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YOFC (06869.HK) Surges Over 13% as M Stanley Raises TP to HKD230; High Earnings Expectations Already Priced In
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YOFC (06869.HK) opened 3.95% higher today and peaked at HKD263.8. It is now trading at HKD263.8, up 13.32%, with turnover of 10.0615 million shares, involving HKD2.54 billion. M Stanley said in a research report that YOFCs share price has rebounded significantly since 4Q25 and has largely reflected investors expectations of high earnings, implying execution risk if future growth fails to keep pace. Although strong AI-driven demand continues to support solid short-term fundamentals, the firm expects mid-term cyclical normalization and pricing pressure as global new capacity expansion accelerates. The broker noted that the current share price implies quarterly profit of RMB2.5 billion over the next 12 months, equivalent to 4 to 5 times its 1Q26 earnings. The report highlighted that optical fibre prices have reached a seven-year peak due to tight supply. Rapid expansion of AI data centres has driven unprecedented demand for optical fibre, with usage multiple times that of traditional data centres. However, demand from drones remains uncertain due to geopolitical factors. On the supply side, major overseas manufacturers are actively expanding capacity, while Chinese producers are more cautious. The broker expects historically high gross margins to attract global capacity expansion, potentially leading to a decline in optical fibre prices in 20272028. It believes the current share price has largely priced in elevated earnings expectations for 20262027, with limited room for positive surprises. In response to the significant rise in optical fibre prices and a positive industry outlook, M Stanley substantially raised its forecasts for YOFC. It lifted its revenue forecasts for 2026 and 2027 by 64% and 84%, respectively, and increased net profit forecasts for the two years by 343% and 553% to RMB7.507 billion and RMB12.73 billion, respectively. The broker sharply raised its TP for YOFCs H shares to HKD230 from HKD47, while maintaining an Equalweight rating. It also raised its TP for YANGTZE OPTICAL FIBRE (601869.SH) A shares to RMB202.25 from RMB43.93, with an Underweight rating. (ad/u) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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