[ET Net News Agency, 26 June 2020] Following its cutting numbers for the HK telecom
sector to factor in the impact of COVID-19, Goldman Sachs made further adjustments to its
forecasts for a deeper-than-expected deterioration over the past few months and
potentially near future into 3Q.
During Feb-May, inbound/outbound volume declined by 99%/72% which translates to an
equivalent extent of roaming revenue decline (versus the research house's previous
estimate at 70%).
At the current stage, the easing of travel restrictions (e.g. tourist visas and 14-day
quarantine requirements) remains uncertain despite stabilizing situations. Into 2H,
Goldman expects the government to take a gradual approach in re-opening the economy and
reconnecting with those nearby.
As a result, Goldman fine-tuned its 2020-22 earnings forecasts by 0% to -5% for its HK
telecom coverage. It also lowered its target prices for the players in the sector as
follows:
Name Target Price Rating
-----------------------------------------------------
HKT-SS (06823) HK$14 from HK$14.1 Buy
HKBN (01310) HK$16.4 from HK$16.6 Buy
SmarTone (00315) HK$5.54 from HK$5.8 Neutral
HutchTel HK (00215) HK$1.43 from HK$1.5 Neutral
(KL)