Nomura: Cuts Yangtze Optical Fibre price target to HK$167, maintains "Buy" rating.

Nomura issued a research report stating that Yangtze Optical Fibre and Cable's third-quarter revenue and profit were RMB 9.3 billion and RMB 3.2 billion, respectively, up 139% and 1,742% year-on-year. The bank believes the robust growth was mainly driven by strong AIDC demand and supply shortages that led to significant fiber price increases, as well as product mix improvement, and expects the company to continue benefiting from strong AIDC demand in the second half of 2026 and 2027. The bank raised its 2026-2027 revenue forecasts by 2% to 6% to reflect the recovery in demand for high-end products; and due to the increased revenue contribution from AI networks and price increases, raised its gross margin forecasts for 2026-2028 by 11.2 to 11.5 percentage points, lifting its 2026-2028 profit forecasts by 40% to 58%. The bank expects AI network product revenue to achieve a compound annual growth rate of 57% from 2026 to 2028. The bank maintains its "Buy" rating on Yangtze Optical Fibre and Cable but lowered its target price from HK$266 to HK$167, based on 10x 2027 forecast earnings per share.