Goldman Sachs: Slightly raises target price for YOFC (06869) to HKD 292, maintains "Neutral" rating.

Goldman Sachs released a research report maintaining a "Neutral" rating on YOFC (06869), with a slight increase in the target price from HKD 290 to HKD 292. The firm holds a positive outlook on YOFC's upgrade of its product portfolio from the telecommunications market to the AI data center market, as well as its expansion into polarization-maintaining fibers to capture co-packaged optical/next-generation network processor opportunities. Following the second-quarter results, the firm raised its earnings forecasts for 2026 to 2028 by 44%, 36%, and 12%, respectively, primarily reflecting an upward adjustment in revenue and gross margin projections. Goldman Sachs noted that YOFC's net profit for the second quarter jumped 606% quarter-on-quarter to RMB 2.4 billion, in line with the company's earlier forecast range of RMB 1.9 billion to RMB 2.5 billion, mainly driven by an increase in the average selling price of fiber optic products. During this period, the gross margin reached 60.5%, significantly higher than the 41.5% in the first quarter and 28.7% in the same period last year, outperforming the firm's expectations. Looking ahead to the second half of the year, Goldman Sachs expects YOFC's revenue to continue growing quarter-on-quarter, benefiting from more fiber optic projects reflecting higher pricing and an upgraded product mix towards higher-priced AI data center products. Additionally, the group's subsidiary EverProX Technologies (300548.SZ) recently announced a four-year long-term agreement with clients to provide scaled solutions, with a contract value of no less than RMB 4.5 billion.