Nomura: YOFC (6869 HK) — Signals of Accelerating Industry Capacity Expansion
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Nomura views the recently announced fiber preform capacity expansion plans by Hanjoo Precision (002008 CH, Buy) and Hoshine Silicon (603260 CH, Unrated) as a clear signal of robust optical fiber demand driven by accelerating AI data center infrastructure deployment. On June 25, Hanjoo Precision unveiled plans to invest up to RMB 2.52 billion in a Zhangjiagang facility to produce 2,000 tons of fiber preform and synthetic quartz annually, equivalent to 60 million core kilometers of optical fiber, constructed across two phases. Separately, Hoshine Silicon targets an annual output of 3,200 tons of fiber preform.
Despite these ambitious plans, fiber preform manufacturing presents extremely high technological barriers, meaning established industry leaders like Corning (GLW US, Unrated), Fujikura (5803 JP, Buy), and Yangtze Optical Fibre and Cable (YOFC, 6869 HK, Buy) remain dominant. In the near term, persistent supply constraints allow YOFC to benefit from elevated spot prices and margin expansion tied to growing AI data center market exposure.
However, if new entrants successfully develop high-end products such as hollow-core and multi-core fiber, competitive intensity will inevitably increase, pressuring the margin trajectories of incumbents. Nomura maintains its Buy rating on YOFC with a target price of HK$266, based on 23.7 times FY27F earnings per share of RMB 9.75. The stock closed at HK$250.60 on June 26, 2026.