Forensic Analyst

Jason Yap, CFA

Forensic Accounting

Incorporated in Beijing in July 2014, <a href="https://www.smartkarma.com/entities/china-tower-corp-ltd" target="_blank" data-smartkarma-citation="entities:27037:1" rel="noopener">China Tower (788 HK)</a> is a state-owned telecommunications company that provides telecommunications tower construction, tower maintenance, ancillary facilities management and related services in China. 
As at 31 December 2020, China Tower operated and managed 2.023 million tower sites and its total assets were RMB337.4 billion, and it was therefore commonly known as the world's largest telecommunications tower infrastructure service provider. 
Amid aggressive 5G rollout in China in 2020, <a href="https://www.smartkarma.com/entities/china-tower-corp-ltd" target="_blank" data-smartkarma-citation="entities:27037:1" rel="noopener">China Tower (788 HK)</a> was initially poised to be a key beneficiary of the 5G secular growth story. Instead, its share price performance has significantly underperformed both the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> and its telecommunication tower infrastructure peers listed internationally over the past 12 to 18 months. 
This was attributed to <a href="https://asia.nikkei.com/Spotlight/5G-networks/Chinese-telecom-operators-cut-back-5G-network-construction" target="_blank" rel="noopener">weaker</a> than expected 5G-related demand for new towers, which was in turn due to a combination of factors, such as:
<ol>
<li>slower than expected 5G adoption;</li>
<li>China telecom operators, namely <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom (H) (728 HK)</a>, <a href="https://www.smartkarma.com/entities/china-unicom-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:1016:1" rel="noopener">China Unicom Hong Kong (762 HK)</a>, <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> and new entrant China Broadcast Network, striking partnerships to share network frequency bands; and </li>
<li>where possible, China telecom operators opting for co-location of base stations to save tower deployment capital expenditures. </li>
</ol>
In this Insight, we discuss if China Tower is past its trough and whether the upcoming tower lease negotiations in 2022 will become an overhang. Further, we address potential corporate governance concerns given that its major shareholders - that is, the Big 3 China telecom operators - are also its largest customers and therefore have considerable influence on China Tower's business decisions.

Incorporated in Beijing in July 2014, China Tower (788 HK) is a state-owned telecommunications company that provides telecommunications tower construction, tower maintenance, ancillary facilities management and related services in China. 
As at 31 December 2020, China Tower operated and managed 2.023 million tower sites and its total assets were RMB337.4 billion, and it was therefore commonly known as the world's largest telecommunications tower infrastructure service provider. 
Amid aggressive 5G rollout in China in 2020, China Tower (788 HK) was initially poised to be a key beneficiary of the 5G secular growth story. Instead, its share price performance has significantly underperformed both the Hong Kong Hang Seng Index (HSI INDEX) and its telecommunication tower infrastructure peers listed internationally over the past 12 to 18 months. 
This was attributed to weaker than expected 5G-related demand for new towers, which was in turn due to a combination of factors, such as:

slower than expected 5G adoption;
China telecom operators, namely China Telecom (H) (728 HK), China Unicom Hong Kong (762 HK), China Mobile (941 HK) and new entrant China Broadcast Network, striking partnerships to share network frequency bands; and 
where possible, China telecom operators opting for co-location of base stations to save tower deployment capital expenditures. 

In this Insight, we discuss if China Tower is past its trough and whether the upcoming tower lease negotiations in 2022 will become an overhang. Further, we address potential corporate governance concerns given that its major shareholders - that is, the Big 3 China telecom operators - are also its largest customers and therefore have considerable influence on China Tower's business decisions. 

China Tower (788 HK) - Deep Value, Though Lease Negotiation Overhang Persists

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

Shenton Research

Shenton Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Index Rebalance

<ul>
<li>We screen the Mainland Securities ahead of the HSCEI review result, due on 20 Nov 2026 after market close.</li>
<li>One ADD and one DELETE are screened as high-conviction calls this cycle.</li>
<li>We also include one mid-conviction ADD and one low-conviction DELETE.</li>
</ul>


We screen the Mainland Securities ahead of the HSCEI review result, due on 20 Nov 2026 after market close.
One ADD and one DELETE are screened as high-conviction calls this cycle.
We also include one mid-conviction ADD and one low-conviction DELETE.


Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>The Hong Kong Alpha portfolio gained 5.79% in July, outperforming its benchmark by 0.30%.  The portfolio has outperformed Hong Kong indexes by 52% to 74% since inception.</li>
<li>The portfolio's largest exposures are in the industrial, financial, and technology platform sectors. The portfolio has no exposure to the materials or energy sectors.</li>
<li>The portfolio has generated a Sharpe ratio of 1.20 since inception, compared with 0.69 for the benchmark.  The portfolio's annualized mean excess return is 19.4%.</li>
</ul>


The Hong Kong Alpha portfolio gained 5.79% in July, outperforming its benchmark by 0.30%.  The portfolio has outperformed Hong Kong indexes by 52% to 74% since inception.
The portfolio's largest exposures are in the industrial, financial, and technology platform sectors. The portfolio has no exposure to the materials or energy sectors.
The portfolio has generated a Sharpe ratio of 1.20 since inception, compared with 0.69 for the benchmark.  The portfolio's annualized mean excess return is 19.4%.


Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 200 stocks over the last week. The average A-H premium was 92.3% as of Oct 9th.</li>
<li>The average A-H premium changed by 3.7ppt week-on-week, led by materials, industrials, utilities.</li>
<li>We highlight weekly changes in A-H premium for Innocare, Ganfenglithium, China East Air, Yofc.</li>
</ul>


We analyse the changes of A-H premium on 200 stocks over the last week. The average A-H premium was 92.3% as of Oct 9th.
The average A-H premium changed by 3.7ppt week-on-week, led by materials, industrials, utilities.
We highlight weekly changes in A-H premium for Innocare, Ganfenglithium, China East Air, Yofc.


A-H Premium Weekly (Oct 9th): Innocare, Ganfenglithium, China East Air, Yofc

<ul>
<li>The Hong Kong Alpha portfolio beat the Hong Kong indexes in June and was flat to its benchmark with a loss of 6.98%.</li>
<li>The Hong Kong market experienced heavy selling in the second half of June, as both foreign and mainland investors reduced their exposure.</li>
<li>At the end of June, we sold positions in the electric utilities, technology, consumer, and property sectors. We added positions in the broker, biotech, telecom, and industrial sectors.</li>
</ul>


The Hong Kong Alpha portfolio beat the Hong Kong indexes in June and was flat to its benchmark with a loss of 6.98%.
The Hong Kong market experienced heavy selling in the second half of June, as both foreign and mainland investors reduced their exposure.
At the end of June, we sold positions in the electric utilities, technology, consumer, and property sectors. We added positions in the broker, biotech, telecom, and industrial sectors.


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)

China Tower (788 HK) - Deep Value, Though Lease Negotiation Overhang Persists

We discuss whether China Tower's share price has bottomed and address potential corporate governance concerns given that the Big 3 China telcos...

Jason Yap, CFA

HSCEI Dec 2026 Index Rebalance Forecast

We expect Shenzhou to be deleted below rank 60 and Hua Hong Grace to fill its seat, while a mid-conviction WuXi Bio ADD would also see ZTO deleted.

Ke Yan, CFA, FRM

HONG KONG ALPHA PORTFOLIO: (July 2026)

We made several adjustments to the portfolio yesterday. We sold the Baidu (9888) position since it hit our stop-loss level. We also sold the...

David Mudd

A-H Premium Weekly (Oct 9th): Innocare, Ganfenglithium, China East Air, Yofc

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Innocare, Ganfenglithium, China East Air, Yofc.

Ke Yan, CFA, FRM

HONG KONG ALPHA PORTFOLIO: (June 2026)

At mid-month, we note that pc makers are passing on higher chip and component costs to consumers. For this reason, we sold our positions in Lenovo...

David Mudd

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