Key Takeaways:
Nomura warned that YOFC (06869.HK) faces intensifying competition as two new entrants announced a combined 5,200 tonnes of annual optical fiber preform capacity.
"These investment projects reflect strong demand for optical fiber, mainly driven by AI data center infrastructure construction," Nomura analysts said in a report.
Han's Laser (002008.SZ) on June 25 announced a RMB2.52 billion investment for a Zhangjiagang project with annual capacity of 2,000 tonnes of optical fiber preforms, equivalent to 60 million fiber-km. The buildout proceeds in two phases — RMB1.52 billion in the first and RMB1 billion in the second. Separately, Hoshine Silicon Industry (603260.SH) received government approval on June 8 for a 3,200-tonne annual preform target, marking its entry into the optical fiber industry. Han's Laser also plans to use RMB306 million of internal funds to acquire a 51 percent stake in Lingxian Technology, which owns hollow-core fiber technology applicable to AI network deployment.
In the near term, supply constraints should persist, allowing YOFC to benefit from higher spot prices and margin expansion as AI data center demand deepens, Nomura said. However, if new entrants successfully develop high-end products such as hollow-core and multi-core fiber, competition will intensify and pressure margins for existing players including YOFC, Corning (GLW.US) and Fujikura (5803.JP).
The optical fiber preform industry carries high technical barriers and is currently dominated by incumbents YOFC, Corning and Fujikura, Nomura noted. The broker maintained its Buy rating on YOFC's H-shares with a price target of HKD266, based on 23.7 times its FY2027 earnings per share estimate of RMB9.75.
YOFC shares fell 7.9 percent on the news, with short selling reaching HKD1.71 billion and a short ratio of 23.6 percent. The decline puts the stock under pressure as the market weighs whether Han's Laser and Hoshine can execute their capacity plans and secure customers in the AI data center supply chain. Investors will watch for updates on the new entrants' production timelines and product qualification with hyperscaler clients.
This article is for informational purposes only and does not constitute investment advice.
