[ET Net News Agency, 17 August 2020] Goldman Sachs cut its target price for China Tower
(CTC)(00788) to HK$1.5 from HK$2.03 and downgraded its rating to "neutral" from "buy".
The research house said the downgrade reflects (1) lowered revenue growth potential over
the next two years on continued cost pressure from the telcos; and (2) CTC's 5-year
commercial pricing agreement with the telcos is slated to expire in 2022. Goldman sees
potentially further pricing pressure with the re-negotiation, as the last re-negotiation
in early 2018 resulted in an effective 6% price cut.
At the current stage, Goldman sees limited upside for CTC's share price due to the lack
of positive catalyst from either growth or dividend perspective. On growth, Goldman
forecast revenue growth at 5.4%/5.4%/5.8% in 2020/21/22 (versus previous 8.1%/9.4%/10.3%);
on dividend, it expects CTC to pay out 65%/70%/70% of distributable net income in
2020/21/22. It lowered its 2020-22 revenue/net income forecast by 2.5%-10.4%/1.6%-5.3%.
(KL)
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23518 UB-TRIP@EP2408A (PUT)
Nominal 
0.051 +0.004 (+8.511%) 17/08/2020 10:28
{I-bank focus}Goldman cuts China Tower (00788) to HK$1.5
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