Yangtze Optical Fibre and Cable Joint Stock Limited Company (hereinafter referred to as "YOFC", stock code: 601869.SH, 06869.HK) announced its interim results for the six months ended 30 June 2022, on Aug. 26. It has delivered a satisfactory result to investors. According to the report, YOFC achieved the operating revenue of approximately RMB6.39 billion in the first half of 2022, an increase of approximately 46.9% in comparison to roughly RMB4.35 billion in the first half of 2021. Benefiting from the rise of the average price in the industry and the optimization of the Company's production efficiency, the Company's gross profit margin improved from 19.6% in FY2021 to 22.5% in the first half of 2022, while the Group’s profit for the Period (exclusive of non-recurring profit or loss) attributable to the equity shareholders of the Company amounted to approximately RMB463.3 million, increased by approximately 188.1% as compared to the same period of 2021 of approximately RMB160.8 million..
The year 2022 marks the second year of YOFC's strategic implementation of the "14th Five-Year Plan". In the first half of 2022, the telecommunications industry further developed at home and abroad. As the optical fibre and cable market showed resilience and rebounded, the business environment improved greatly for the Company. While putting continuous efforts into cost reduction, efficiency improvement, technological innovation and sharpening competitive advantages of its main business, YOFC has reached milestones in internationalization and diversification.
1. Cost reduction, efficiency improvement and more technological innovation
In the first half of 2022, YOFC continued to improve its production efficiency and made breakthroughs in new product R&D and applications. In the first half of 2022, the gross profit margin of the Company went up by approximately 3%, which was attributable to the higher production efficiency and better cost control.
As China progressively rolls out the “Eastern Data and Western Computing” project, the demand for transmission network equipment, optical fibres and cables, optical transceivers and other telecommunication infrastructure are expected to grow. In the recent centralized procurement of G.654.E optical fibre by China Telecom and China Mobile, YOFC has obtained the highest share. This demonstrated the forward planning and leading R&D capability of the Company for new technology and products.
2. Further growth of overseas business and acceleration of production capacity optimisation
Internationalization is one of the key strategies of the Company. Through the active expansion of the overseas markets in recent years, the Company added new sales locations and increased brand influence considerably. In the first half of 2022, revenue from the Company’s overseas business reached approximately RMB 2.19 billion, representing a growth of approximately 53.1% from RMB 1.43 billion in the first half of 2021, accounting for 34.2% of the Company's total revenue. As a result, the Company outperformed the industry average in terms of growth.
YOFC's plant in Poland
In order to cope with rising transportation costs, international shipping capacity crunch, trade protectionism and foreign currency fluctuation in the target markets, the Company continued to enhance the plan for localizing production capacity in the overseas markets. In the first half of 2022, the Company expanded the production capacity of the optical cable plant in Indonesia, sent out the first batch of orders from the optical cable plant in Poland, and undertook the construction of optical cable production lines as scheduled for YOFC Poliron, which was acquired by the Company in 2021. In addition, the telecommunication network projects in the Philippines, Peru and Mexico were advancing steadily.
3. Further business diversification with a focus on integration and expansion
In the first half of 2022, the Company optimised the strategic planning of major diversification areas, namely compound semiconductors, optical transceivers and components, industrial lasers and submarine cable engineering. The rapid growth of these sectors will create market opportunities for the Company to integrate acquired assets and expand business in diversified fields.
YOFC completed the acquisition and integration of Wuhu Tus Semiconductor Co., Ltd. and Wuhu THZ Engineering Centre Co., Ltd. in May 2022. Following the acquisition, the target company was renamed to Anhui YOFC Advanced Semiconductor Co., Ltd. and became a subsidiary of the Company.
YOFC completed the acquisition of Broadex Technologies Co., Ltd. in July 2022, which marked a milestone in diversifying the optical transceiver and optical component business.
YOFC has fully integrated related industry chain resources and established Everfoton Technologies Corporation Limited to take advantage of its vertical integration and provide differentiated and customized fibre laser solutions to achieve business expansion.
YOFC consolidated relevant resources along the value chain to establish Everfoton Technologies Corporation Limited, which will take advantage of the vertical integration to drive business expansion by offering differentiated and customised optical fibre and laser solutions.
Baosheng YOFC Marine Engineering Company Ltd. was established as a joint venture subsidiary by YOFC and Baosheng Science and Technology Innovation Co., Ltd., so as to provide products and services for grid power distribution and transmission systems, submarine power distribution and transmission, signal transmission and submarine development projects.
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