[ET Net News Agency, 20 January 2020] Citi Research tweaked its target price for China
Tower (00788) to HK$1.78 from HK$1.8 and maintained its "neutral" rating.
The research house said China Tower has 96% market share in the China telecom tower
market. Regulatory support and limited competition provide earnings visibility in the
midterm.
China Tower has stable growth, healthy FCF that could lead to favorable cash returns
from FY2020, and scope for earnings upgrade in case of fast nontelco business growth.
China Tower on positive earnings growth in the near term is benefiting from opex/capex
savings through 3rd-party partnerships.
Though 5G can be a growth driver for China Tower, network sharing between China Unicom
(00762) and Ching Telecom (00728) could reduce its 5G benefits. Also, high 5G BTS price
(currently 2x 4G BTS price in the comparable development period) could limit telcos' 5G
BTS adds in the next two years, Citi added. (KL)