Analyst 网页链接{Edison Lee} from Jefferies maintained a Buy rating on China Communications Services (CUCSF – 网页链接{Research Report}) and increased the price target to HK$6.30 from HK$5.31.
Edison Lee has given his Buy rating due to a combination of factors including the solid growth trajectory of China Communications Services (CUCSF) and its favorable position amid China’s aggressive digital transformation policies. Lee’s report highlights the company’s strong half-year revenue and net profit growth, which, when adjusted for one-time write-offs, would have been even more impressive. The firm has delivered consistent growth, reflected in a year-over-year revenue increase and has leveraged its expertise and state-owned enterprise status to secure new business opportunities in both telecommunications and non-telecommunications sectors, further bolstered by national policy support.
Additionally, Lee points out the company’s gross margin (GM) has been on a notable recovery trend since the second half of 2021, reaching a new high since the second half of 2017. This improvement is attributed to reduced pricing pressure from telecom companies, enhanced software development capabilities, success in securing larger-scale projects, and stringent cost control measures. The management’s optimistic outlook, coupled with the stock trading at a discount to its cash value and the potential for increased dividend payouts, positions China Communications Services as an attractive investment according to Lee’s analysis. The company’s strategic moves and solid financial performance underpin the Buy rating, suggesting confidence in its continued growth and value proposition.