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<Research>M Stanley Upgrades CHINA TOWER to Overweight, Name It Top Pick for CN Telecoms
Recommend 35 Positive 60 Negative 18 |
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Morgan Stanley said in a research note that it stayed optimistic that Chinese telecoms will maintain their dividends despite uncertainties in interest rates and the macro environment. The broker also forecast the sector to ride on the reduction in capex during the late 5G cycle, and potential improvement in working capital position. Compared to telecoms, Morgan Stanley was more bullish on the development of data centers and towers in the China market. Morgan Stanley's top three telecoms in pecking order were CHINA TELECOM (00728.HK), CHINA UNICOM (00762.HK) and CHINA MOBILE (00941.HK), which were all rated Overweight. Morgan Stanley forecast Chinese telecom industry service revenue growth rate will rebound faintly to 3.2% in 2025, vs 2.7% in 2024, but still slower than the pace of economic growth, given the traditional business pressure and new business focus shift to cash flow, the expected dividend growth of China Telecom, China Unicom and China Mobile in 2025 will be up to 9%, 20% and 6% respectively. Morgan Stanley thought that CHINA TOWER (00788.HK) has a more resilient growth outlook, while its CAGR for DPS from 2023 to 2026 is 30.3%, far more than the Big Three. Hence, the broker upgraded CHINA TOWER to Overweight, with a target price of $1.3. The broker was also upbeat about the robust demand for data centers in China, and was more bullish on GDS-SW (09698.HK) (GDS.US) and VNET (VNET.US). AAStocks Financial News |
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