JPMorgan has issued a research report maintaining its "Overweight" rating on China Telecom (00728) with a target price of HK$5.2, noting that the company's expected dividend yield of approximately 6.2% for 2026 is attractive.
China Telecom's third-quarter net profit fell 14.7% year-on-year to RMB 6.6 billion, while service revenue declined 1.5% year-on-year to RMB 115.2 billion, broadly in line with market expectations.
The year-on-year declines in service revenue and operating profit narrowed from 2.6% and 16.7% in the second quarter to 1.5% and 14.1% in the third quarter, respectively.
The bank noted that after excluding the impact of VAT item adjustments, China Telecom's operating revenue remained broadly stable on a comparable basis, with net profit maintaining steady growth, reflecting the resilience of its underlying business and no deterioration in fundamentals.
The bank continues to believe that China Telecom's earnings can resume growth next year.
JPMorgan also pointed out that China Telecom demonstrated good expense discipline in the first nine months of this year, combined with healthy operating cash flow, which helps enhance its funding capacity and supports future dividend payments.
The bank prefers China Mobile (00941), citing its more resilient earnings this year and higher dividend yield of 7%.
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