Nomura: There are signs of accelerated expansion of production capacity in the fiber optic industry. Changfei Optical Fiber Cables may face intensified competition.

Nomura Securities stated that both DaZu Laser and Hesheng Silicon Industry are relatively new entrants in the fiber optic market. The bank believes that their recent investment projects reflect strong demand for fiber optics, mainly driven by the construction of AI data center infrastructure. At the same time, the bank believes that the technical barriers in the fiber preform industry are high, currently dominated by existing participants such as Corning, Fujikura, and Yangtze Optical Fiber and Cable. In the short term, the bank believes that supply constraints will continue, and Yangtze Optical Fiber could continue to benefit from higher spot prices and profit margin expansion due to greater involvement in the AI data center market. However, if new entrants successfully develop high-end products and execute their capacity expansion plans smoothly, the bank believes that market competition will intensify and existing participants like Yangtze Optical Fiber may face pressure on profit margin expansion. The bank maintains a Buy rating on Yangtze Optical Fiber and Cable, with a target price of HK$266, based on a forward P/E ratio of 23.7 times forecasted earnings per share of RMB 9.75 for the financial year 2027.