According to a research report, Jefferies released a “buy” rating for China Tower (00788). Its main shareholders are China's top three telecom companies, which means that the company may follow the initiative of the State Assets Administration Commission and focus on capital management to increase the valuation. The target price will rise from HK$1.04 to HK$1.09.
According to the report, the State Assets Administration Commission recently mentioned that it intends to use market value as a key performance indicator for senior management of central state-owned enterprises, which will further motivate management to make more use of capital management tools, such as dividends and stock repurchases, to increase valuations. Telecom companies' stock prices also performed well as a result. The bank's ecological preferences for telecom are the top three telecom operators, China Communications Services (00552), China Tower (00788), and ZTE (00763), etc. They also believe that China Tower is an attractive alternative for telecom companies, but they prefer China Communications because of valuations, more room to increase dividend rates, and potential to improve gross profit.