UBS Rates CHINA TOWER (00788) as "Neutral" as Depreciation Savings Offset by Higher Operating Costs

Stock News04-20

UBS released a research report noting that CHINA TOWER (00788) reported a 1.5% year-on-year increase in first-quarter 2026 revenue to RMB 25.1 billion. EBITDA fell by 11.2% year-on-year to RMB 15.4 billion, while net profit grew by 31.8% year-on-year to RMB 4.0 billion. The bank indicated that the decline in EBITDA was primarily due to increased maintenance costs, as guided by management, for upgrading older towers, which was partially offset by savings on depreciation expenses. UBS assigned a "Neutral" rating to the company with a target price of HK$11.6. The report stated that telecommunications tower business revenue decreased by 0.6% year-on-year in the first quarter, a slowdown compared to the 0.7% growth for the full year 2025 and slightly below management's guidance for stable annual growth. Despite the EBITDA decline in the first quarter of this year, management expects it to stabilize by 2027. For the full year 2026, management maintains its guidance, anticipating stable revenue growth from the telecom operator business and high growth from the two non-telecom businesses, with solid profit growth driven by significant depreciation savings.

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