CIMB tracked City Telecom (01137-HK) for the first time and gave it an outperforming market rating, with a target price of HK$3.91; the target price was reasonable because the stock was valued at HK$4.01 based on discounted cash flow.

City Telecom is the second largest broadband service provider in Hong Kong. Thanks to the huge market demand for high-speed Internet services, the company is currently expanding its market share. CIMB believes that in the next 3 years, City Telecom will be able to maintain a continuous increase in the number of users and raise the company's market share forecast for 2012 from 22% to 35%, because the company's revenue stream is stable, the outlook is optimistic, and the market position is unique using advanced FTTH networks.

City Telecom closed slightly higher by 0.34% throughout the day to HK$2.91.