[ET Net News Agency, 4 July 2019] Nomura maintained its target price for Yangtze
Optical Fibre And Cable (YOFC)(06869) unchanged at HK$17 but upgraded its rating to
"neutral" from "reduce".
The research house said China's optical fibre sector started feeling the negative impact
of weak demand and increased capacity since 2H 2018; a sharp price cut (40% on cable and
fibre) by major suppliers for China Mobile's (00941) tender in March-2019 worsened the
situation.
While the ASP and margin contractions are yet to be reflected in YOFC's earnings, Nomura
believes the share price has likely factored in most of the negative news. A potential
acceleration of 5G infrastructure rollout in 2H 2019, and some big cities (e.g., Shanghai)
promoting the 1000M family might help YOFC to get out of the trough.
Hence, Nomura slightly raised its 2019-20 earnings forecasts by 2-6%. It recommended
that investors wait for the suboptimal supply-demand trend to end before becoming more
positive the stock. (KL)
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06869 YOFC
Nominal 
8.260 -1.150 (-12.221%) Research Report
04/07/2019 11:47
[I-bank focus]Nomura upgrades YOFC (06869) to "neutral
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