Nomura lowered its target price for China Communications Services (CCS)(00552) to HK$5.8 from HK$7.2 and maintained its "buy" rating.
The research house lowered its forecast for total 2019-2025 capex by the three telcos in China by CNY280bn, or 11%, given China Unicom (00762) and China Telecom's (00728) partnership to roll out 5G BTS nationwide.
Total demand for the telecom infrastructure construction and the maintenance business might decline but the impact on CCS should be limited, as it looks better positioned to take market share from Unicom.
Nomura cut 2019-2021 revenue forecasts by 4-11% to reflect the lower demand from operators, and its earnings forecasts for the same period reduced by 5-11%.
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