BOCI Research revised up its forecast to 2.8% and 3.1% in 2021/22E, respectively.
CITIC Telecom International is seen sustaining its growth in 2021 as tourism in Macau is expected to recover this year.
CITIC Telecom reported last week its 2020 profit rose 2.1% YoY to $1.02b, which BOCI Research Limited noted as slightly higher than their 2% estimate. The group’s service revenue excluding hardware sales, meanwhile, increased by 7.9% to $8b, much higher than the 2.3% forecast.
“CITIC Telecom reported FY20 earnings and revenue, both beating BOCI estimates thanks to strong growth from enterprise short messaging,” BOCI said in its research report.
The report attributed the FY20 results to the 39.8% growth in international telecom services revenues that offset the 23% decline in mobile service revenue. The decline was an impact of the pandemic as lockdowns led to reduced roaming related services.
“We expect full 5G coverage and additional data centre to be launched in 2021, and we consider the company well positioned to benefit from the recovery of Macau’s tourism this year,” the report added.
CITIC Telecom plans to deploy the 5G SA network and provide full coverage of Macau by June 2021, which it wants to launch commercially as soon as possible.
On top of this, BOCI expects 5G international roaming to be launched in 18 countries and regions. The research company added increased capacity will likely come later in 2021 after the Phase III expansion of CITIC’s data centre in the CITIC Telecom Towers is completed.
BOCI maintained buy rating with target price at $3.41 as it revised up 2021/22E earnings forecast on the back of higher revenue contribution from corporate messaging services and lower handset sales.
“We see sustained improvement in dividend payout as a significant support for shareholders’ confidence in adverse market condition,” the report said. “Trading below -1 std deviation based on historical trading and 8.6% expected dividend yield in 2021, we view the shares offer attractive risk reward as the company is well positioned for Macau’s tourism recovery.”
BOCI research noted a major risk to its rating is the uncertainty over the inbound tourist recovery in Macau market.
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