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China Netcom, China Telecom ratings, targets raised -Morgan
Morgan Stanley reiterated its bullish view on the Chinese telecom sector and upgraded its target prices and ratings on China Telecom and China Netcom.
The brokerage raised its target price on China Telecom to 5.5 hkd from 4. 5 hkd, and on China Netcom to 26.3 hkd from 17.5.
The ratings on the two telecom firms were upgraded to ""equal-weight"" from ""underweight"".
It maintained its ""overweight"" ratings for China Mobile and China Unicom, with target prices at 150 hkd and 16 hkd respectively.
""A recent regulatory statement suggests that restructuring is a priority for 2008, and we retain our long-held view that it will likely take place in the second half of 2008, providing a catalyst for Unicom, China Telecom and China Netcom,"" Morgan Stanley said.
It noted that as a leveraged restructuring play, Netcom's valuation would see the most upside swing depending on the format and pricing of a potential Unicom merger.
""We also expected the competitive landscape to remain benign for most of 2008, leaving a stable environment for China Mobile and Unicom to expand revenue and operational scale,"" it said.
It noted that Unicom's solid earnings growth, while achieved mostly through cost rationalization rather than revenue growth, should be sustainable in 2008.
It added that China Mobile remained its top pick in the industry and an effective play on rising disposable income in China, with continued solid earnings growth this year.
At the morning close, China Telecom was up 0.09 hkd or 1.47 pct at 6.2, China Netcom was up 0.72 hkd or 4.34 pct at 17.32, China Mobile was up 0.2 hkd or 0.17 pct at 118.7, and China Unicom was up 0.72 hkd or 4.34 pct at 17. 32.
Morgan Stanley reiterated its bullish view on the Chinese telecom sector and upgraded its target prices and ratings on China Telecom and China Netcom.
The brokerage raised its target price on China Telecom to 5.5 hkd from 4. 5 hkd, and on China Netcom to 26.3 hkd from 17.5.
The ratings on the two telecom firms were upgraded to ""equal-weight"" from ""underweight"".
It maintained its ""overweight"" ratings for China Mobile and China Unicom, with target prices at 150 hkd and 16 hkd respectively.
""A recent regulatory statement suggests that restructuring is a priority for 2008, and we retain our long-held view that it will likely take place in the second half of 2008, providing a catalyst for Unicom, China Telecom and China Netcom,"" Morgan Stanley said.
It noted that as a leveraged restructuring play, Netcom's valuation would see the most upside swing depending on the format and pricing of a potential Unicom merger.
""We also expected the competitive landscape to remain benign for most of 2008, leaving a stable environment for China Mobile and Unicom to expand revenue and operational scale,"" it said.
It noted that Unicom's solid earnings growth, while achieved mostly through cost rationalization rather than revenue growth, should be sustainable in 2008.
It added that China Mobile remained its top pick in the industry and an effective play on rising disposable income in China, with continued solid earnings growth this year.
At the morning close, China Telecom was up 0.09 hkd or 1.47 pct at 6.2, China Netcom was up 0.72 hkd or 4.34 pct at 17.32, China Mobile was up 0.2 hkd or 0.17 pct at 118.7, and China Unicom was up 0.72 hkd or 4.34 pct at 17. 32.
