Equity Analysis /
Hong Kong

HK : China Tower - Waiting for clarity on renewal negotiations

    Mark Po
    Mark Po

    Research Analyst

    CGS-CIMB
    25 March 2022
    Published by

    We reiterate the view that the market is waiting for clarity on price negotiations with telecom operators to be more positive on China Tower. Despite slower-than-expected 2021 results, we believe that China Tower will deliver healthy and stable overall growth, with the “Two Wings business” (TSSAI and energy) remaining its main growth driver, contributing a large proportion of total revenue. A potential catalyst is more information on the price negotiations, which is expected to emerge in mid-2022. We maintain our ADD rating with a lower target price of HK$1.38, based on 4x 2022F EV/EBITDA. The cut in our target is due to a downward revision in net profit forecasts and a lower target multiple (from 5.5x to 4x).