$YOFC (06869.HK)$ The company will release its earnings report at 04:29 Beijing Time. Revenue for Q1 2026 is expected to reach 4.033 billion yuan, with an estimated earnings per share of 0.64 yuan.
The accounting standards applied to the above data are the Chinese Accounting Standards (2007).
The optical fiber industry is currently in its strongest upward cycle since 2025, and Changfei, as the global leader, is well-positioned to benefit significantly. According to the latest research report from UBS Group and CRU industry data, the company’s Q1 performance is highly likely to exceed expectations, with profitability elasticity accelerating its realization.
Industry: Optical fiber prices surge, confirming a cyclical reversal
According to CRU bimonthly data cited by UBS Group, the spot price of G652.D bare optical fiber in China reached 83.40 yuan/core kilometer in March 2026 – representing a year-on-year increase of 418% and a month-on-month rise of 165%. Since May 2025, the cumulative increase has exceeded 400%, surpassing the high point of the previous cycle for the first time.
The wave of optical fiber price increases has also spread to European and American markets. The price of G652.D bare optical fiber in Europe reached 7.94 euros/core kilometer in March 2026, reflecting a 136% month-on-month increase from January 2026 and a 159% year-on-year increase. Global optical fiber prices are experiencing a sharp rise, and the increase in product prices is expected to translate into profits, potentially improving the company's profitability.
The logic behind the price hike is not complicated:
Structural changes on the demand side: While domestic telecom demand remains weak, demand driven by data center expansion and optical fiber drones has emerged. The growth in data center optical fiber demand, fueled by AI computing infrastructure, is particularly notable.
Persistent tightness on the supply side: Limited capacity release from upstream preform production, coupled with optical fiber manufacturers adjusting their production structures to adapt to new demands, suggests that the short-term supply-demand gap will be difficult to bridge.
Another noteworthy point is that starting from January 2026, optical fiber prices in China exceeded those in Europe for the first time. Prices of G657.A1 bare optical fiber (for data applications) have also surged significantly – indicating that this price increase is not regional but rather a global industry upturn.
Moreover, according to a research report by Huaxin Securities:
Changfei Fiber Optic is one of the few companies in China capable of large-scale integrated development and production of optical fiber preforms, optical fibers, and optical cables.
Among these, the optical fiber preform is a crucial upstream raw material in the industry, as its quality and performance directly impact the quality and performance of optical fibers and optical cables. The company was the first in China to possess the capability to produce optical fiber preforms and is also one of the few enterprises in the industry that can manufacture optical fiber preforms using both PCVD and VAD+OVD processes.
Since January this year, optical fiber preforms have been in continuous short supply, with global production capacity nearing full utilization. Meanwhile, the company has ranked first in the world for nine consecutive years from 2016 to the present in terms of market share for optical fiber preforms, optical fibers, and optical cables, positioning it to benefit significantly from the upward cycle driven by supply and demand reversals.
Demand: Stable domestically, notable growth overseas
From a volume perspective, data tracked by UBS Group shows:
China Market: Q1 optical cable consumption remained largely flat year-over-year, with slower telecommunications investment offset by demand from data centers;
Overseas Markets: Demand in Changfei's core export regions (Europe, ASEAN, Latin America) grew approximately 2% year-over-year, while the U.S. market increased by 24%, primarily benefiting from telecommunications network upgrades and expansions of hyperscale data centers.
This 24% growth rate in the U.S. is quite remarkable. Changfei has invested significantly in overseas expansion in recent years, and now it coincides perfectly with the global AI computing infrastructure window.
Profit Expectations: Q1 Earnings Likely to Exceed Expectations
The current consensus for Changfei’s Q1 single-quarter performance is projected to achieve revenue of 4.033 billion yuan by Q1 2026, with an expected earnings per share of 0.64 yuan.
Profit upside primarily comes from two areas: direct gross margin improvement due to rising optical fiber prices + product mix upgrade (increased proportion of high-margin data communication optical fibers).
In terms of timing, Q1 is at the steepest slope of price increases (a 165% month-over-month increase in March). If the company's pricing strategy keeps pace, Q1 gross margin improvement should be fairly noticeable. Of course, some orders may have been signed last year under long-term agreements, causing a lag in price transmission, which needs to be noted.
Valuation and Institutional Views
UBS Group has given Changfei a **'Buy' rating**, with a 12-month target price of 290 Hong Kong dollars, offering approximately 56% upside from the closing price of 185.90 Hong Kong dollars on April 1st.
Based on UBS Group’s forecast of 8.73 yuan EPS for 2027, the current share price corresponds to a 2027 P/E ratio of about 19x. Considering the certainty of the industry upcycle and the company's leading position, this valuation is not considered expensive.
Overall, the optical fiber industry is in an upturn cycle of historical significance. As the global leader, Changfei is highly likely to report both volume and price increases for Q1. Specific figures will be disclosed by the company, but the direction shows a high degree of certainty.
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