Shares of YOFC (HKG: 06869) climbed more than 7% in today's trading session.

At the time of writing, the stock was up 7.36% to HK$14.0, with a trading turnover of HK$512 million.

The rally follows positive commentary from the company's management regarding future demand.

Drivers of the Surge

At a thematic forum on July 18, YOFC's Executive Director and President, Zhuang Dan, stated that the market for polarization-maintaining (PM) fiber is currently extremely robust.

He projected that demand for PM fiber will surge by ten to twentyfold over the next one to two years.

The company is collaborating with partners across the industrial chain to expand its production capacity for this product.

Strong Financial Performance

The company had previously issued a positive profit alert on July 14.

For the first half of this year, YOFC anticipates achieving a net profit attributable to shareholders in the range of approximately RMB 2.4 billion to RMB 3.0 billion.

This represents a staggering year-on-year increase of 711% to 914%.

The strong performance is primarily attributed to the accelerated construction of computing power data centers and the sustained growth in demand for new fiber optic cable products both domestically and internationally, leading to continuous improvements in the industry's supply-demand structure.

Analyst Upgrade and Outlook

Morgan Stanley recently published a research report noting that YOFC's stock has declined by about 50% from its peak in June 2026.

However, the bank believes the earnings growth trajectory, supported by an AI-driven fiber supercycle, remains intact.

The report stated that the valuation de-rating has created a highly attractive entry point.

Consequently, Morgan Stanley upgraded its rating on the H-shares from "Equal-weight" to "Overweight."

The upgrade reflects a more favorable risk-reward profile following the recent stock price correction.

The firm maintained its target price of HK$23.0 for the shares.