YOFC jumps 15% as data center demand drives 914% profit surge

YOFC (06869.HK) expects first-half net profit to surge as much as 914% to RMB3 billion, driven by booming demand for optical fiber and cable from computing power data centers.

The company's shares opened 14.94% higher at HKD 176.9 on Wednesday, with 764,000 shares changing hands in pre-market negotiated transactions worth HKD 135 million.

"The accelerated development of computing power data centers has driven continued demand for new types of optical fiber and cable both domestically and internationally," YOFC said in a filing. The company said it leveraged its global leadership position to expand its core customer base and optimize its product structure.

Net profit for the six months ending June is expected to range from RMB2.4 billion to RMB3 billion, representing year-over-year growth of 711% to 914%. After stripping out non-recurring items, adjusted net profit is expected to range from RMB2 billion to RMB2.6 billion, a jump of 1,349% to 1,784% from a year earlier. The company did not disclose revenue or earnings per share figures in the profit alert.

HSBC Research initiated coverage on YOFC with a Buy rating and a price target of HKD 277, implying about 57% upside from the stock's pre-market open. The stock has gained more than 80% year to date, reflecting investor enthusiasm for the data center infrastructure theme.

The profit alert signals that YOFC is capturing a disproportionate share of the global data center buildout, which is driving demand for high-bandwidth optical connectivity. Investors will watch for the company's full interim report, expected in late August, for revenue and margin details that will clarify the sustainability of this growth trajectory.

This article is for informational purposes only and does not constitute investment advice.