UBS has upgraded its target price for YOFC (06869) by approximately 147%, from HK$17.8 to HK$44, while maintaining a "Neutral" rating. The revision reflects stabilizing telecom operations and robust growth in the data communication segment. The bank forecasts an 11% compound annual growth rate (CAGR) for the company's overall transmission business revenue from 2025 to 2028.

Hollow-core fiber (HCF) remains a market focus, attracting investor attention, though its short-term earnings impact is limited. UBS expects YOFC's telecom transmission revenue to bottom out in 2025 with a 7% year-on-year decline, followed by a 1.5% rebound in 2026 and steady annual growth of 4-5% thereafter.

On the supply side, manufacturers are gradually shifting capacity toward data communication and export orders, leading to sustained improvements in supply-demand dynamics. Despite lingering demand pressures, early signs of price recovery emerged in the second half of 2025, supporting telecom business stabilization. Additionally, initial recovery in overseas markets provides a cushion for the telecom segment.

UBS projects a 57% surge in data communication transmission revenue this year, with a 30-40% CAGR through 2028. The segment's share of total transmission revenue is expected to rise from below 15% in 2024 to 36% by 2028. With gross margins exceeding 50% for data communication cables, the group's overall transmission business gross margin could climb from 31.7% in 2024 to 36.5% by 2028.

The bank notes that current market sentiment already prices in YOFC's high-margin data communication growth potential and initial optimism around HCF, suggesting moderate upside ahead. While HCF holds long-term promise, UBS anticipates gradual technological maturation over the next 2-3 years before delivering meaningful revenue contributions, positioning it as a strategic growth lever with limited near-term profit impact.