[ET Net News Agency, 16 July 2019] HSBC Global Research raised its target price for
China Tower Corporation (00788) to HK$2.41 from HK$2.25 and maintained its "buy" rating.
The research house forecast China Tower to deliver a solid set of results for 1H.
Overall revenue could grow 8.9% YoY with revenue of the tower leasing business increasing
5.5%. HSBC expects revenue growth of distributed antenna systems (DAS) to accelerate from
2H 2018 and exceed 43% YoY. EBITDA margin could remain flat at 58.2% due to increased
labor costs for new business development.
HSBC raised its estimate for FY2019 tower site net adds to 80k from 60k. However, it
believes overall revenue growth will not change materially given lower revenue per site
(for small cell) and a lower tenancy ratio.
HSBC revised up its revenue forecasts by less than 1% for FY2019-21 on a higher tower
site net add assumption. It slightly cut its capex by 0-4% as upstream constructors
continue to suffer a large project pricing discount. This leads to a 1-4% increase in net
profit for FY2020-21. (KL)