[ET Net News Agency, 5 July 2019] Jefferies Research lowered its target price for
Yangtze Optical Fiber and Cable Joint Stock (YOFC)(06869) to HK$15.48 from HK$16.32 and
upgraded its rating to "hold" from "underperform" after a 47% fall in its stock price.
The research house said YOFC received 7.5x (RMB216m) more government grant in 1H 2019
versus FY2018 (RMB28m), but Jefferies remains cautious since the visibility of ASP and
profit recovery beyond 2019 remains uncertain. In addition, pressure on the Chinese telcos
to accelerate 5G build could mean more squeezing of suppliers, and hopes of increasing
adoption of G654.E fiber were dampened by China Unicom's (00762) recent tender
cancellation.
Jefferies now assumed another grant of RMB50m is received in 2H. Hence, it raised its
2019 forecast of YOFC's bottom line from a small loss to a positive profit of RMB211m.
(KL)