HK's listed telecoms firms tipped to outperform on improved revenues
Hong Kong's three listed telecommunications network operators are all on their way to generating significant earnings next year, according to Macquarie Securities.
The company has upgraded its revenue estimates for PCCW, SmarTone Telecommunications Holdings and Hutchison Telecommunications Hong Kong Holdings, which all received an 'outperform' rating on improved growth outlooks.
Next year's total revenue for fixed-line telecommunications giant PCCW is predicted to reach HK$23.03 billion, up from the previous estimate of HK$22.78 billion but down from HK$23.66 billion forecast this year.
'We believe [PCCW's] core telephony business is able to compensate for the fall in contribution from [property arm] Pacific Century Premium Developments,' Macquarie Securities analyst Lisa Soh said yesterday.
PCCW's market price has also been raised to HK$3.40 per share from the earlier forecast of HK$2.60 per share.
'We expect rapid growth from its Now TV business,' said Soh, noting that PCCW will still see net savings from its expired broadcast rights to the English Premier League. Coverage of the soccer league's latest season was taken over by rival iCable.
The positive earnings forecast for Hutchison Telecommunications, part of Hutchison Whampoa Group, is based on the carrier's rising 3G smartphone subscriber acquisitions and greater data usage at its mobile network unit, 3 Hong Kong.
'We see the potential for average revenue per user (arpu) growth for 3, driven by the increasing smartphone uptake,' Soh said. The monthly arpu for smartphone users at 3, which was Apple's first local carrier-partner for the iPhone, is estimated to be HK$230.
Revenue for Hutchison Telecommunications is expected to hit HK$9.74 billion next year from the forecast HK$9.1 billion this year. Macquarie's target price has increased to HK$2.80 per share, up from the earlier estimate of HK$1.75 per share.
SmarTone, a subsidiary of Sun Hung Kai Properties, is predicted to post revenue of HK$4.77 billion next year, up from the previous estimate of HK$4.4 billion and this year's forecast of HK$3.96 billion. Its target price has been raised to HK$13.20 per share from HK$11 per share.
'We see double-digit subscriber growth coming from market share gains and demand from new segments, such as tablet SIM plans,' Soh said, noting SmarTone's typical quota of more than 1,000 new subscribers each day.
Estimated monthly average revenue per user at Hutchison Telecommunications mobile unit 3 is, in Hong Kong dollars: $230