J.P. Morgan Chase released a research report saying that the Hong Kong Telecom sector performed mixed in the second half of last year, while HKT-SS (06823) is the only company that saw an increase in dividends this year. The report suggests that investors should selectively invest in this industry because of the fragmentation of company fundamentals and the outlook for US interest rates is still uncertain. The preferences for HKT are HKT, PCC (00008), and Hong Kong Broadband (01310) in that order.
According to the report, PCCW's rating was downgraded from “overholding” to “neutral”, and the target price was lowered by 9% to HK$4 from HK$4.4, fearing that its dividend prospects were uncertain; Hong Kong Broadband had structural problems with execution, corporate governance and liabilities, and was unlikely to improve in the short term, so the rating was downgraded from “increase holdings” to “reduced holdings”, and the target price was reduced from HK$4.5 to HK$2.4; while HKT was the only sector that was rated as the “overbearing” because the company had structural issues with implementation, corporate governance and liabilities, and was unlikely to improve in the short term Conservative and steady business performance, dividend rate of 9%, profit and dividends The growth is more clear.
The bank pointed out that in the second half of 2023, HKT, the market leader, performed the most steady, with mobile revenue/EBITDA/profit increasing by 6%/2%/2% respectively; Hutchison Telecom Hong Kong (00215)'s mobile revenue/EBITDA only increased 1%/1% year over year and remained in a net loss state; Digiton Telecom (00315) mobile revenue/EBITDA/profit fell 1%/3%/4% respectively; Electric & Ying turned losses into profits in the second half of the year. HKT's dividend per share increased 3% year-on-year in the second half of the year, while the dividends paid by Dengying, Hoden and Digitcom remained unchanged. Hong Kong Broadband announced its results for the first half of the 2024 fiscal year at the end of April.