Earnings First Take: 9M23 EBITDA increased by 1.4% y-o-y, in line with market expectations
- EBITDA increased by 1.4% y-o-y to Rmb48.1bn, in line with market expectations
- Revenue grew by 2.1% y-o-y to Rmb70.2bn, driven by a 30% increase in Two Wings business, confirming our positive view in this segment
- Rate BUY on the counter for its rapid expansion in the Two Wings business; TP unchanged at HK$1.4
9M23 EBITDA increased by 1.4% y-o-y, in line with market expectations. China Tower (788 HK) announced its 9M23 results on 19 Oct 2023 after market close. Revenue grew by 2.1% y-o-y to Rmb70.2bn in 9M23, led by a 30% increase in Two Wings (Smart Tower and Energy) business. TSP (telecommunications service provider) revenue decreased by 0.8% y-o-y to Rmb61.7bn, due to lower ASP under the new commercial pricing agreements. Compared to Dec 2022, tower sites remained stable at 2,054k and total number of tower tenants increased 68k to 3,651k, with tower tenancy ratio increased from 1.74x to 1.77x. EBITDA increased by 1.4% y-o-y to Rmb48.1bn, in line with market expectations. Net profit increased by 14.8% y-o-y to Rmb7.4bn.
We rate BUY on the counter for its rapid expansion in the Two Wings business. We expect neutral share price reaction with this set of in line results. Looking ahead, we believe the company will continue to leverage on its nationwide tower network to grow its smart tower and energy operation businesses, which are key growth engines for the company. The company also offers a stable dividend yield of 5%. We currently rate BUY on the counter for its rapid expansion in the Two Wings business; TP of HK$1.4.