SZSC:728

Stock Analysis Report

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Executive Summary

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


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 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

8.8%

728

10.6%

HK Telecom

7.2%

HK Market


1 Year Return

-38.2%

728

-33.0%

HK Telecom

-0.5%

HK Market

Return vs Industry: 728 underperformed the Hong Kong Telecom industry which returned -30.4% over the past year.

Return vs Market: 728 underperformed the Hong Kong Market which returned 0.9% over the past year.


Shareholder returns

728IndustryMarket
7 Day8.8%10.6%7.2%
30 Day-3.7%-1.0%6.6%
90 Day-9.6%-8.8%13.2%
1 Year-35.1%-38.2%-30.7%-33.0%3.6%-0.5%
3 Year-27.4%-35.2%-36.0%-41.7%9.5%-2.2%
5 Yearn/a-40.0%-47.8%9.6%-8.6%

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

No news available

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$2.36) is trading below our estimate of fair value (HK$17.84)

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 (8.4x) compared to the Telecom industry average (12.6x).

PE vs Market: 728 is good value based on its PE Ratio (8.4x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 728 is good value based on its PEG Ratio (1x)


Price to Book Ratio

PB vs Industry: 728 is good value based on its PB Ratio (0.5x) compared to the HK Telecom industry average (1.2x).


Next Steps

Future Growth

How is China Telecom forecast to perform in the next 1 to 3 years based on estimates from 23 analysts?

8.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 728's forecast earnings growth (8.7% per year) is above the savings rate (1.6%).

Earnings vs Market: 728's earnings (8.7% per year) are forecast to grow slower than the Hong Kong market (17.6% per year).

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

Revenue vs Market: 728's revenue (4.2% per year) is forecast to grow slower than the Hong Kong market (10.8% per year).

High Growth Revenue: 728's revenue (4.2% 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 (6.5%).


Next Steps

Past Performance

How has China Telecom performed over the past 5 years?

2.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 728 has high quality earnings.

Growing Profit Margin: 728's current net profit margins (5.4%) are lower than last year (5.7%).


Past Earnings Growth Analysis

Earnings Trend: 728's earnings have grown by 2.7% per year over the past 5 years.

Accelerating Growth: 728's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 728 had negative earnings growth (-5.1%) over the past year, making it difficult to compare to the Telecom industry average (-5.1%).


Return on Equity

High ROE: 728's Return on Equity (5.7%) is considered low.


Next Steps

Financial Health

How is China Telecom's financial position?


Financial Position Analysis

Short Term Liabilities: 728's short term assets (CN¥95.4B) do not cover its short term liabilities (CN¥265.3B).

Long Term Liabilities: 728's short term assets (CN¥95.4B) exceed its long term liabilities (CN¥90.2B).


Debt to Equity History and Analysis

Debt Level: 728's debt to equity ratio (8.6%) is considered satisfactory.

Reducing Debt: 728's debt to equity ratio has reduced from 36.6% to 8.6% over the past 5 years.

Debt Coverage: 728's debt is well covered by operating cash flow (365.6%).

Interest Coverage: 728's interest payments on its debt are well covered by EBIT (8.7x coverage).


Balance Sheet


Next Steps

Dividend

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

5.36%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: 728's dividend (5.36%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.28%).

High Dividend: 728's dividend (5.36%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.54%).


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 (44.1%), 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 (44.8% payout ratio).


Next Steps

Management

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

2.0yrs

Average management tenure


CEO

Ruiwen Ke (58yo)

1.17yrs

Tenure

CN¥982,000

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 ($USD139.96K) is below average for companies of similar size in the Hong Kong market ($USD816.97K).

Compensation vs Earnings: Ruiwen's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Ruiwen Ke
Chairman & CEO1.17yrsCN¥982.00kno data
Min Zhu
Executive VP1.75yrsCN¥761.00kno data
Zhongyue Chen
Executive VP & Executive Director3.17yrsCN¥913.00kno data
Guiqing Liu
Executive VP & Executive Director0.92yrCN¥508.00kno data
Guoquan Wang
Executive VP & Executive Director0.92yrCN¥205.00kno data
Zhengmao Li
President0.17yrno datano data
Yuzhu Ma
Managing Director of Corporate Culture Departmentno dataCN¥415.00kno data
Zhiyong Zhang
Executive Vice President2yrsno datano data
Guanglu Shao
Executive Director0.17yrno datano data
Yuk Har Wong
Company Secretary3.58yrsno datano data

2.0yrs

Average Tenure

55yo

Average Age

Experienced Management: 728's management team is considered experienced (2 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Ruiwen Ke
Chairman & CEO1.17yrsCN¥982.00kno data
Min Zhu
Executive VP1.75yrsCN¥761.00kno data
Zhongyue Chen
Executive VP & Executive Director3.17yrsCN¥913.00kno data
Guiqing Liu
Executive VP & Executive Director0.92yrCN¥508.00kno data
Guoquan Wang
Executive VP & Executive Director0.92yrCN¥205.00kno data
Zhengmao Li
President0.17yrno datano data
Guanglu Shao
Executive Director0.17yrno datano data
Hau Yin Tse
Independent Non-Executive Director14.83yrsCN¥487.00kno data
Erming Xu
Independent Non-Executive Director14.83yrsCN¥250.00kno data
Hsuehming Wang
Independent Non-Executive Director6.17yrsCN¥266.00kno data

1.5yrs

Average Tenure

57yo

Average Age

Experienced Board: 728's board of directors are not considered experienced ( 1.5 years average tenure), which suggests a new board.


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: SZSC
  • Founded: 2002
  • Industry: Integrated Telecommunication Services
  • Sector: Telecom
  • Market Cap: HK$191.000b
  • 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
  • Wanchai
  • Hong Kong

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CHANYSE (New York Stock Exchange)SPON ADR H SHSUSUSDNov 2002
ZCHADB (Deutsche Boerse AG)SPON ADR H SHSDEEURNov 2002
CHJH.FOTCPK (Pink Sheets LLC)YesForeign Shares-Foreign ListedUSUSDNov 2002
728SEHK (The Stock Exchange of Hong Kong Ltd.)YesForeign Shares-Foreign ListedHKHKDNov 2002
ZCHDB (Deutsche Boerse AG)YesForeign Shares-Foreign ListedDEEURNov 2002
728SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDNov 2002
728SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDNov 2002

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, including local wireline telephone services and long distance wireline services; CDMA mobile voice services, such as local calls, domestic and international long distance calls, intra-provincial roaming, and inter-provincial roaming and international roaming; wireline Internet access services comprising dial-up and broadband services; wireless Internet access services; and wireline, Internet, and mobile value-added services. The company also provides Best Tone information services; and information technology-based integrated solutions, such as system integration and consulting, outsourcing, special advisory, information application, knowledge, and software development services. In addition, it offers managed data services that include digital data network, frame relay, and asynchronous transfer mode services for government agencies, large corporations, and institutions; and leased line services, as well as sells, repairs, and maintains customer-end equipment. Further, the company provides international telecommunications services, including network, Internet access and transit, Internet data center, and mobile virtual network services in various countries, including the Asia Pacific, Europe, Africa, South America, and North America; and music production and related information, instant messenger, finance leasing, capital and financial management, and e-commerce services, as well as sells telecommunications terminals. As of December 31, 2019, it had approximately 336 million mobile subscribers; 153 million wireline broadband subscribers; and 111 million access lines in service. The company was incorporated in 2002 and is based in Wanchai, Hong Kong. China Telecom Corporation Limited is a subsidiary of China Telecommunications Corporation. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/07/07 15:18
End of Day Share Price2020/07/07 00:00
Earnings2020/03/31
Annual Earnings2019/12/31


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.