Yangtze Optical Fibre shares surged 22% at the opening of the Hong Kong stock market; Morgan Stanley upgraded its rating to overweight.

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YOFC (Yangtze Optical Fibre and Cable) welcomes a strong catalyst resonance. Morgan Stanley upgraded the company’s H-share rating to Overweight, coupled with the release of an upbeat earnings pre-announcement by the company, driving the stock price up by as much as 22% at Thursday’s open, marking the largest single-day gain in over three weeks.

Morgan Stanley analysts including Andy Meng pointed out in a report that YOFC’s H-shares have fallen about 50% from their peak in June, but supported by the AI-driven optical fiber super cycle, the company’s profit growth trajectory remains unchanged and the current risk/reward ratio of the stock has become more attractive.

Morgan Stanley maintained its target price at HK$230. Meanwhile, the company announced that the net profit attributable to shareholders of the listed company for the first half of 2026 is expected to be about 2.4 to 3 billion yuan, representing a year-on-year increase of 711% to 914%.

As of now, YOFC’s Hong Kong shares are up 9.55%, trading at HK$168.6.

Morgan Stanley: Pullback has fully reflected supply-side concerns, entry timing is ripe

The core logic behind Morgan Stanley’s rating upgrade is that the previous stock price correction mainly reflected market concerns about supply-side risks rather than a fundamental deterioration.

Analysts including Andy Meng stated in the report that industry capacity release still needs time, while demand driven by booming AI infrastructure remains strong, making substantial changes in profit growth momentum over the next 6 to 12 months unlikely. Against this backdrop, after a significant pullback, the stock’s current valuation is highly attractive, and the recent correction has created a very attractive entry opportunity for investors.

Morgan Stanley also noted that the company’s earnings pre-announcement further confirms the credibility of its profit forecasts, and the bank judges there is a very high probability of YOFC achieving its full-year profit forecast of 7.5 billion yuan.

Earnings Pre-Announcement: First Half Net Profit Soars Over 9x Year-on-Year

YOFC’s earnings pre-announcement shows that the company’s profitability has surged significantly during this reporting period.

The announcement shows that net profit attributable to shareholders of the listed company for the first half of 2026 is expected to be around 2.4 to 3 billion yuan, while the same period last year was only 296 million yuan, representing a year-on-year increase of 711% to 914%. After deducting non-recurring gains and losses, net profit is estimated at 2 to 2.6 billion yuan, with a year-on-year growth of 1349% to 1784%.

The announcement attributes this substantial growth to two main drivers: first, the continued expansion of domestic and overseas demand for new optical fiber and cable products stimulated by the accelerated construction of computing power data centers; second, the ongoing improvement in the industry’s supply and demand structure. This performance demonstrates the rapid recovery in the optical fiber and cable sector’s prosperity and highlights the strong driving effect of computing power infrastructure construction on related industrial chain companies.

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