Key Takeaways:
- Morgan Stanley raised YOFC's H-share target to HKD230 from HKD47
- Net profit forecasts for 2026 and 2027 raised 343% and 553%
- Optical fibre prices hit a seven-year peak on AI data centre demand
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Morgan Stanley lifts YOFC target 5x to HKD230 on AI fibre demand
Morgan Stanley lifted YOFC's target more than fivefold to HKD230, citing AI-driven fibre demand at a seven-year price peak.
"The current share price implies quarterly profit of RMB2.5 billion over the next 12 months, equivalent to four to five times its first-quarter 2026 earnings," Morgan Stanley analysts wrote in a note, while maintaining an Equalweight rating.
YOFC shares surged 13.32% to HKD263.8 on Wednesday, with turnover reaching HKD2.54 billion. The stock has already surpassed Morgan Stanley's new target, suggesting elevated earnings expectations are largely priced in. The broker raised its 2026 revenue forecast by 64% and 2027 revenue by 84%, while boosting net profit estimates by 343% to RMB7.507 billion and 553% to RMB12.73 billion, respectively.
The upgrade reflects a structural re-rating for the optical fibre sector driven by AI infrastructure buildout. Rapid expansion of AI data centers has driven unprecedented demand for optical fibre, with usage multiple times that of traditional data centers, according to the report. However, Morgan Stanley warned that historically high gross margins will attract global capacity expansion, potentially leading to price declines in 2027-2028. Major overseas manufacturers are actively expanding capacity while Chinese producers remain more cautious.
Morgan Stanley also raised its target for Yangtze Optical Fibre's A-shares (601869.SH) to RMB202.25 from RMB43.93, with an Underweight rating.
The sharp target revision points to a structural re-rating for the optical fibre sector, but the stock's move above the new target suggests limited upside surprise potential. Investors will watch for capacity expansion announcements from global peers and pricing trends in the second half of 2026 as key catalysts.
This article is for informational purposes only and does not constitute investment advice.
[1] YOFC (06869.HK) Surges Over 13% as M Stanley Raises TP to HKD230; High Earnings Expectations Already Priced In[2] Inside the race to rebuild AI data centers before the grid hits its limit[3] YOFC (06869.HK) Surges Over 13% as M Stanley Raises TP to HKD230; High Earnings Expectations Already Priced In - AASTOCKS.com
