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2026-04-17 14:45:10 Morgan Stanley (M Stanley) issued a report expecting service revenue of Chinese telecom stocks to fall 1.4% YoY in 1Q26. Taking into account the impact of value-added tax, it forecasts net profit of CHINA TELECOM (00728.HK) and CHINA UNICOM (00762.HK) to decline by 10% to 12% in 2026, while that of CHINA MOBILE (00941.HK) will drop by about 5%. In contrast, CHINA TOWER (00788.HK) is expected to record a 30% increase in net profit due to lower depreciation charges. The broker expects industry service revenue to decline 1.4% YoY in 1Q26, in line with the growth reported by the Ministry of Industry and Information Technology for January-February 2026. It forecasts CHINA UNICOM's net profit to fall 14.7% YoY in 1Q26, CHINA TELECOM's net profit to drop 17.3% YoY in 1Q26, and CHINA MOBILE's net profit to decrease 8.3% YoY in 1Q26. The broker estimates that industry growth will improve slightly in 2Q26 and 3Q26. M Stanley lowered TP on Chinese telecom stocks by 6% to 13% to reflect the impact of value-added tax. The TP on CHINA UNICOM's H shares was cut from HKD8 to HKD7, with rating maintained at Equalweight. The TP on CHINA TELECOM's H shares was reduced from HKD5.5 to HKD5, with rating maintained at Equalweight. The TP on CHINA MOBILE's H shares was lowered from HKD85 to HKD80, with rating maintained at Equalweight. The broker believes the current dividend yield of 5% to 6% for Chinese telecom stocks can provide certain downside protection for share prices. The broker trimmed its revenue forecasts for CHINA MOBILE by 1% to 1.2% for 2026 to 2027, reflecting the impact of value-added tax on mobile/broadband data and SMS services. As a result, it lowered operating profit forecasts by 9.6% and 8.1%, and reduced normalized EPS forecasts for 2026 and 2027 by 12.8% and 10.9%. It introduced a 2028 EPS forecast of RMB6.62 per share. M Stanley cut its dividend per share forecast for CHINA MOBILE this year from HKD5.78 to HKD5.29, and lowered its forecast for next year from HKD6.03 to HKD5.61. It expects dividend per share to reach HKD6.22 in 2028. (wl/da)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |