Morgan Stanley released a report, raising the Target Price for HKT Trust and HKT (06823.HK) from 10.3 HKD to 11.5 HKD, maintaining a 'Shareholding' rating and listing the stock as the Industry favorite. The Target Price corresponds to a forecast dividend yield of 7.1% and a corresponding 350 basis points spread to the USA ten-year Bonds target yield of 3.6%. This spread has narrowed by 50 basis points from the original assumption, reflecting the market's recognition of high visibility dividend payments amidst uncertainty regarding tariffs and policies.

The firm also raised the Target Price for PCCW (00008.HK) from 3.9 HKD to 4.5 HKD, based on adjustments to the valuation of HKT Trust and HKT, maintaining an 'In line with market' investment rating, as the current valuation has fully reflected the risks of dividend transmission rates.

The firm expects HKT Trust and HKT's dividend per share to grow by approximately 4% this year, with a faster growth rate than in 2024, benefiting from a more stable environment for fixed-line Business and the solid position of mobile Business along with ongoing cross-selling opportunities. The interbank borrowing rate in Hong Kong has dropped to 3.5%, easing interest burdens, and HKT Trust and HKT will gain more benefits from cost savings and efficiency improvements.