China Telecom's (00728) capital expenditure guidance for this year is a 2.9% year-on-year decrease, which is less than the 4.4% and 12% declines of China Mobile (00941) and China Unicom (00762).
The Zhitong Finance App learned that Morgan Stanley released a research report saying that China Telecom (00728)'s performance and performance conference statements are close to market expectations, and there is no surprise. The company is determined to maintain steady profit growth, and plans to raise the dividend rate to 75% by 2026, making its 2024 dividend rate of about 7% attractive. Damo maintains its H share “gain” rating, with a target price of HK$5.
The bank estimates that China Telecom's service revenue and net profit this year increased by 6.3% and 7.5% respectively. The growth rate is slower than in 2023. The revenue from industrial digitization services is expected to increase 14%, which is also slower than the 18% increase in 2023. Tianyi Cloud's revenue increased by about 68% year-on-year to 97.2 billion yuan last year, falling short of the 100 billion yuan guideline. The company emphasized that the quality of the cloud business comes first, and China Telecom will not participate in the price reduction war. Furthermore, China Telecom's capital expenditure guidance for this year is a 2.9% year-on-year decrease, which is less than the 4.4% and 12% declines of China Mobile (00941) and China Unicom (00762). Damo also predicts that China Telecom's dividend payout rate will increase by 2 percentage points each year starting this year, driving a compound annual growth rate of 10% per share in 2024-26.