Nomura: Accelerated capacity expansion signs in fiber optic industry, Changfei Fiber Optic Cable may face increased competition

Odaily Planet Daily News Nomura Securities stated that Han's Laser and Hoshine Silicon are relatively new entrants in the fiber optic market. The bank believes their recent investment projects reflect strong fiber optic demand, primarily driven by AI data center infrastructure construction. Meanwhile, the bank notes that the optical fiber preform industry has high technical barriers and is currently dominated by existing players such as Corning (GLW.N), Fujikura, and Yangtze Optical Fiber and Cable (06869.HK).

In the short term, the bank believes supply constraints will persist, and Changfei can continue to benefit from higher spot prices and margin expansion driven by greater exposure to the AI data center market. However, if new entrants can successfully develop high-end products (i.e., hollow-core fiber and multi-core fiber) and effectively execute their capacity expansion plans, the bank believes market competition will intensify, and existing players like Changfei Fiber may face pressure on margin expansion. The bank maintains a Buy rating on Changfei Fiber Optic Cable (06869.HK) with a target price of HK$266, based on a 23.7x forward P/E ratio on FY2027 forecasted earnings per share of RMB 9.75. (Jin Shi)