德银-中国-电信行业-中国电信业：一些风险正在出现，但我们仍然维持建设

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1、DeutscheBankMarketsResearchAsiaIndustryDateChinaChineseTelecoms29November2017TelecommunicationsForecastChangeJamesWangSomerisksemergingbutweremainResearchAnalyst(+852)22036145constructivejames-z.wang@db.comSectorriskmanageable...CUourtoppickonstrongermomentumPeterMilliken,CFATheC

2、hinesetelcoshavedeliveredsolidtop-linegrowththisyear(6%)buthaveResearchAnalystbeencasualtiesofrisk-ontrade.Whilecompetitiveintensityincreased(+852)22036190followingthelaunchofCT’sRMB99/mthunlimiteddataplansinSeptember,peter.milliken@db.comwedonotbelievethesectorwillengageincutthr

3、oatcompetitionatthisstage,inviewofitsorderlybehaviortodate.M&Ariskalsorecentlycametothefore,KeyChangeswithCTlookingtoacquireanearbankruptOi,althoughifthisgoesthrough,itwouldmostlikelyoccurattheparentlevel.WhilewestilllikeCM,whosenextCompanyTargetPriceRatinglikelymajorcatalystisin

4、1H18,wechangeourtoppicktoCU,whererevenue0728.HK5.40to4.55(HKD)-momentumisimprovingandcostcontrolisbetterthanatpeers.0762.HK14.80to-15.50(HKD)SectorremainsingoodconditionSource:DeutscheBankThesectorremainsingoodconditionwithrevenuegrowthacceleratingto7%in3Qandfreecashflowsettoimpr

5、oveinthenextfewyearsfromcapexToppicksreductions.WhilecostmanagementatCMandCThasbeenlessthanChinaUnicom(0762.HK),HKD11.60Buydesirablethisyear,maintenancecostgrowthshouldeaseassoonastheChinaMobile(0941.HK),HKD80.35Buynetworkroll-outslows.Onpricingandcompetition:weareencouragedbythe

6、Source:DeutscheBanktop-linegrowthspurredbyunlimiteddataplansthathavebeenintroducedsofarbutremainwatchfulforpossibledeteriorationinpricinglevelsfromhere.CompaniesFeaturedCUnowourtoppickoncostcontrolandbetter-than-expectedtop-linegrowthChinaTelecomCorp(0728.HK),HKD3.79BuyCUisnowour

7、toppickforitsbetter-than-expectedrevenuemomentum,with2016A2017E2018E3Qrevenuegrowthrisingto6%YoYfrom2%in1Qand4%in2Q.CostP/E(x)14.613.412.6managementhasalsobeenstrong.EBITDAmarginhasimproved60bpsYTDEV/EBITDA(x)3.73.63.2andweseeprospectsforfurthermarginimprovementasCUconsolidatesPr

8、ice/book(x)0.80.80.8moreofitsvariousbusi