CHINA TOWER(00788) 国泰君安证券·2024-04-23 13:32Investment Rating - The report maintains a "Buy" investment rating for China Tower (00788 HK) with a target price of HKD 1.20 [1]. Core Insights - China Tower recorded a robust performance in Q1 2024, with revenue of RMB 23.974 billion, representing a year-on-year growth of 3.3%, and a net profit attributable to shareholders of RMB 2.784 billion, up 11.1% year-on-year, aligning with market expectations [1]. - The depreciation of a significant number of towers is expected to end in Q4 2025, which will enhance net profit. The report anticipates that the company will not reduce its dividend payout ratio, leading to a substantial increase in dividends in 2026 [2]. - The report highlights that the company's tower business revenue saw slight growth due to an increase in the number of tower sites and tenants, driven by strong indoor coverage demand and robust growth in the smart tower business [1][2]. Summary by Sections Financial Performance - For Q1 2024, China Tower's revenue was RMB 23.974 billion, a 3.3% increase year-on-year, while net profit was RMB 2.784 billion, reflecting an 11.1% year-on-year growth [1]. - The depreciation expense accounted for 52.2% of total revenue in 2023, indicating its significant impact on profitability [2]. Future Outlook - The depreciation of the acquired tower assets from 2015 will conclude in Q4 2025, providing a strong impetus for profit growth in 2026 [2]. - The report expects double-digit net profit growth for the company in 2024 due to effective cost control and increasing demand for services [1]. Dividend Expectations - The report anticipates a significant increase in dividends for 2026, as the company is expected to maintain its dividend payout ratio [1][2].