Author | Li Xin

Editor | Chen Xiaoran

Hengtong Optic-Electric (600487.SH) has embarked on a fresh round of capital market moves.

On November 4, Hengtong Optic-Electric announced that its controlling shareholder, Hengtong Group, plans to increase its stake by 400 million to 600 million yuan within 12 months.

On the same day, the company disclosed a share repurchase plan, under which it intends to buy back 100 million to 200 million yuan worth of shares for use in employee stock ownership plans or equity incentives, with the repurchase price not exceeding 84.05 yuan per share.

This confidence behind the stake increase and buyback stems from the company's earnings growth. In the first three quarters of 2026, net profit attributable to the parent company reached 6.163 billion yuan, up 159.42% year on year.

Soaring demand for AI computing power has driven both the volume and price of optical communications products upward. This veteran leader in optical fiber and cable now stands at a critical juncture in a new round of industrial growth.

Controlling Shareholder Increases Stake Again

This is not Hengtong Group's first move.

In April 2025, Hengtong Group launched a plan to increase its holdings by 150 million to 300 million yuan, which was completed in April 2026, with cumulative purchases of about 7.5356 million shares and a transaction amount of about 150 million yuan.

As of the end of September 2026, Hengtong Group held about 594 million shares of Hengtong Optic-Electric, accounting for 24.07% of the company's total share capital.

The successive announcements of the controlling shareholder's stake increase and the listed company's planned buyback signal confidence in the company's long-term development. However, the increase plan and repurchase proposal do not mean that all the relevant funds have been deployed, and the final effect will still depend on subsequent implementation.

Behind these capital moves, Hengtong Optic-Electric's operating performance is undergoing notable changes.

In the first three quarters of 2026, Hengtong Optic-Electric achieved operating revenue of 64.367 billion yuan, up 29.72% year on year; net profit attributable to the parent company of 6.163 billion yuan, up 159.42% year on year; and net profit attributable to the parent company after deducting non-recurring gains and losses of 6.148 billion yuan, up 162.80% year on year.

In the third quarter alone, operating revenue reached 22.341 billion yuan, up 27.14% year on year; net profit attributable to the parent company was 3.044 billion yuan, up 299.10% year on year, nearly four times that of the same period last year.

Profit growth far outpaced revenue growth. Hengtong Optic-Electric stated in its financial report that the profit increase was mainly driven by growing demand in the optical communications market and rising product prices, with the company's optical communications business growing significantly.

This means that Hengtong Optic-Electric's earnings explosion came not only from an expansion in sales scale but also from rising product prices and improved profitability.

AI Ignites Optical Communications

As one of China's leading optical fiber and cable enterprises, Hengtong Optic-Electric has long been positioned in two major industries: optical communications and energy interconnection. Its products cover optical fiber preforms, optical fibers and cables, optical communications devices, submarine communications cables, power cables, and marine engineering.

In the past, the optical fiber and cable industry mainly relied on operators' network construction investment. Infrastructure projects such as 5G and gigabit broadband once drove demand growth, but as industry capacity expanded, price competition also squeezed corporate profit margins.

Today, artificial intelligence is reshaping the demand structure of the optical communications industry.

Large AI data centers require not only high-speed computing chips but also high-bandwidth, low-loss optical connection systems. As the scale of training and inference clusters expands, communication demand within and between data centers continues to grow, further enhancing the importance of high-performance optical fibers and optical interconnect products.

For Hengtong Optic-Electric, the opportunity lies not only in sales growth of traditional optical fibers and cables but also in upgrading to high-value-added products.

Hengtong Optic-Electric has already established an industrial layout spanning optical fiber preforms and optical fiber manufacturing to optical cables and related communications systems, with strong upstream and downstream coordination capabilities.

The private placement plan disclosed in September 2026 shows that Hengtong Optic-Electric intends to raise no more than 6.636 billion yuan, to be invested in projects including research and production of next-generation optical fibers, high-end optical new materials, R&D of advanced CPO packaging, data intelligent connection communications, advanced AI optical interconnect, and marine energy.

Among them, the advanced AI optical interconnect project plans to use 1.051 billion yuan of raised funds, the advanced CPO packaging R&D project plans to use 196 million yuan, and the next-generation optical fiber R&D and production project plans to use 758 million yuan.

These projects indicate that Hengtong Optic-Electric is extending toward the high-end optical communications industry chain required by AI computing infrastructure.

However, traditional optical fibers and cables, high-speed optical modules, and advanced CPO packaging are not the same type of product, and there are differences in technical barriers, customer certification cycles, and profit models.

Whether Hengtong Optic-Electric can transform its advantages in the traditional optical communications industry into competitiveness in the high-end optical interconnect market still requires observation of product mass production, customer certification, and order fulfillment.

Another indicator worth watching is cash flow.

In the first three quarters of 2026, the net cash flow from Hengtong Optic-Electric's operating activities was 841 million yuan, up 70.57% year on year, but still significantly lower than the 6.163 billion yuan net profit attributable to the parent company in the same period. As of the end of the period, monetary funds fell 4.22% year on year to 13.266 billion yuan, further revealing signs of slower cash collection.

The large gap between operating cash flow and net profit indicates that profit growth has not yet been converted simultaneously into net operating cash inflow. With the construction of new projects and expansion of business scale, accounts receivable, inventory, and capital recovery efficiency deserve continued attention.

Marine Business Steps Up

In addition to AI optical communications, marine communications and marine energy are also important growth directions for Hengtong Optic-Electric.

With the construction of global data centers, cross-border data transmission, and the development of cloud computing businesses, transoceanic communications networks face continued capacity expansion demand.

Global internet communications rely on a vast submarine optical cable network. Compared with ordinary terrestrial optical cables, transoceanic submarine communications systems need to comprehensively address issues such as optical transmission, submarine repeaters, long-distance power supply, and system integration, and have high technical thresholds.

Hengtong Optic-Electric's Huahai Communications has already possessed capabilities in submarine optical cables, submarine repeaters, and marine communications system solutions, and is the only Chinese manufacturer among the world's top four enterprises with comprehensive solution capabilities for transoceanic intercontinental submarine optical cables. Its 32-fiber-pair submarine communications repeater has moved from prototype to engineering implementation and has been applied in actual submarine cable projects such as MIC-3.

The market space in this field has already begun to be reflected in order reserves.

As of the disclosure date of the 2026 third-quarter report, Hengtong Optic-Electric's orders on hand in the energy interconnection field, including submarine cables, marine engineering, and land cables, exceeded 24 billion yuan; orders on hand in the marine communications business exceeded 6 billion yuan; and orders on hand for the PEACE transoceanic submarine cable communications system operation project exceeded 300 million US dollars.

Order reserves provide certain support for future revenue, but large marine engineering projects have long delivery cycles. Orders on hand are not equivalent to current revenue or profit, and actual profitability also depends on project cost control, execution progress, and capital recovery.

From the perspective of industrial trends, Hengtong Optic-Electric is facing two rounds of infrastructure investment opportunities at the same time.

One round comes from the expansion of AI computing power, driving demand growth for high-performance optical fibers, data center interconnection, and high-speed optical communications products; the other comes from global power grid upgrades, offshore new energy construction, and expansion of transoceanic communications networks.

Both business lines have certain technical barriers and both require sustained R&D investment and capital expenditure.

This also raises a question worthy of further study: how much of Hengtong Optic-Electric's high profit growth in this round comes from cyclical gains from rising optical fiber prices, and how much comes from structural changes brought by an increased share of high-end products?

The impact of the two types of growth on the long-term value of an enterprise is not the same.

If profit improvement mainly comes from product price increases under tight supply and demand, then after new industry capacity is released in the future, profitability may face adjustment again.

If advanced AI optical interconnect, high-end optical communications, and marine communications systems can continue to expand their revenue contribution, the company is expected to gradually reduce its dependence on the price cycle of traditional optical fibers and cables.

Today, Hengtong Optic-Electric has delivered a report card showing a 159.42% year-on-year increase in net profit attributable to the parent company in the first three quarters, and its stake increase and planned repurchase have also attracted attention one after another.

However, Hengtong Optic-Electric's long-term value still depends on operations themselves, namely whether high-end products can form large-scale orders, whether new capacity can bring sustained returns, and whether rapidly growing profits can truly be converted into cash flow.