Nomura: Fiber Optic Industry Capacity Expansion Shows Signs of Acceleration, Yangtze Optical Fibre and Cable May Face Increased Competition

Odaily Planet Daily reported that Nomura Securities stated Han's Laser Technology Industry Group and Hegeng Silicon Industry are both relatively new entrants to the fiber optic market. The firm believes their recent investment projects reflect strong demand for optical fiber, primarily driven by infrastructure construction for AI data centers. Meanwhile, the bank noted that the preform sector has high technical barriers and is currently dominated by existing players such as Corning (GLW.N), Fujikura, and Yangtze Optical Fibre and Cable (06869.HK).

In the short term, Nomura believes supply constraints will persist, and Yangtze Optical can continue to benefit from higher spot prices and margin expansion due to its greater involvement in the AI data center market. However, if new entrants successfully develop high-end products (i.e., hollow-core and multi-core fibers) and smoothly execute their capacity expansion plans, the bank believes market competition will intensify, and existing players like Yangtze Optical may face pressure on margin expansion. The firm maintains a Buy rating on Yangtze Optical Fibre and Cable (06869.HK), with a target price of HKD 266, based on a forward P/E of 23.7 times its forecasted earnings per share of RMB 9.75 for the fiscal year 2027. (Jin Shi)