Nomura lifted its target price for SmarTone Telecommunications (00315) to HK$5.1 from HK$4.8 and maintained its "neutral" rating.
The research house said SmarTone's 1H FY2021 et margin up 2pp to 8.2%, helped by effective cost reduction. Nomura believes SmarTone will continue to see headwinds in service revenue in the near term as the pandemic is still not fully under control in Hong Kong, but in the long run, the company is likely to benefit from the 5G rollout and the attendant potential rise in ARPU.
Nomura cut its FY2021-23 revenue forecasts by 3-12% but raised its earnings forecasts by 20-33% to reflect the higher-than-expected cost reduction in 1H.
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