[ET Net News Agency, 19 October 2018] UBS Global Research lowered its target price for
China Telecom (CT)(00728) to HK$4.05 from HK$4.7, and downgraded its rating to "neutral"
from "buy".
The research house does not expect CT to achieve further material market share gains,
with its pricing having aligned with China Mobile's (CM)(00941).
Its share appreciation scheme helps but not as effective as mixed ownership: this is
given the long vesting time, a lack of transparency on KPIs and the asymmetric nature of
the payoff. Historically CT's share appreciation rights grants did not result in share
price outperformance in the following 12 months, UBS noted.
It said that CT is trading at a 44% premium versus the HSI 12-month forward PE, in line
with the historical average. Its dividend yield of 3% is lower than CM's, while its PE is
also higher at 13.8x. (KL)