Group 1 - The core viewpoint of the article highlights the performance of the China Securities Hong Kong Stock Connect TMT Index, which has seen a 10.93% increase over the past month and a 22.64% increase year-to-date [1] - The index consists of 50 listed companies in the TMT sector selected from the Hong Kong Stock Connect, reflecting the overall performance of related industry companies [1] - The top ten weighted companies in the index include Xiaomi Group-W (21.12%), Tencent Holdings (14.91%), and China Mobile (14.28%) [1] Group 2 - The index is adjusted semi-annually, with changes implemented on the next trading day following the second Friday of June and December [2] - In special circumstances, the index may undergo temporary adjustments, such as removing companies that are delisted or adding new TMT companies that rank in the top ten by market capitalization [2] - The index's holdings are entirely composed of companies listed on the Hong Kong Stock Exchange, with 52.50% in communication services and 47.50% in information technology [1]

Core Viewpoint - A 5.5 magnitude earthquake occurred in Shigatse, Tibet, prompting China Tower's Tibet branch to initiate a level three emergency response to ensure communication services are maintained [1] Group 1: Earthquake Details - The earthquake struck on May 12 at 5:11 AM, with a depth of 10 kilometers, located at latitude 28.76° N and longitude 87.543° E [1] - The China Earthquake Networks Center confirmed the earthquake's magnitude and details [1] Group 2: Impact on Communication Infrastructure - China Tower operates 186 communication tower sites in the affected area of Lazhi County [1] - Two sites are currently without power, and two sites have exited service due to the earthquake [1] Group 3: Emergency Response Actions - The Tibet branch of China Tower has activated a level three emergency response [1] - The company is coordinating closely with emergency management departments and telecom operators to address communication service needs [1] - Maintenance personnel, vehicles, and generators have been arranged to respond promptly to service demands [1]

Investment Rating - The investment rating for China Tower Corp Ltd is Overweight, with an industry view classified as Attractive [4][62]. Core Insights - The total revenue for 1Q25 was Rmb24.8 billion, reflecting a year-over-year increase of 3.3% [7]. - The tower business revenue decreased by 0.4% year-over-year, while the DAS business grew by 15.2% year-over-year [2][7]. - The smart tower and energy business saw a year-over-year increase of 17.9%, although it experienced a quarter-over-quarter decline of 18.5% [2][7]. - EBITDA increased by 4.2% year-over-year to Rmb17.3 billion, with a margin expansion of 0.6 percentage points [7]. - Net profit rose by 8.6% year-over-year to Rmb3 billion, with a margin increase of 0.6 percentage points [7]. Summary by Sections Financial Performance - Tower business revenue: Rmb18,877 million, down 0.4% YoY, up 0.5% QoQ [2]. - DAS business revenue: Rmb2,347 million, up 15.2% YoY, up 6.3% QoQ [2]. - Smart Tower and Energy business revenue: Rmb3,457 million, up 17.9% YoY, down 18.5% QoQ [2]. - Total revenue: Rmb24,771 million, up 3.3% YoY, down 2.2% QoQ [2]. - EBITDA: Rmb17,295 million, up 4.2% YoY, margin at 69.8% [2][7]. - Profit before taxation: Rmb4,006 million, up 8.6% YoY, margin at 16.2% [2]. - Net profit: Rmb3,024 million, up 8.6% YoY, margin at 12.2% [2]. Market Position - Current market capitalization is US$24.8 billion, with an enterprise value of US$33.99 billion [4]. - The average daily trading value is US$71 million [4].

Financial Performance - The company's operating revenue for Q1 2025 reached RMB 24.771 billion, a year-on-year increase of 3.3%[4] - Operating business revenue was RMB 21.224 billion, up 1.1% year-on-year; tower business revenue decreased by 0.4% to RMB 18.877 billion, while indoor distributed antenna system revenue grew by 15.2% to RMB 2.347 billion[3] - Smart connection business revenue increased by 17.1% to RMB 2.312 billion, and energy business revenue rose by 19.6% to RMB 1.145 billion[3] - EBITDA for Q1 2025 was RMB 17.295 billion, reflecting a 4.2% increase year-on-year, with an EBITDA margin of 69.8%[5] - Profit attributable to shareholders was RMB 3.024 billion, an increase of 8.6% compared to the previous year[4] Operational Metrics - As of March 31, 2025, the number of tower sites reached 2.108 million, with 3.82 million tenants, a net increase of 29,000 tenants from the end of the previous year[5] - The proportion of revenue from the two wings business increased from 12.2% to 14.0% year-on-year[5] Strategic Initiatives - The company plans to enhance core competitiveness and seize opportunities from initiatives like "dual-gigabit" network construction and "carbon neutrality" goals in 2025[6] - The company aims to optimize its battery swap network and expand its user base while promoting comprehensive energy solutions[6] Financial Data Disclaimer - The financial data presented is based on internal records and has not been reviewed by auditors, cautioning shareholders against undue reliance on this data[7]

Financial Performance - In 2024, the company achieved operating revenue of RMB 97.772 billion, a year-on-year increase of 4.0%[5] - EBITDA for 2024 reached RMB 66.559 billion, reflecting a growth of 4.7% compared to the previous year, with an EBITDA margin of 68.1%[22] - Profit attributable to shareholders was RMB 10.729 billion, marking a 10.0% increase from 2023[5] - The company reported a net cash flow from operating activities of RMB 49.468 billion, an increase of RMB 16.628 billion year-on-year[22] - Operating profit reached RMB 16.33 billion, reflecting a year-on-year growth of 12.6%[83] - Operating cash flow increased significantly by 50.6% to RMB 49.47 billion[83] Revenue Breakdown - In 2024, the operator business achieved revenue of RMB 84.119 billion, a year-on-year increase of 2.4%[25] - The tower business generated revenue of RMB 75.689 billion in 2024, with a year-on-year growth of 0.9% and a total of 2.094 million tower sites, an increase of 48,000 sites from the previous year[26] - The indoor distribution business reported revenue of RMB 8.430 billion, reflecting an 18.1% year-on-year growth, with a cumulative coverage area of 12.68 billion square meters, up 24.9%[28] - The two wings business achieved revenue of RMB 13.388 billion, accounting for 13.7% of total revenue, an increase of 1.5 percentage points year-on-year[29] - The smart connection business generated revenue of RMB 8.911 billion, a year-on-year increase of 22.4%, with the tower vision business contributing RMB 5.539 billion, representing 62.2% of smart connection revenue[30] - The energy business reached revenue of RMB 4.477 billion, a 6.2% year-on-year growth, with the battery swap business accounting for RMB 2.500 billion, or 55.8% of energy revenue[31] Capital Expenditures and Investments - Capital expenditures for 2024 amounted to RMB 31.941 billion, slightly up by 0.7% from the previous year[5] - Capital expenditure for new site construction and shared renovations was RMB 17.972 billion, up 5.4% year-on-year, accounting for 56.3% of total capital expenditure[105] - The company increased R&D investment by 40% and the number of R&D personnel by 60% in 2024, with patent applications and authorizations rising by 58% and 68% respectively compared to 2023[32] Shareholder Returns - The proposed final dividend for the year is RMB 0.30796 per share, leading to a total dividend of RMB 0.41696 per share for the year, an increase of 11.5%[22] - The company aims to distribute at least 50% of the annual distributable profits as dividends, considering factors such as operating performance and cash flow[167] - The final dividend, if approved, is expected to be paid around June 30, 2025[169] Tower and Tenant Growth - The total number of tower sites managed by the company reached 2.094 million, an increase of 2.3% year-on-year[11] - The number of tower tenants increased to 3.791 million, representing a growth of 3.6% compared to the previous year[11] - The average annual revenue per tower site was RMB 40,870, up by 1.8% from 2023[11] - The company expanded its tower site sharing level, with the average number of tenants per site increasing from 1.68 to 1.72[26] Strategic Initiatives - The company aims to enhance its core competitiveness and maintain high-quality development through its "one body, two wings" strategic layout[46] - The company is focusing on optimizing its battery swap network and expanding its user base to strengthen its leading position in the battery swap market[37] - The company actively promoted green energy applications, including photovoltaic power generation and energy storage systems, to fulfill its "dual carbon" responsibilities[35] Management and Governance - The company continues to expand its board with experienced professionals to enhance governance and strategic oversight[141] - The management team includes professionals with advanced degrees and qualifications, ensuring a high level of expertise in financial and operational matters[149][153][156] - The ongoing recruitment of independent directors reflects the company's commitment to strong corporate governance and accountability[136] Market Presence and Coverage - The company operates in 31 provinces in mainland China, focusing on communication tower infrastructure and energy application services[164] - The total coverage of subway lines reached 13,126 kilometers, growing by 12.9% compared to the previous year[62] - The total coverage of high-speed rail tunnels reached 16,189 kilometers, marking a 30.1% increase year-on-year[62] Share Capital and Structure - The company's registered capital totals RMB 10,000 million, with initial share subscriptions from China Mobile, China Unicom, and China Telecom at 40%, 30.1%, and 29.9% respectively[182] - As of December 31, 2024, the total issued share capital is RMB 176,008,471,024, consisting of 176,008,471,024 shares with a par value of RMB 1.00 each[185] - The shareholding structure shows that domestic shares account for approximately 73.49% of the total issued capital, while H shares account for 26.51%[185]

Financial Performance - The company achieved operating revenue of RMB 97.77 billion for the year, representing a year-on-year growth of 4.0%[3] - Operating business revenue reached RMB 84.12 billion, an increase of 2.4% year-on-year, with tower business revenue at RMB 75.69 billion, growing by 0.9%[3] - EBITDA reached RMB 66.56 billion, reflecting a year-on-year increase of 4.7%, with an EBITDA margin of 68.1%[6] - Net profit attributable to shareholders was RMB 10.73 billion, up 10.0% year-on-year, resulting in a net profit margin of 11.0%[6] - The company generated a net cash flow from operating activities of RMB 49.47 billion, with free cash flow reaching RMB 17.53 billion, an increase of RMB 16.40 billion year-on-year[6] - The total operating revenue for the year ended December 31, 2024, was RMB 97,772 million, an increase of 2.9% from RMB 94,009 million in 2023[26] - Operating profit for the same period was RMB 16,330 million, up 12.6% from RMB 14,502 million in 2023[26] - The net profit attributable to shareholders for 2024 was RMB 10,729 million, representing a 10% increase compared to RMB 9,750 million in 2023[26] - The total comprehensive income for the year was RMB 10,727 million, compared to RMB 9,756 million in 2023, reflecting a growth of 9.9%[28] - The basic and diluted earnings per share for 2024 were RMB 0.6138, an increase from RMB 0.5578 in 2023[28] Assets and Liabilities - The total assets of the company amounted to RMB 332.83 billion, with interest-bearing liabilities of RMB 92.54 billion, leading to a net debt leverage ratio of 31.0%, a decrease of 0.4 percentage points from the previous year[6] - The company's total assets as of December 31, 2024, amounted to RMB 332,834 million, a slight increase from RMB 326,007 million in 2023[30] - The total liabilities decreased to RMB 132,855 million in 2024 from RMB 128,313 million in 2023[31] - The company maintained a healthy financial position with a net debt leverage ratio of 31.0%, a decrease of 0.4 percentage points from the previous year[90] Revenue Breakdown - The revenue from the three major telecommunications operators accounted for 86.69% of total revenue in 2024, down from 88.02% in 2023[38] - The revenue from tower business reached RMB 75,689 million in 2024, up from RMB 75,023 million in 2023, representing a growth of 0.9%[40] - The revenue from indoor distribution business increased by 18% to RMB 8,430 million in 2024, compared to RMB 7,140 million in 2023[40] - The revenue from smart connection business rose by 22% to RMB 8,911 million in 2024, up from RMB 7,283 million in 2023[40] - The energy business reported revenue of RMB 4.477 billion in 2024, a year-on-year increase of 6.2%, with the tower battery swap business generating RMB 2.500 billion, making up 55.8% of energy business revenue[16] Investments and R&D - The company increased its R&D investment and personnel by 40% and 60% respectively in 2024, with the number of patent applications and grants rising by 58% and 68% respectively compared to 2023[17] - The company plans to continue expanding its smart connection and energy businesses, focusing on technological advancements and market penetration strategies[46] Dividends and Shareholder Information - The company proposed a final dividend of RMB 0.30796 per share, resulting in a total dividend of RMB 0.41696 per share for the year, an increase of 11.5% compared to 2023[6] - The company will hold its annual general meeting on May 20, 2025, to discuss the proposed final dividend and other matters[103] - For H-share individual shareholders, a 20% withholding tax will be applied to dividends received through the Hong Kong Stock Connect[110] Corporate Governance - The board's composition includes 10 members, with three executive directors, four non-executive directors, and three independent non-executive directors, which is below the required one-third independent non-executive directors[95] - The company has complied with the corporate governance code and listing rules as of December 31, 2024, after recent board appointments[97] - The company received a waiver from the Hong Kong Stock Exchange regarding the appointment of independent non-executive directors, extending the deadline to September 30, 2024[96] Future Outlook - The company is focusing on enhancing its digital infrastructure services and expanding its market presence in line with national strategies for digitalization and carbon neutrality[5] - The company aims to enhance its core competitiveness and maintain a high-quality development pattern, focusing on the "one body, two wings" strategic layout[21] - The company is committed to promoting green energy applications, including photovoltaic power generation and energy storage systems, to fulfill its "dual carbon" responsibilities[19] - The company will continue to strengthen its technological innovation framework, focusing on key areas such as new generation mobile communication and artificial intelligence[22]

Summary of Conference Call Notes Company and Industry - **Company**: China Tower Corporation - **Industry**: AI and Edge Computing Core Points and Arguments 1. **Growth Opportunity in AI and Edge Computing**: The company sees a significant growth opportunity in AI, particularly in edge computing, which aligns with the broader trend of AI applications flourishing in the market [1][3] 2. **Importance of Edge Computing**: It is estimated that 75% of data will be generated and processed at the edge due to the need for real-time processing and efficiency, highlighting the critical role of edge computing in the AI landscape [2] 3. **Market Growth Projections**: The edge computing budget is projected to grow from approximately $9 billion in 2020 to $445 billion by 2030, with a compound annual growth rate (CAGR) of 48% [2] 4. **China Tower's Strategic Position**: The company has a strong position in edge computing due to its extensive infrastructure, including communication towers and data centers, which are well-equipped with necessary resources [4][5] 5. **Distributed Computing Initiatives**: Since 2020, China Tower has been exploring distributed computing, with plans for large-scale distributed computing pools to enhance its service capabilities [5][6] 6. **Collaboration with Major Tech Firms**: The company has established partnerships with major players like Alibaba, which plans to invest $38 billion to $40 billion in AI over the next three years, emphasizing the importance of integrated cloud and edge computing strategies [7][8] 7. **Diverse Application Areas**: China Tower is involved in over 40 sectors, including emergency services and environmental monitoring, leveraging its existing infrastructure for various applications [9][10] 8. **AI Model Development**: The company has developed AI models for specific applications, such as emergency forest fire management, showcasing its commitment to integrating AI into its operations [10][11] Other Important but Potentially Overlooked Content 1. **Stock Market Activity**: The company is undergoing a stock restructuring process, which is expected to positively impact its stock price and trading volume [11] 2. **Depreciation Changes**: A significant reduction in depreciation of acquired assets is anticipated in 2020, which will positively affect profit growth projections [12] 3. **Dividend Yield Expectations**: The expected dividend yield for 2025 is around 4.6% to 4.7%, with an increase to approximately 7.2% to 7.6% by 2026, indicating a strong return for investors [12] This summary encapsulates the key insights from the conference call, focusing on the strategic positioning of China Tower in the evolving AI and edge computing landscape, along with financial projections and market dynamics.

Investment Rating - Buy (Maintained) [8] Core Views - The company proposes a share consolidation and change in trading unit to enhance attractiveness, with the total issued share capital reducing from RMB 1760.08 billion to RMB 176.01 billion, and the trading unit changing from 2000 existing H shares to 500 consolidated and reduced H shares, expected to take effect on February 20, 2025 [3] - The company is leveraging its resource advantages to tap into the low-altitude economy, which is expected to grow significantly, with the low-altitude economy scale in China reaching RMB 5060 billion in 2023, a 33.8% YoY increase, and projected to exceed RMB 1 trillion by 2026 [4] - The company's "One Body, Two Wings" strategy is driving steady growth, with the depreciation of tower assets acquired in 2015 expected to reach an inflection point in 2026, significantly reducing depreciation and amortization expenses and contributing to profit growth [5] - The company is expected to achieve revenues of RMB 983 billion, RMB 1025 billion, and RMB 1068 billion in 2024-2026, with YoY growth rates of 4.5%, 4.3%, and 4.3%, respectively, and net profits attributable to the parent company of RMB 108 billion, RMB 125 billion, and RMB 195 billion, with YoY growth rates of 11.1%, 15.7%, and 55.6%, respectively [6] Financial Forecasts - Revenue is projected to grow from RMB 94,009 million in 2023 to RMB 106,843 million in 2026, with a CAGR of 4.3% [10] - Net profit attributable to the parent company is expected to increase from RMB 9,750 million in 2023 to RMB 19,501 million in 2026, with a CAGR of 26.1% [10] - EPS is forecasted to rise from RMB 0.06 in 2023 to RMB 0.11 in 2026 [10] - The company's P/E ratio is expected to decrease from 15.93x in 2024 to 8.85x in 2026, indicating improving valuation attractiveness [10] Strategic Initiatives - The company is focusing on the low-altitude economy, leveraging its extensive tower resources, with 2.081 million tower sites as of September 2024, and building a comprehensive low-altitude service network, including flight facility networks, low-altitude intelligent networks, and low-altitude service networks [4] - The "One Body, Two Wings" strategy continues to drive growth, with the company expanding its operator business, smart connectivity business, and energy business, particularly in areas like digital governance and energy solutions [5] Industry Outlook - The low-altitude economy is poised for significant growth, driven by policy and technological advancements, with the industry expected to exceed RMB 1 trillion by 2026, encompassing low-altitude infrastructure, manufacturing, operations, and flight support [4]

Investment Rating - The report assigns a Neutral rating to China Tower [1][9][16] Core Insights - China Tower's 3Q24 results were mixed, with total revenue growth decelerating from 4% year-over-year (yoy) in 2Q24 to 2% in 3Q24, primarily due to a slowdown in the TSP business, despite steady performance in the Two Wings segment [1][9] - EBITDA growth improved slightly from 3.4% to 3.7% yoy in 3Q24, attributed to stringent cost control measures, while net profit growth rebounded from 9% to 13% yoy due to slower depreciation and amortization (D&A) expense increases and reduced finance costs [1][9][2] - The report anticipates a positive short-term reaction in China Tower's share price due to solid earnings improvement, although it expresses concerns that consensus earnings estimates may be overly optimistic, leading to potential downward revisions that could negatively impact the share price in the medium term [1][7][9] Summary by Sections Revenue Performance - Total revenue growth slowed from 4% yoy in 2Q24 to 2% in 3Q24, driven by a notable slowdown in the TSP business [1][9] - TSP revenue growth decreased from 4% yoy in 2Q24 to 1% in 3Q24, with tower leasing and DAS revenue growth dropping significantly [3][9] Earnings and Profitability - EBITDA growth increased from 3.4% to 3.7% yoy in 3Q24, supported by reduced repair and maintenance expenses [2][9] - Net profit growth accelerated from 11% in 1Q24 and 9% in 2Q24 to 13% in 3Q24, benefiting from improved EBITDA, slower D&A expense increases, and lower finance costs [2][9] Business Segments - The Two Wings business showed mixed results, with energy operations experiencing a decline for the first time, while Smart Tower revenue increased from 14.5% yoy in 2Q24 to 17% in 3Q24 [4][9] - Overall, the Two Wings business maintained steady growth at approximately 10% yoy in 3Q24 [4][9] Market Expectations - The consensus for China Tower's 2024 revenue, EBITDA, and earnings stands at RMB 98 billion, RMB 66 billion, and RMB 11 billion respectively, implying growth rates of 7%, 5%, and 18% for 4Q24 [6][9] - The report suggests that these consensus numbers are likely to be revised downward following the latest results [6][9]

Financial Performance - The company's operating revenue for the first three quarters of 2024 reached RMB 72,452 million, representing a year-on-year growth of 3.3%[2] - Revenue from operator business was RMB 63,124 million, up 2.4% year-on-year, with tower business revenue at RMB 56,902 million (0.9% growth) and indoor distributed antenna system revenue at RMB 6,222 million (18.0% growth)[3] - EBITDA for the period was RMB 49,717 million, reflecting a 3.4% increase year-on-year, with an EBITDA margin of 68.6%[5] - Profit attributable to shareholders was RMB 8,153 million, marking an 11.0% increase compared to the previous year[3] - The pre-tax profit for the first three quarters was RMB 10,758 million, an increase of 11.3% year-on-year[3] Operational Metrics - The number of tower sites reached 2.081 million, with a net increase of 95,000 tenants, totaling 3.753 million tenants, and an average of 1.80 tenants per site[5] - The revenue contribution from the two wings business increased from 11.7% to 12.6% of total operating revenue[5] Assets and Liabilities - Total assets as of September 30, 2024, were RMB 324,491 million, while total liabilities were RMB 125,178 million[3] Strategic Focus - The company aims to continue its strategy of shared development, focusing on becoming a world-class digital infrastructure provider[6] Cautionary Note - The company emphasizes the importance of cautious reliance on the financial data provided, as it has not been reviewed or audited by external auditors[7]