[ET Net News Agency, 13 February 2019] Macquarie Research sees two near-term catalysts
that can drive up sentiment for 5G stocks (1) the National People's Congress (NPC) on 5
March; and (2) 2018 results season in March.
The research house's top picks are telecom infrastructure providers China Tower
(00788)(Outperform; TP: HK$1.9) and China Communications Services Corporation
(00552)(Outperform; TP: HK$9) as it views both stocks as safer plays for China's 5G growth
in light of the China-US trade tension and risks in Huawei/ ZTE (00763) incidents.
In 2018, the key message from NPC for the telecom sector was a 30% cut in data fees and
cancellation of the data roaming fee. This year, however, Macquarie expects the key
message to focus on China's 5G plan and substantive 5G rollout targets, which should
support 5G stocks' momentum.
The negative scenario will be telcos guiding delayed 5G progress and capex, which is
highly unlikely, given the government's policies, such as MIIT's plan to issue temporary
5G licences for several cities in 2019.
Macquarie expects telcos' 5G guidance to bring positive surprises, or at least reaffirm
their 5G schedule to ease concerns on a delayed 5G rollout. Either case will support 5G
sentiment. (KL)