The Zhitong Finance App learned that on July 10, the optical fiber prefabricated rod of the Optical Communications branch ushered in big news. The Ministry of Commerce decided to conduct a final review investigation of anti-dumping measures applied to imported optical fiber precast rods originating in Japan and the United States starting July 11, 2023. During the final review investigation of anti-dumping measures, anti-dumping duties continued to be levied on imported optical fiber precast rods originating in Japan and the United States in accordance with the scope of taxable products and tax rates announced by the Ministry of Commerce in Notice No. 25 of 2015, Notice No. 57 of 2018, and Notice No. 39 of 2020.

Huaxi Securities said earlier that with the continuous construction of domestic information infrastructure, the continuous deployment of communication networks such as 5G and gigabit optical networks, and the industry's vigorous promotion of FTTR, vigorously promoting “optical fiber entry” to achieve a whole-house gigabit and whole-house smart home experience, it can greatly promote operators' smart home business applications and further boost demand for fiber optic cable products. Overall fiber optic cable procurement volume is expected to continue to rise in 2023, driving the continued upward trend of the industry.

According to information, the upstream of the optical fiber precast rod industry chain is the supplier of raw materials; midstream fiber precast rod manufacturing is at the core of the entire industry chain, with high industry concentration and strong bargaining power; the downstream is fiber optic cable manufacturers, the three major operators, and other applications.

The leading manufacturers in the middle reaches of the optical fiber precast rod industry chain mainly include Changfei Optical Fiber, Fenghuo Communications, Hengtong Optoelectronics, Zhongtian Technology, and Fortis Information. Basically, enterprises in the industry have gradually formed a “bar-optical rod-fiber-optical cable” optical communication industry chain layout and production model.

In recent years, China's annual consumption of fiber optic cables is about 300 million core kilometers. Under the stimulus of 5G and gigabit optical network construction plans, China's optical cable demand will maintain a compound annual growth rate (CAGR) of 2.9% from 2021 to 2026. Affected by the construction of 5G dual gigabit networks, there is no change in the trend of rising market demand for optical cables in the long run. Reflected in the first half of 2023, there was a positive signal in the fiber optic cable market: China Mobile and China Telecom have successively launched bidding projects for ordinary optical cables and outdoor optical cables, bringing light to the fiber optic cable market.

China Mobile recently announced the collection results of butterfly cable products from 2023 to 2024. Ten companies, including Hengtong, Fenghuo, Zhongtian, and Changfei, won the bid. According to the collection announcement previously issued by China Mobile, the estimated procurement scale of the butterfly cable products purchased this time is about 5 million core kilometers, equivalent to 4.7758 million kilometers of skin length, and the total project budget is 1,185.6 billion yuan (excluding tax).

China Telecom has launched 50 million core kilometers of outdoor optical cable collection (2023) collection. The procurement volume of this outdoor cable collection project exceeds the same period in 2020 and 2021, which is the same as the procurement volume in 2018, showing China Telecom's strong demand for optical cables.

Furthermore, China Unicom and China Radio and Television did not launch large-scale fiber-optic cable bidding projects in the first half of the year. However, compared to 2022, China Unicom's local network cable collection generated a demand of 43.62 million core kilometers of optical fiber; China Radio and Television first launched a centralized procurement project for ordinary optical cables and butterfly cable products (totaling about 9.03 million core kilometers) in 2022. In the second half of 2023, China Unicom and China Radio and Television will also generate a certain amount of optical cable procurement demand, which is worth the industry's expectations.

Furthermore, the export situation of the fiber optic cable industry reflects the development trend of overseas markets. According to data released by customs, from January to May 2023, the export volume of optical rods, optical fibers, and optical cables was 990.655 tons, 4.433,300 kilometers, and 10.178,800 kilometers, respectively, showing a significant increase compared with the same period in 2021 and 2022.

According to the Guotai Junan Research Report, China Mobile released candidate results for centralized procurement of ordinary optical cable products from 2023 to 2024. The general cable winning pattern improved, and prices were in line with expectations; profit improvements may be higher than price changes; in addition, China Mobile cable tenders usually have significant significance in global fiber optic cable pricing, which usually affects the prices of subsequent procurement of optical cables by China Telecom, China Unicom, etc. Considering that China Telecom will launch a pre-qualification examination for 50 million core kilometers of outdoor optical cables on May 17, 2023, it is expected that further tenders will begin in the future. It is recommended to pay attention to the improvement in the profitability of domestic manufacturers of optical fiber cables.

Related concept stocks:

Changfei Optical Fiber Cable (06869): The global optical device and optical module market will continue to grow, including operators and Internet companies dealing with the demand for optical network upgrades spawned by traffic growth. The company's optical devices, optical modules/silicon optical modules, integrated wiring, etc. will all benefit from all types of optical communication products.

Hengtong Optoelectronics (600487.SH): Hengtong Optoelectronics focuses on creating value for customers in the fields of communication and energy, providing industry-leading products and solutions for offshore wind power, marine communications, smart grids, smart cities, energy storage, etc., has comprehensive capabilities integrating “design, R&D, manufacturing, sales and service”, and is committed to becoming the world's leading system solution service provider in the fields of communication and energy through a global industrial and marketing network layout.

Fortis Information (000836.SZ): The company's optical communication business with optical fiber cable manufacturing as the core and quartz products business supported by quartz tube products. The company is engaged in the manufacture and sale of optical communication products such as single-mode optical fibers, communication optical cables, quartz bushings, etc., and uses capital raised and its own capital to build an optical fiber prefabricated rod manufacturing project (phase I) and a quartz bushing tube phase II expansion project to actively expand upstream in the industry chain. It is an important optical fiber manufacturer north of the Yellow River, one of the country's important fiber optic cable manufacturers, and the only supplier of natural quartz fiber precast rod liners in China.

Firefight Communications (600498.SH): The main business of Firefight Communications is based on optical communications and has further expanded into a wide range of fields created by the integration of information technology and communication technology. Related high-tech product design, manufacturing and sales: including optical fiber prefabricated rods, optical fiber composite overhead ground wires (OPGW), optical fiber composite phase cables (OPPC), etc.