share cable companies.
• Recent relative performanceYOFC down nearly 40% over the past two weeks, Hang Seng Index roughly flatThe report frames this pullback as the backdrop to a potential trading opportunity.

Impact & implications

For YOFC, the key impact of this China Mobile tender is not only volume, but price and share allocation. Although annualized procurement volume is down year-on-year, a significant increase in winning price versus last year would help the market reassess earnings leverage in the fiber cable industry. Demand support from AI data centers for fiber prices is an important part of the bullish thesis; however, if sector expansion accelerates or supply discipline weakens, price recovery could be diminished.

Risks

• China Telecom and telecom operators' fiber demand is weaker than expected.
• AI network business expansion is weaker than expected.
• YOFC's overseas market expansion is weaker than expected.
• Major optical fiber rod vendors fail to maintain supply discipline, leading to oversupply.
• China Mobile tender price or winning share allocation is lower than market expectations.

What to watch

• Whether China Mobile's 2026-27 standard optical cable tender results are announced within about one month.
• Whether the winning bid price in this tender rises clearly above CNY53.85/core-km in 2025.
• YOFC's share allocation in China Mobile's tender.
• Whether AI data center demand continues to support fiber prices.
• Whether major optical fiber rod vendors maintain supply discipline.
• Whether short-term suppressive factors for YOFC's stock are dissipating.