J.P. Morgan lowered its target price for HKBN Ltd. (01310) to HK$14.5 from HK$15 mainly due to lower margin estimates and maintained its "buy" rating for its high yield (5.5%) and relatively fast dividend growth prospects (high-single-digit).
The research house said HKBN's results have continued to be unexciting and its track record of guidance delivery is not getting any better. JPM appreciates the company's shareholder-friendly attitude on dividend and its proactive pursuit for inorganic growth (i.e. launch of e-commerce business soon).
Similar to previous earnings announcements, JPM expects immediate share price reaction to be negative and suggest buying the dip. It thinks HKT (06823) is a better dividend stock for investors who seek less share price volatility and more long-term dividend sustainability.