Goldman Sachs chopped its target price for China Mobile (00941) to HK$70 from HK$83 and maintained its "neutral" rating.
Due to the aforementioned enhanced competitive pressures from the combined network of China Telecom (00728)/China Unicom (00762), the research house now expects CM's subscriber market share to gradually shrink from 60% in 2018 to 55% in 2022, which translates to 0.9%-1.8% mobile service revenue downside versus our prior forecast.
In addition to consumer business, Goldman also sees downside risk to its previous view of CM being able to capture majority of 5G revenue opportunity with leading positions in mMTC (massive Machine Type Connection) and uRLLC (ultra Reliable Low Latency Communication) use cases, now that the combined CT/CU 5G network will be on par with CM's network.
Goldman factored in (1) weaker 1H result, (2) decreased mobile subscriber market share, and (3) revised HKD/CNY forex assumptions (from 1.17 to 1.1). It also lowered its 2019-21 EPS forecasts by 8%-15%.
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