HK Stock Market Move | YOFC (06869) Falls Over 5% in Early Trading; UBS Says Market Overestimates Risk of Optical Fiber Overcapacity

YOFC (06869) fell over 5% in early trading. As of press time, it was down 4.09% at HK$187.7, with a turnover of HK$1.791 billion. On the news front, UBS initiated coverage of China's optical fiber and cable industry for the first time, believing that investors' concerns about overcapacity in 2027 and peak earnings are significantly overestimated. UBS pointed out that since its share price peaked in June, YOFC has fallen 37%, due to investors' worries that optical fiber capacity expansion announced by peers and new companies could cause the company's earnings to peak in 2027. However, UBS believes the risk of overcapacity is limited. The bank said it raised its target price for YOFC by 14%, from HK$290 to HK$330, and reiterated its "Buy" rating. It also raised its earnings forecasts for the company, lifting its 2026-2028 earnings forecasts to RMB 9.1 billion, RMB 15.6 billion and RMB 19.1 billion, mainly reflecting better-than-expected optical fiber prices driven by AI, as well as the shift in product mix toward high-performance optical fiber products.