Svmuu News: Nomura Securities stated that both Han’s Laser and HeSheng Silicon are relatively new entrants to the optical fiber market. The firm believes their recent investment projects reflect strong demand for optical fiber, driven primarily by the construction of AI data center infrastructure. At the same time, the firm believes the optical fiber preform industry has high technical barriers and is currently dominated by existing players such as Corning (GLW.N), Fujikura, and Yangtze Optical Fibre and Cable (06869.HK).
In the short term, the firm expects supply constraints to persist, and Yangtze Optical Fibre & Cable is likely to continue benefiting from higher spot prices as well as margin expansion resulting from its increased involvement in the AI data center market. However, if new entrants successfully develop high-end products (i.e., hollow-core and multi-core fibers) and smoothly execute their capacity expansion plans, the firm believes market competition will intensify, and existing players such as Yangtze Optical Fibre & Cable may face pressure on their profit margins. The firm maintains a “Buy” rating on Yangtze Optical Fibre & Cable (06869.HK), with a target price of HKD 266 based on a forward P/E ratio of 23.7 times its projected earnings per share of RMB 9.75 for fiscal year 2027. (Jin Shi)