Optical communication concept stocks saw their losses deepen in the afternoon trading session, ranking among the top decliners. As of the latest update, YOFC (06869) fell 12.21% to HK$222.6; Huahong Semiconductor (01347) dropped 7.64% to HK$117.4; CIG (06166) declined 6.99% to HK$142.3; and Foxconn Interconnect Technology (06088) decreased 6.73% to HK$9.29.
The sell-off follows a recent research report from UBS, which noted that YOFC's first-quarter net profit of 495 million yuan fell short of the buy-side market expectation of 800 million to 1 billion yuan, anticipating a negative short-term market reaction. However, the bank expressed confidence in the company's profit growth over the coming quarters, stating that the increase in fiber optic prices will take time to be fully reflected and that sustained demand from data centers should help the company meet its full-year forecast.
Notably, earlier this month, optical module giant Lumentum reported revenue slightly below analyst consensus expectations. This, combined with its substantial year-to-date stock surge, triggered profit-taking after hours. The stock had previously traded at a price-to-earnings ratio exceeding 300 times, with a cumulative gain of approximately 1444% over the past year. Analysts point out that at such high valuation levels, any deviation in performance execution or guidance is likely to trigger significant stock price volatility.
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