Kohoku Kogyo: Dominant Player in Optical Devices for Submarine Cables with Strong Growth Prospects

KOHOKU KOGYO CO. LTD. (6524) has received a new Buy rating, initiated by Goldman Sachs analyst, Mitsuhiro Icho.

Mitsuhiro Icho’s rating is based on Kohoku Kogyo’s strong position in the niche market of optical devices for telecom submarine cables, which are crucial for international data communication. The company is expected to benefit significantly from the rapid growth in global data traffic, as its products are essential for supporting long-distance submarine communications.
Kohoku Kogyo holds a dominant market share of over 50% in optical components for telecom submarine cables, with the total addressable market projected to grow at a compound annual growth rate of 16% from 2024 to 2027. The company’s vertically integrated supply chain and high operating margins, coupled with the high barriers to entry for new competitors, further strengthen its competitive position. Consequently, Icho anticipates substantial sales and profit growth, leading to a favorable Buy rating.