China Tower (Buy, TP: HK$14, +14%) Q4 24 Quick Take: Rising Two Wings contribution, stable margins supportive of ongoing shareholder remuneration
China Tower saw Q4 revenue and EBITDA ahead of consensus by 0.9% and 4.8% respectively, led by strong momentum in Two Wings and good cost control. As margins have started to stabilise and earnings up 10% in 2024, the company announced an 11% increase in dividends which implies a 76% payout, in-line with its guidance. As depreciation is set to fall this year, we expect earnings to grow rapidly which should be supportive of the ongoing shareholder remuneration policy. At 3.5x FY25 EV/EBITDA, China Tower remains a compelling Tower play, and we stay Buyers with a HK$ 14 price target post its 10:1 share split.CHINA TOWER CORPORATION LIMITED is a China-based telecommunications tower infrastructure service provider. The Company mainly has three business segments. The Tower Business segment mainly uses sites to carry out macro cell and small cell businesses with telecommunications service providers (TSPs). The Indoor 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 Business (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.
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