According to Goldman Sachs' research report, China Tower (00788) is the largest tower operator in China. Considering the decline of capital expenditure of Chinese telecommunication companies for 5G, and the peak of China's 5G deployment, it is expected that the growth momentum of China Tower will be weaker, and 5G base station deployment in 2024-2025 may slow down.
The bank pointed out that most investors are still concerned about the dividend potential in 2026 because the company's net profit is likely to increase in 2026 due to the reduction of depreciation expenses. Overall, it is expected that net profit will increase by 49% to RMB 18.2 billion in 2026, with a dividend payout ratio of 81% and a dividend yield of 8.1%, surpassing China Mobile (00941) and China Telecom (00728). Therefore, Goldman Sachs expects the dividend yield of the company in 2024, 2025 and 2026 to reach 4.6%, 5.3% and 8.1%.
The bank did not change its revenue and profit forecasts for the company. However, the target price was raised by 1.06 Hong Kong dollars, up 13.2% to 1.2 Hong Kong dollars. It maintains a "neutral" rating.