We maintain the target price of HK $4.05 and the investment rating of "collection". We forecast earnings per share of RMB 0.479 / 0.498 / 0.523 for the fiscal year 2022-2024. Taking into account the strong market demand and huge growth space for applications, content and other services (ACO), as well as the expected steady growth of business process outsourced services (BPO) and telecommunications infrastructure services (TIS), we maintain our previous target prices and investment ratings.
We expect that the size of the company's business will continue to expand and gross profit margin will gradually stabilize. The performance of China Communications Services in the first half of fiscal year 2022 is in line with our expectations. In the second half of 2022, we expect the construction of cloud networks and data centers to provide stable demand for TIS business, and TIS revenue growth will be higher than in the first half of 2022. Due to the active expansion of the integrated maintenance and engineering maintenance optimization service model, as well as the expansion of the network and data center, we expect BPO revenue to maintain steady growth in the second half of 2022. Due to the strong strength of the company and strong demand from telecom operators and industry customers, we expect ACO revenue to continue to grow by more than 20% year-on-year in the second half of 2022. By strengthening cost control, we expect gross profit margin to stabilize gradually.
We expect future dividend levels to exceed market expectations. Given the strong cash position, we expect the company to maintain a final dividend yield of 36 per cent, but will further increase the special dividend payout; we expect the total dividend payout to be around 40 per cent in fiscal year 2022 and further increase in fiscal years 2023 and 2024.
Catalyst: the increase in dividend payout rate, the acceleration of construction progress in the second half of 2022, and the faster-than-expected development of ACO business.
Risk hint: COVID-19 epidemic situation is repeated; non-operator customer demand is weaker than expected.