DBS analyst Tsz Wang maintained a Buy rating on China Tower (CHWRF – Research Report) on April 22 and set a price target of HK$1.40.
Tsz Wang has given his Buy rating due to a combination of factors surrounding China Tower’s dominant market position and growth prospects. China Tower, as the leading tower provider in China, commands more than two million towers, accounting for 95% of the market share among telecom operators. This extensive network is a significant source of lease income, which is bolstered by the ongoing expansion of mobile networks and the addition of base stations. Furthermore, the company has diversified its revenue streams by venturing into indoor coverage solutions, enhancing its overall financial resilience.
The “Two Wings” strategy is another key driver for the optimistic outlook, as China Tower leverages its existing infrastructure to transform telecom towers into multifunctional digital towers. These towers are used for additional applications, including surveillance and temperature monitoring. The company’s energy segment, featuring battery exchange for light vehicles and power backup services, demonstrated a robust year-over-year revenue increase of 29%. With the expected deployment of approximately 600,000 5G base stations annually in the coming years, the tenancy ratio is set to rise, which should, in turn, improve profitability. Tsz Wang’s analysis suggests that these factors collectively justify a Buy rating for China Tower’s stock.
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China Tower (CHWRF) Company Description:
China Tower Corp., Ltd. engages in the providing of telecommunications tower infrastructure services. The company mainly has three business segments: following as The Tower Business segment mainly uses sites to carry out macro cell and small cell businesses with telecommunications service providers, The Distributed Antenna System (DAS) Business segment mainly provides indoor distributed antenna systems to TSPs and to attach their telecommunications equipment. The Trans-sector Site Application and Information (TSSAI) Business segment mainly uses the sites dispersed nationwide and provide site resource services, including infrastructure, maintenance services and power services, to host different types of devices for customers from different industries and support them to build up different types of nationwide or regional networks. China Tower was founded in July 2014 and is headquartered in Beijing, China.
