We maintain the investment rating as "Accumulate" and TP at HK$4.50. Considering the margin of safety from relatively high dividend yield and the opportunities brought by computing power infrastructure and AI, we maintain the investment rating as "Accumulate" and TP at HK$4.50.

Steady revenue and profit growth, with expected steady dividend growth. Revenue and shareholders' net profit in 1H23 were RMB73,170 million (+5.7% yoy) and RMB2,034 million (+7.3% yoy), respectively, in line with market expectations. We believe the Company's net profit will continue to grow steadily over the next few years, thanks to strong demand from data center construction, and the Company's sound business strategy of focusing on high quality and high margin projects. Given the healthy cash position, and the Company's willingness to improve shareholders' return, we expect dividend payout ratio to increase continuously in the next few years.

We expect the Company's computing power infrastructure services to exceed market expectations. As the main force of the country's digital infrastructure, the Company achieved excellent performance in data center, cloud services and 5G+ in 1H23, with new contracts increasing by more than 50%. Among them, strategic emerging industries are booming, and new contracts signed in 1H23 account for more than 27% of the total number of new contracts signed, with amount exceeding 27 billion. China Telecom / China Mobile/ China Unicom plan to increase their CAPEX on computing power by 39.3%/35%/20.2% yoy in 2023, internet enterprises and government enterprises are also actively involved in the construction of data center and AIGC.

In particular, compared with traditional data centers, the construction of intelligent data center has a higher growth. Considering the Company's continuous investment in research and development, coupled with explosive growth of computing power demand from cloud computing and AI large models, we expect the Company's TIS business growth may exceed market expectations.

Catalysts: Increase in dividend payout ratio; better-than-expected growth of data center construction.

Risks: Lower-than-expected CAPEX investment of telecom operators; weaker-than-expected demand from non-operator customers.