Is China Telecom (SEHK:728) Still Undervalued? A Closer Look at Current Valuation

China Telecom (SEHK:728) has caught the attention of investors lately, prompting a fresh round of debate about where the stock goes next. With no single headline driving the movement, some shareholders are nonetheless taking a closer look, wondering if the recent price swings are pointing to something deeper. When there is buzz without a clear catalyst, it often reflects shifting sentiment or expectations on future growth. This could signal a turning point or just a pause. Over the past year, the stock has enjoyed a respectable run, building on its longer-term momentum. A jump of almost 40% since last year stands out, even after factoring in a recent pullback in the past month. Other than the latest moves, China Telecom has maintained steady revenue and income growth, which helps explain why it remains on many watchlists despite changing market moods. For those weighing whether to sit tight or act, the big picture hints at a company adapting to both industry trends and local conditions. After all these shifts, the central question is whether the current price is an invitation for value-seekers or if the market already expects China Telecom to keep delivering strong growth. Is there a bargain hiding in plain sight, or is everything already baked in?

Most Popular Narrative: 21.4% Undervalued

According to the most widely followed analysis, China Telecom is trading at a significant discount to its estimated fair value. This suggests strong upside potential if forecasts come to fruition.

The company is accelerating its AI and Quantum technology developments, including AI+ and Quantum+, to drive industrial innovation and create new revenue streams. This initiative is likely to significantly impact revenue and enhance net margins as the company integrates these high-tech solutions into various sectors.

Curious how a bold bet on next-generation technology could send earnings, margins, and valuation multiples surging? Only the most ambitious forecasts reveal the true story behind this major price target, but the real surprise is buried in future projections and a premium valuation usually reserved for sector leaders.

Result: Fair Value of $7.32 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, substantial costs for R&D and ambitious projects could pressure margins and earnings, particularly if anticipated returns from new technologies do not materialize.

Find out about the key risks to this China Telecom narrative.

Another View: SWS DCF Model Perspective

From a different angle, the SWS DCF model suggests a vastly different valuation outlook for China Telecom. This approach points to the company being significantly undervalued, which raises the stakes of the debate. Could the true opportunity be hiding in the numbers, or is there more to the story?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out China Telecom for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own China Telecom Narrative

If this analysis does not quite align with your conclusions, or you would rather dig deeper yourself, there is always the option to shape your own view in just a few minutes. Do it your way.

A great starting point for your China Telecom research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more handpicked investing opportunities?

Set yourself apart from the crowd by acting now on investment themes that are shaping tomorrow’s markets. Don’t wait, as these ideas may not be available for long.

• Catch high-growth upstarts before the crowd by checking out penny stocks with strong financials in penny stocks with strong financials.
• Target consistent income streams by reviewing companies offering dividend stocks with yields above 3% via dividend stocks with yields > 3%.
• Spot the future of medicine by uncovering healthcare leaders using artificial intelligence through healthcare AI stocks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com