SEHK:728

Stock Analysis Report

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Market Cap

HK$188.6b

Last Updated

2021/06/20 10:06 UTC

Data Sources

Company Financials +

Executive Summary

China Telecom Corporation Limited, together with its subsidiaries, provides wireline and mobile telecommunications services primarily in the People’s Republic of China. More Details


Snowflake Analysis

Very undervalued with excellent balance sheet and pays a dividend.


Similar Companies

Share Price & News

How has China Telecom's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 728 is less volatile than 75% of Hong Kong stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: 728's weekly volatility (3%) has been stable over the past year.


Market Performance


7 Day Return

-4.9%

728

-2.3%

HK Telecom

-1.3%

HK Market


1 Year Return

1.7%

728

-13.3%

HK Telecom

21.7%

HK Market

Return vs Industry: 728 exceeded the Hong Kong Telecom industry which returned -13.3% over the past year.

Return vs Market: 728 underperformed the Hong Kong Market which returned 21.7% over the past year.


Shareholder returns

728IndustryMarket
7 Day-4.9%-2.3%-1.3%
30 Day-8.6%-3.7%0.2%
90 Day-14.3%-10.2%-2.2%
1 Year6.5%1.7%-9.4%-13.3%26.3%21.7%
3 Year-24.3%-33.4%-28.7%-37.4%10.1%-1.6%
5 Year-16.4%-30.7%-18.3%-32.0%59.7%32.5%

Long-Term Price Volatility Vs. Market

How volatile is China Telecom's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is China Telecom undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 728 (HK$2.33) is trading below our estimate of fair value (HK$13.76)

Significantly Below Fair Value: 728 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 728 is good value based on its PE Ratio (7.5x) compared to the Hong Kong Telecom industry average (10x).

PE vs Market: 728 is good value based on its PE Ratio (7.5x) compared to the Hong Kong market (11.5x).


Price to Earnings Growth Ratio

PEG Ratio: 728 is good value based on its PEG Ratio (0.6x)


Price to Book Ratio

PB vs Industry: 728 is good value based on its PB Ratio (0.4x) compared to the HK Telecom industry average (1x).


Future Growth

How is China Telecom forecast to perform in the next 1 to 3 years based on estimates from 22 analysts?

11.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 728's forecast earnings growth (11.6% per year) is above the savings rate (1.5%).

Earnings vs Market: 728's earnings (11.6% per year) are forecast to grow slower than the Hong Kong market (19.4% per year).

High Growth Earnings: 728's earnings are forecast to grow, but not significantly.

Revenue vs Market: 728's revenue (4% per year) is forecast to grow slower than the Hong Kong market (12.8% per year).

High Growth Revenue: 728's revenue (4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 728's Return on Equity is forecast to be low in 3 years time (6.7%).


Past Performance

How has China Telecom performed over the past 5 years?

1.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 728 has high quality earnings.

Growing Profit Margin: 728's current net profit margins (5.3%) are lower than last year (5.4%).


Past Earnings Growth Analysis

Earnings Trend: 728's earnings have grown by 1.8% per year over the past 5 years.

Accelerating Growth: 728's earnings growth over the past year (5.3%) exceeds its 5-year average (1.8% per year).

Earnings vs Industry: 728 earnings growth over the past year (5.3%) exceeded the Telecom industry 2.1%.


Return on Equity

High ROE: 728's Return on Equity (5.8%) is considered low.


Financial Health

How is China Telecom's financial position?


Financial Position Analysis

Short Term Liabilities: 728's short term assets (CN¥92.8B) do not cover its short term liabilities (CN¥262.8B).

Long Term Liabilities: 728's short term assets (CN¥92.8B) exceed its long term liabilities (CN¥78.3B).


Debt to Equity History and Analysis

Debt Level: 728's debt to equity ratio (5%) is considered satisfactory.

Reducing Debt: 728's debt to equity ratio has reduced from 38.2% to 5% over the past 5 years.

Debt Coverage: 728's debt is well covered by operating cash flow (733.7%).

Interest Coverage: 728's interest payments on its debt are well covered by EBIT (13.8x coverage).


Balance Sheet


Dividend

What is China Telecom current dividend yield, its reliability and sustainability?

5.30%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: 728's dividend (5.3%) is higher than the bottom 25% of dividend payers in the Hong Kong market (1.9%).

High Dividend: 728's dividend (5.3%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.05%).


Stability and Growth of Payments

Stable Dividend: 728's dividends per share have been stable in the past 10 years.

Growing Dividend: 728's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (40.9%), 728's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 728's dividends in 3 years are forecast to be well covered by earnings (44.5% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.9yrs

Average management tenure


CEO

Ruiwen Ke (58 yo)

2.08yrs

Tenure

CN¥821,000

Compensation

Mr. Ruiwen Ke has been Chairman and Chief Executive Officer of China Telecom Corporation Limited since May 22, 2019. Mr. Ke served as President and Chief Operating Officer of China Telecom Corporation Limi...


CEO Compensation Analysis

Compensation vs Market: Ruiwen's total compensation ($USD127.23K) is below average for companies of similar size in the Hong Kong market ($USD933.95K).

Compensation vs Earnings: Ruiwen's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: 728's management team is considered experienced (2.9 years average tenure).


Board Members

Experienced Board: 728's board of directors are considered experienced (3.4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

China Telecom Corporation Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: China Telecom Corporation Limited
  • Ticker: 728
  • Exchange: SEHK
  • Founded: 2002
  • Industry: Integrated Telecommunication Services
  • Sector: Telecom
  • Market Cap: HK$188.572b
  • Shares outstanding: 80.93b
  • Website: https://www.chinatelecom-h.com/en/global/home.php

Number of Employees


Location

  • China Telecom Corporation Limited
  • Everbright Centre
  • 28th Floor
  • Wan Chai
  • Hong Kong

Listings


Biography

China Telecom Corporation Limited, together with its subsidiaries, provides wireline and mobile telecommunications services primarily in the People’s Republic of China. It offers wireline voice services, i...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/06/20 10:06
End of Day Share Price2021/06/18 00:00
Earnings2021/03/31
Annual Earnings2020/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.