Shares of Yangtze Optical Fibre And Cable Joint Stock Limited Company are experiencing a powerful confluence of positive catalysts. A rating upgrade to Overweight by Morgan Stanley on its H-shares, coupled with the company's release of a stellar earnings forecast, propelled the stock to surge as much as 22% early on Thursday, marking its largest single-day gain in over three weeks.
In a report, analysts including Andy Meng from Morgan Stanley noted that the H-shares of Yangtze Optical Fibre And Cable Joint Stock Limited Company have declined approximately 50% from their June peak. However, supported by the AI-driven optical fibre supercycle, the company's earnings growth trajectory remains intact, and the risk/reward profile at the current share price has become more attractive.
Morgan Stanley has maintained its target price of HK$230. Simultaneously, the company announced an expected net profit attributable to shareholders of approximately RMB 2.4 billion to RMB 3.0 billion for the first half of 2026, representing a year-on-year increase of 711% to 914%.
At the latest update, the stock was up 9.55% to HK$168.6.
Analyst Perspective: Correction Priced in Supply Concerns
The core rationale behind Morgan Stanley's rating upgrade is that the previous stock price correction primarily reflected market concerns over supply-side risks, rather than a substantive deterioration in fundamentals.
Analysts including Andy Meng stated in the report that capacity expansion in the industry will still require time, while demand driven by the AI infrastructure boom remains robust. The earnings growth momentum is unlikely to see a material change over the next 6 to 12 months. In this context, following the significant correction, the stock's current valuation has become highly attractive, with the recent pullback creating a compelling entry point for investors.
Morgan Stanley also indicated that the company's positive earnings forecast further validates the credibility of its profit projections. The bank assesses the probability of achieving its full-year profit forecast of RMB 7.5 billion for Yangtze Optical Fibre And Cable Joint Stock Limited Company as extremely high.
Earnings Forecast Details
The positive earnings forecast released by Yangtze Optical Fibre And Cable Joint Stock Limited Company indicates a substantial leap in the company's profitability during the reporting period.
The announcement shows an expected net profit attributable to shareholders of approximately RMB 2.4 billion to RMB 3.0 billion for the first half of 2026, compared to RMB 296 million in the same period last year, representing a year-on-year increase of 711% to 914%. Net profit after deducting non-recurring gains and losses is expected to be between RMB 2.0 billion and RMB 2.6 billion, indicating an even higher year-on-year surge of 1349% to 1784%.
The announcement attributes this significant performance growth to two main drivers: first, the continued expansion in demand for new optical fibre and cable products both domestically and internationally, spurred by the accelerated construction of computing power data centers; and second, the ongoing improvement in the industry's supply-demand structure. This performance confirms the rapid recovery in the optical fibre and cable industry's prosperity and highlights the powerful driving effect of computing power infrastructure construction on related industrial chain companies.
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