Goldman Sachs released a research report stating that China Tower (00788) has a 'neutral' rating, with a slight reduction of up to 1.4% in the company's revenue forecast from this year to 2026, to reflect the slowing revenue growth of the telecommunications tower business due to price declines, and raised the target price from 1.15 Hong Kong dollars to 1.16 Hong Kong dollars.
The bank anticipates that China Tower's outlook is stable, with next year's revenue growth expected to remain stable at 4%, net profit expected to grow by 12%, dividend per share expected to be 4.9 fen RMB, equivalent to a year-on-year increase of 15% or a distribution of 79% of earnings. The bank points out that despite facing challenges with aging receivables, China Tower's cash flow outlook means the company can cope with the expected rise in dividend payout ratio from 2025 to 2026. Additionally, the company is expected to record a one-time depreciation expense reduction of 6 billion RMB in 2026, driving a 46% increase in net profit, mainly due to a decrease in depreciation expense after the tower assets acquired reach their depreciable life.
