Haitong International: Lowering the target price of Changfei Optical Fiber Cable (06869) by 39.2% to HK$144 to maintain “increase” rating and raise profit forecast

The Zhitong Finance App learned that Haitong International released a research report stating that it will reduce the target price of Changfei Optical Fiber Cable (06869) by 39.2% from HK$237 to HK$144, maintaining the “gain” rating. The bank raised the company's net profit forecast for 2026 to 2028 by 32%, 40%, and 30% to 9.1 billion yuan, 13.1 billion yuan and 11.2 billion yuan, respectively. It believes that the peak of profit will still occur before additional production capacity is invested, and profits are expected to peak in 2027.

Changfei Optical Fiber Cable's third-quarter revenue increased by 139.4% year-on-year to RMB 9.316 billion, 10.6% higher than market expectations; net profit was RMB 3.2 billion, which was roughly in line with expectations. Gross margin fell 3.2 percentage points to 57.4% quarterly, 4.6 percentage points lower than market expectations.

Haitong International pointed out that this increase in the profit forecast mainly reflects an increase in the sales base based on the company's actual performance in the first nine months. The bank still expects profit to peak in 2027, then net profit may fall 14% in 2028 as spot prices fall and new production capacity is introduced one after another from the second half of 2027.