Goldman Sachs released a report that continues to be positive about the outlook for the three major Chinese telecommunications stocks in the second half of the year. Goldman Sachs believes that the stocks meet long-term value evaluation based on the ex-dividend discount model. The ability to achieve dividend targets based on clear dividend payout ratios, stable business and profit growth combinations, and the forecast of free cash flow from this year to 2026 exceeds pure profits, as well as promoting shareholder returns and managing market capitalization based on corporate performance indicators of state-owned enterprises.

The bank stated that the dividend rate of the three major Chinese telecommunications stocks in the next 12 months is 7% to 8%, and the after-tax dividend rate is 5% to 6%, which is 3 to 4 cents higher than the interest rate of Chinese one-year government bonds. It is also one of the 30 highest dividend-paying stocks among listed companies with a market value of over 100 billion in Hong Kong. The valuation of the relevant shares is also lower than the historical average before the COVID-19 pandemic and since 2008. The valuation of the relevant shares is attractive under the improved profit growth and free cash flow prospects.

The bank adjusted its target price for the three major Chinese telecommunications stocks by 5% to 13% based on the forecast of enterprise value multiples in 2025 as the target price basis.

The table below lists Goldman Sachs' latest investment ratings and target prices for the three major Chinese telecommunications stocks and China Tower (00788.HK):

Stock │ Investment rating │ Target price

China Mobile (00941.HK) │ Buy │ HKD 82.50 -> 87.00

China Telecom (00728.HK) │ Buy │ HKD 5.10 -> 5.40

China Unicom (00762.HK) │ Buy │ HKD 7.00 -> 7.90

China Tower (00788.HK) │ Neutral │ HKD 1.05 -> 1.06