Yangtze Optical Fiber and Cable's non-net profit in 2025 increased by 40.6% year-on-year, with gross profit margin breaking 30% for the first time | Financial report insights

Longhua Fiber, a leading fiber optic cable company, is expected to deliver an impressive performance in 2025.

The financial report shows that the annual operating income reached approximately 14.252 billion yuan, a year-on-year increase of 16.85%; the non-recurring net profit was approximately 516 million yuan, a significant increase of 40.56% year-on-year. The overall gross profit margin reached 30.7%, marking the first time it has surpassed 30% since going public in 2014, with the gross profit margin for the fourth quarter alone reaching 35.7%, a historic high.

The operating cash flow performance was also strong. The net cash flow generated from operating activities for the year was approximately 3.653 billion yuan, a year-on-year increase of over 104%, confirming the substantial improvement in the company’s profit quality. In terms of capital operations, the company completed a placement of 70 million H-shares in December, raising a net amount of approximately 2.229 billion Hong Kong dollars, the largest H-share placement project in the optical communication industry since 2015; in August, it issued the country’s first tech innovation bond in the optical communication industry worth 500 million yuan, with an issuance rate of only 1.9%, demonstrating the market’s high recognition of the company’s credit.

Regarding dividends, the company plans to distribute a cash dividend of 2.95 yuan (before tax) for every 10 shares, totaling about 244 million yuan; combined with the 197 million yuan A-share repurchase completed within the year, the total dividend amounts to approximately 442 million yuan, accounting for 54.26% of the net profit attributable to the parent company, significantly enhancing shareholder returns.

Dual-driven: Optical interconnect components experience rapid growth, and the structure of optical transmission products is optimized

From the business segment perspective, the company’s two core sectors both achieved positive growth, but the growth rates varied significantly.

The optical transmission product segment generated revenue of approximately 8.346 billion yuan, a year-on-year increase of 6.09%, with the gross profit margin increasing by 4.22 percentage points to 35.90%. The growth was driven mainly by two factors: the continuous improvement in the production efficiency of standard single-mode fiber optic cables, and a year-on-year decrease in direct material costs of 8.30%; the large-scale commercial application of new fiber optic products accelerated, with G.654.E ultra-low loss large effective area fiber experiencing explosive growth in 2025. China Mobile’s total procurement in June reached 3.14 million core kilometers, a year-on-year increase of about 156%, and China Telecom’s first framework procurement of G.654.E cables in October amounted to approximately 2.24 million core kilometers, with Changfei winning the largest share.

The optical interconnect components segment was the biggest highlight of the year. The subsidiary Changxin Bochuang seized opportunities in AI computing infrastructure construction, achieving revenue of approximately 3.144 billion yuan, a year-on-year increase of 48.58%, with a gross profit margin of 39.73%, up 10.45 percentage points year-on-year. Changxin Bochuang has established a “1+3” global collaborative production system with “Indonesia + Jiaxing, Chengdu, Hanchuan,” and high-speed products such as the 400G/800G AEC series, multi-mode 400G SR4, and 800G SR8 are capable of mass supply, with R&D investment accounting for over 5% of revenue.

Overseas business: Revenue ratio surpasses 40%, becoming an important growth engine

In 2025, Changfei achieved overseas business revenue of approximately 6.092 billion yuan, a year-on-year increase of 47.8%, further raising its share of total revenue to 42.7%, a historic high. The recovery of telecommunications infrastructure construction in Southeast Asia and Europe and America, coupled with the company’s localized operational advantages in eight major production bases across six countries including Indonesia, South Africa, Brazil, Poland, Germany, and Mexico, has led to a simultaneous increase in volume and price for overseas business.

In terms of regional structure, revenue from mainland China was approximately 8.160 billion yuan, a year-on-year increase of 1.04%, accounting for 57.26%; overseas revenue was approximately 6.092 billion yuan, accounting for 42.74%. The gross profit margin for overseas business reached 35.29%, up 4.40 percentage points year-on-year, higher than the domestic business’s 27.88%, indicating a better profit structure.

The net proceeds from the H-share placement completed in December, amounting to approximately 2.229 billion Hong Kong dollars, will be specifically used to support the development of overseas business, providing ample ammunition for the company to further expand its international market share.

Diversified business: Revenue share first exceeds 40%, with substantial progress in each segment

In 2025, the company’s diversified business revenue was approximately 5.9 billion yuan, with its share of total revenue exceeding 40% for the first time.

In the industrial laser sector, the company completed the acquisition and integration of Pentium Laser (Zhejiang) Co., Ltd. (holding 60.76%), establishing a complete industrial chain from upstream special optical fibers, midstream laser devices, to downstream laser equipment. In the marine energy and engineering sector, the company formed an entire chain capability around the demand for large-scale development of deep-sea wind power, including marine energy transmission, marine optical network systems, and engineering construction services. In the high-purity quartz material sector, the company completed the research and industrialization project of Changfei optical quartz components, achieving significant customer breakthroughs in core markets.

In the third-generation semiconductor sector, the stake in Changfei Advanced Semiconductor completed its first wafer rollout at the Wuhan base in May 2025, but it is still in a period of large-scale investment, reporting a loss of approximately 1.6 billion yuan during the reporting period, with an investment loss of approximately 342 million yuan recognized using the equity method.

Expenses and cash flow: Continued increase in R&D investment, significant improvement in cash flow

In 2025, the company’s R&D expenses were approximately 894 million yuan, a year-on-year increase of 13.61%, accounting for 6.28% of total revenue; the R&D staff numbered 1,428, accounting for 13.48% of total employees. The company has the only national key laboratory in the domestic optical fiber and cable industry, applying for 283 patents and being granted 319 patents throughout the year, and leading the formulation of two international standards.

Financial expenses increased by 37.95% year-on-year to 264 million yuan, primarily due to reduced interest income, exchange losses, and increased interest expenses. Credit impairment losses were approximately 179 million yuan, a year-on-year increase of 25.69%, with the balance of bad debt provisions for accounts receivable reaching 801 million yuan, requiring continuous attention to collection risks.

The net cash flow from operating activities was approximately 3.653 billion yuan, doubling year-on-year, primarily benefiting from the growth in operating performance and improved efficiency in the use of operating funds. The year-end cash and cash equivalents totaled approximately 5.764 billion yuan, a significant increase of 75% compared to the beginning of the year, mainly due to the inflow from H-share placement proceeds. The company’s debt-to-asset ratio was 51.12%, and the current ratio was 1.71, maintaining a sound financial structure.

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