We raised our target price from HK$0.92 to HK$1.02 and maintained the investment rating “collected” by the company. We forecast earnings per share for fiscal year 2022-2024 to be RMB 0.050/ 0.055/ 0.062 yuan. Due to a better-than-expected service framework agreement, we raised our target price while maintaining the “collected” investment rating.

The new service framework agreement between China Tower and telecom operators has been better than market expectations. Under the new agreement, the benchmark price for existing orders will be discounted by 2.4%, while the benchmark price-sharing discount rate for new orders is generally increased by 2.4 percentage points compared to the old agreement. As discounts on existing orders and new order sharing discounts increase, the revenue of the Tower business will be negatively affected, but as the 5G network continues to expand, we expect the Tower business to be basically stable in 2023.

We expect the growth rate of the “Two Wings” business to exceed market expectations. With extensive site resources and strong capabilities, we anticipate that the company's tower vision business and site leasing business will expand further to more customers and deeper levels. Furthermore, the intelligent connection business will continue to shift from simply providing site resources to providing comprehensive information services, and the value of a single site will continue to increase. With its ever-expanding network resources and huge market demand, we expect the energy business to continue to grow strongly.

Catalysts: Increased dividend rates; the growth rate of the “Two Wings” business was faster than market expectations.