20221215-招银国际-中国铁塔-00788.HK-A_clearing_event_that_investors_have_been_waiting_for__Maintain_HOLD_4页_860kb

报告摘要

China Tower (788 HK) Company Update Summary

Core Content Overview

China Tower (788 HK) recently announced a new five-year (2023-2027) agreement with China telcos on 14 December 2022. This development has been viewed positively by investors, as it removes concerns over potential significant pricing discounts or lower cost markups in the new agreement. The company's share price surged by 13.41% to close at HK$0.93 on the day of the announcement. The recommendation remains HOLD, with a target price (TP) of HK$1.01.

Key Information

New Agreement Details:
- Provides better clarity and certainty for the company's future business.
- Includes an additional 2.4% discount to co-location tenants.
- Cost margin remains unchanged at 10%.
- Revenue under the agreement is expected to stay flat (mainly from tower and DAS businesses).
- Total revenue is projected to increase, while operating margin is expected to remain stable for 2023, aligning with previous expectations.
Revenue and Growth Outlook:
- 2023/24 revenues are expected to maintain single-digit growth (4.4%/4.2% YoY).
- China telco's business (tower plus DAS) contributed ~91% of 9M22 revenue.
- Legacy business growth is projected to be flat (1.7%/1.7%), while new business segments are expected to grow at 29.3%/22.4%.
Target Price and Valuation:
- TP remains at HK$1.01, based on a 2.7x EV/EBITDA multiple, which is ~1SD below the 2-year forward EV/EBITDA multiple.
- The analyst believes that the telecom investment focus has shifted from 5G to higher growth areas like industrial digitalization and cloud computing, limiting overall growth for China Tower.

Financial Summary

Earnings Summary (YE 31 Dec)

Metric	FY20A	FY21A	FY22E	FY23E	FY24E
Revenue (RMB mn)	81,099	86,585	92,481	96,537	100,566
YoY growth (%)	6.1%	6.8%	6.8%	4.4%	4.2%
EBITDA (RMB mn)	59,527	63,017	64,986	67,499	70,315
Net profit (RMB mn)	6,428	7,329	8,668	9,649	10,698
EPS (RMB)	0.04	0.04	0.05	0.06	0.06
YoY growth (%)	23.6%	14.0%	18.3%	11.3%	10.9%
EV/EBITDA (x)	3.9	3.4	3.1	2.6	2.1
PB (x)	0.8	0.8	0.8	0.7	0.7
Yield (%)	2.7%	3.2%	3.9%	4.5%	5.1%
ROE (%)	3.5%	3.9%	4.5%	4.9%	5.3%

Cash Flow Summary

Metric	FY20A	FY21A	FY22E	FY23E	FY24E
Net cash from operating	57,548	60,503	56,273	64,728	64,956
Net cash from investing	-37,897	-31,515	-29,347	-29,799	-30,026
Net cash from financing	-20,837	-27,560	-22,181	-14,376	-14,998
Net change in cash	-1,186	1,428	4,745	20,553	19,932

Balance Sheet Summary

Metric	FY20A	FY21A	FY22E	FY23E	FY24E
Total assets (RMB mn)	337,380	323,259	313,439	308,729	306,295
Total liabilities (RMB mn)	151,134	133,905	120,034	111,312	104,646
Total equity (RMB mn)	186,246	189,354	193,404	197,418	201,650

Key Ratios

Metric	FY20A	FY21A	FY22E	FY23E	FY24E
Revenue mix	-	-	-	-	-
Tower business (RMB mn)	73,371	75,857	77,533	78,522	79,481
DAS business (RMB mn)	3,528	4,340	5,742	6,190	6,672
TSSAI & energy (RMB mn)	3,939	6,131	8,949	11,568	14,155
Net profit margin (%)	7.9%	8.5%	9.4%	10.0%	10.6%
Operating margin (%)	14.8%	15.1%	15.8%	16.0%	16.4%
ROE (%)	3.5%	3.9%	4.5%	4.9%	5.3%
Net debt/total equity (%)	45.1%	38.2%	27.8%	14.7%	2.3%
Current ratio (x)	0.4	0.6	0.9	1.3	1.7
EPS (RMB)	0.04	0.04	0.05	0.06	0.06
DPS (HKD)	0.02	0.03	0.03	0.04	0.04
BPS (RMB)	1.07	1.08	1.11	1.13	1.15

Main Points and Recommendations

The new five-year agreement with China telcos has alleviated investor concerns about pricing.
The share price reacted positively to the news, but the recommendation remains HOLD.
The target price of HK$1.01 is based on a 2.7x EV/EBITDA multiple, which is below the 2-year forward EV/EBITDA multiple.
Revenue growth is expected to remain single-digit in 2023/24.
The company's operating margin is expected to stay stable.
The telecom sector's investment focus has shifted from 5G to higher growth areas, limiting China Tower's overall growth potential.

CMBIGM Ratings

HOLD: Stock with potential return of +15% to -10% over the next 12 months.
Target Price: HK$1.01
Current Price: HK$0.93
Up/Downside: +8.4%

Analyst Certification

The research analyst certifies that the views expressed in the report accurately reflect their personal views.
No compensation was directly or indirectly related to the specific views expressed.
The analyst confirms no conflicts of interest in relation to the covered stocks.

Important Disclosures

The report is for informational purposes only and not investment advice.
CMBIGM is not liable for any loss, damage, or expense incurred from reliance on the information.
The information is based on publicly available data and is not guaranteed for accuracy or completeness.
The report may not be reproduced or distributed without prior written consent.

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