BofA Global Research lowered its target price for China Communications Services (CCS)(00552) to HK$6.4 from HK$6.8 but upgraded its rating to "neutral" from "underperform".
With the stock currently trading in-line with the historical average P/E multiple, the research house believes most of the negative news is priced into the stock. CCS will report its FY2019 results in late March. BofA expects it to report revenue of RMB117.2bn (+10.4%), gross profit of RMB14.3bn (+10.8%) and net profit of RMB3.2bn (+11.7%).
With the outbreak of coronavirus, BofA believes some of the telecoms infrastructure work
could be shifted into 2H. It expects CCS's revenue from the abovementioned segment could be softened in 1H as well.
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