Nomura: YOFC (6869.HK) - China Mobile Announces 2026-27 Optical Cable Tender
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China Mobile recently published its 2026-27 ordinary optical cable centralized procurement tender, requesting approximately 69.2 million core kilometers to fulfill a nine-month demand period. This annualizes to roughly 92.3 million core kilometers, representing a 6.6% year-on-year decline from the 98.8 million core kilometers seen in the previous cycle.
Nomura notes that while the tender did not specify a price ceiling, bidding prices are expected to rise. This projection reflects recent spot price surges driven by a fundamental shift in fiber demand away from traditional telecom markets and toward AI data centers. During the previous cycle, the weighted average bidding price was RMB 53.85 per core kilometer (including VAT). Although prices will likely increase year-on-year, fiber manufacturers are still expected to offer China Mobile traditional volume discounts.
The research highlights that YOFC shares have plummeted approximately 40% over the past two weeks, significantly underperforming a flat Hang Seng Index. Nomura believes this sell-off creates a compelling trading opportunity once short-term uncertainties clear. The firm maintains a Buy rating on YOFC with a target price of HKD 266, based on 23.7 times FY27F earnings per share of RMB 9.75.
Downside risks include weaker-than-expected telecom demand and slow AI network expansion. Upside catalysts involve rapid high-end product penetration and faster overseas growth. Tender results are anticipated within a month.