Goldman Sachs has released a research note maintaining a 'Neutral' rating on YOFC (06869), with the target price slightly lifted from HK$290 to HK$292. The firm holds a positive view on the company's product portfolio upgrade from the telecommunications market to the AI data center segment, as well as its expansion into polarization-maintaining fiber to capture opportunities in co-packaged optics and next-generation network processors.
Following the second-quarter results, the bank has raised its earnings forecasts for 2026 to 2028 by 44%, 36%, and 12% respectively, mainly reflecting upward revisions to both revenue and gross margin projections. Goldman Sachs noted that YOFC's net profit for the second quarter of this year surged 606% quarter-on-quarter to RMB 2.4 billion, aligning with the company's earlier guidance range of RMB 1.9 billion to RMB 2.5 billion, primarily driven by higher average selling prices for fiber optic products.
The gross margin for the period reached 60.5%, significantly above the 41.5% recorded in the first quarter and the 28.7% from the same period last year, outperforming the bank's expectations. Looking ahead to the second half of the year, Goldman Sachs anticipates continued quarter-on-quarter revenue growth for YOFC, supported by more fiber projects reflecting higher pricing and the ongoing shift in product mix toward AI data center offerings with elevated average selling prices.
Additionally, the group's subsidiary, YOFC's affiliated entity Changfei Boguang (300548.SZ), recently announced a four-year long-term agreement with a customer to provide scalable solutions, with a contract value of no less than RMB 4.5 billion.
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