DBS has issued a research report upgrading its rating on YOFC (06869) from Fully Valued to Buy, with a target price of HK$259.

The target price is based on 20 times the forecast price-to-earnings ratio for fiscal year 2027, which is one standard deviation above the historical average.

This reflects improved earnings visibility, rising exposure to artificial intelligence data center demand, and domestic telecom carrier price resets.

The firm forecasts the company's optical cable shipment volumes to grow by 34%, 19%, and 9% for fiscal years 2026 to 2028, respectively.

The group's gross profit margin is expected to expand to 48% in fiscal year 2026.

Revenue is projected to grow by 63%, 44%, and 20% respectively, with earnings forecasts raised to 6.068 billion yuan, 9.313 billion yuan, and 11.199 billion yuan.