Research from Quam Securities, Quam Securities

Quam Securities Research

Research from Quam Securities

Quam Securities

Since its inception in 1986, Quam Securities Limited (Quam Securities) has grown to become one of the few mid-tier securities brokerages in Hong Kong with global execution capabilities for both private and institutional clients. It boasts a well-established network in Greater China including Taiwan and in major world markets through the Global Alliance Partners (GAP). Quam Securities is well-positioned not only to harness and drive business within the China Tonghai International Financial Limited but also between China and the world markets.

Thematic (Sector/Industry)

<ul><li>We initiate coverage on the three Chinese telcos following their impressive 1H22 results.</li><li>We rate all three as BUYs with China Unicom (762 HK, BUY) and China Telecom (728 HK, BUY) as our top picks.</li><li>Despite their outperformance YTD, all three are still attractive in PE valuation with a range of 5.6-7.5x FY23 earnings and div yld of 9.5- 9.9%.</li></ul>

We initiate coverage on the three Chinese telcos following their impressive 1H22 results.We rate all three as BUYs with China Unicom (762 HK, BUY) and China Telecom (728 HK, BUY) as our top picks.Despite their outperformance YTD, all three are still attractive in PE valuation with a range of 5.6-7.5x FY23 earnings and div yld of 9.5- 9.9%.

TMT – Chinese Telcos - Growth Momentum Sustained

Equity Bottom-Up

<ul><li>Although China Telecom’s (CT) 3Q results slightly disappointed, which was due to slower growth in mobile and industrial digitization, we believe the underlying growth momentum remains on the back of steady 5G growth in the industry.</li><li>We have lowered our earnings forecasts and TP (HK$3.80), which reflects both slower than expected revenue growth as well as a lowered FX assumption for the RMB.</li><li>However, we believe the company’s valuation and dividend yld remains attractive and justify our BUY call with a potential upside of 37%. </li></ul>

Although China Telecom’s (CT) 3Q results slightly disappointed, which was due to slower growth in mobile and industrial digitization, we believe the underlying growth momentum remains on the back of steady 5G growth in the industry.We have lowered our earnings forecasts and TP (HK$3.80), which reflects both slower than expected revenue growth as well as a lowered FX assumption for the RMB.However, we believe the company’s valuation and dividend yld remains attractive and justify our BUY call with a potential upside of 37%. 

China Telecom (728 HK) - Earnings Revision - A Slight Disappointment in 3Q

China

China Telecom Corporation Limited, through its subsidiaries, provides wireline telephone, data, and Internet, as well as leased line services in China.

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China Telecom Corp Ltd (Adr) (123D US)

TMT – Chinese Telcos - Growth Momentum Sustained

Despite their outperformance YTD, all three are still attractive in PE valuation with a range of 5.6-7.5x FY23 earnings and div yld of 9.5- 9.9%.

Quam Securities

China Telecom (728 HK) - Earnings Revision - A Slight Disappointment in 3Q

We have lowered our earnings forecasts and TP (HK$3.80), which reflects both slower than expected revenue growth as well as a lowered FX assumption...

Quam Securities

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