Analyst Andy Yu CFA of DBS maintained a Buy rating on China Telecom (ZCH – Research Report), with a price target of HK$6.10.
Andy Yu CFA has given his Buy rating due to a combination of factors including China Telecom’s strong financial performance and strategic initiatives. The company’s net profit saw an 8.4% year-over-year increase, aligning with market expectations, and service revenue also grew, particularly in the cloud and IDC sectors. This growth is supported by management’s guidance for a 22% increase in computing power-related capital expenditures in FY25, which is expected to bolster the industrial digitalization business.
Additionally, China Telecom’s robust presence in Southern China and its strategic partnership with China Unicom to enhance 5G network quality and coverage contribute to its competitive edge. The industrial digitalization segment is a significant revenue driver, accounting for a substantial portion of the company’s growth. Furthermore, the company has committed to increasing its dividend payout ratio, aiming for 75% by FY26, which is anticipated to enhance shareholder returns. Despite potential policy risks and market competition, these factors collectively underpin the Buy rating.
Yu CFA covers the Technology sector, focusing on stocks such as Salesforce, China Unicom (Hong Kong), and China Mobile. According to TipRanks, Yu CFA has an average return of 19.7% and a 53.85% success rate on recommended stocks.
In another report released yesterday, CLSA also maintained a Buy rating on the stock with a HK$6.20 price target.