Shares of Yangtze Optical Fibre and Cable (6869.HK) surged 10.2% to HK$105.50 on August 7, snapping back from a volatile week, after the company issued a profit alert projecting a 711–914% jump in first-half 2026 net profit and announced a deal to fully acquire its YOFC Shanghai subsidiary. The combination of explosive earnings growth and corporate restructuring has investors asking whether this is a turning point or a peak. YOFC's Profit Bonanza and Shanghai Buyout Signal a New Era for China's Fiber Giant — But at What Price?
Shares of Yangtze Optical Fibre and Cable jumped 10.2% to HK$105.50, rebounding sharply from a brutal 50% selloff since June, after a one-two punch of blockbuster earnings guidance and a strategic acquisition reshaped the investment case for China's largest optical fiber maker.
Half a Year's Profit May Top Three Full Years Combined
YOFC guided first-half 2026 net profit of RMB 2.4–3 billion, a 711–914% year-over-year surge, with core operating profit (stripping out one-time items) growing an even more staggering 1,349–1,784%. To put that in perspective: the company's combined net profit across all of 2023, 2024, and 2025 was RMB 2.79 billion — meaning one half-year now likely exceeds three years of earnings. The cause is straightforward: Morgan Stanley estimates global fiber demand will hit 800 million fiber-kilometers in 2026 while supply sits around 700 million, leaving a ~12.5% shortfall — a gap driven overwhelmingly by AI data-center buildouts that require vast quantities of high-speed cabling.
Buying Out the Dutch Partner Simplifies the Business
On July 30, YOFC agreed to purchase the remaining 25% stake in its Shanghai subsidiary from Draka (part of Prysmian Group) for EUR 12 million in cash.
YOFC Shanghai will shift from a joint venture to a wholly-owned subsidiary , with the deal funded entirely from internal resources.
The price represents just a 6.3% premium over net asset value — cheap enough that it's hard to argue shareholders are overpaying. Full ownership means YOFC consolidates all of Shanghai's revenue and profits on its books and eliminates a potential source of governance friction.
Morgan Stanley Sees a Bigger Picture — and More Upside
Morgan Stanley upgraded the H-shares to Overweight and forecasts net profit could reach RMB 3 billion for the first half alone.
The bank sees a high probability YOFC hits its full-year net profit forecast of RMB 7.5 billion , maintaining a target price of HK$230 — more than double today's level. Morgan Stanley argues the prior 50% pullback had already priced in supply-side concerns, while AI-driven demand "remains intact in this supercycle."
The Risk: Cyclical Boom, Cyclical Bust?
Concerns about intensifying competition from accelerating industry capacity expansion have already triggered massive profit-taking from YOFC's all-time high of HK$305.
The fiber optic industry faces both price surges driven by supply shortages and cyclical risks. If new capacity closes that 12.5% supply gap faster than expected, today's extraordinary margins could compress just as quickly as they expanded.