CITIC SEC: China Securities Regulatory Commission officially releases market value management guidelines, focusing on quality central state-owned enterprises in the communication sector.

CITIC SEC released a research report stating that on November 15th, the China Securities Regulatory Commission officially issued the "Listed Company Regulatory Guidelines No. 10 - Market Value Management", aiming to promote the reasonable reflection of the investment value of listed companies on the quality of the listed companies. CITIC SEC is optimistic about the long-term growth prospects of high-quality state-owned enterprises in the communication industry and their subsidiary listed companies. High-quality state-owned enterprises in the communication industry are expected to further enhance market value management and increase shareholder returns through buybacks, holdings, equity incentives, and other means. Key points from CITIC SEC: - The CSRC officially issued market value management guidelines. - In order to implement the "Opinions of the State Council on Strengthening Regulation, Preventing Risks, and Promoting the High-Quality Development of the Capital Market," the CSRC formulated the "Listed Company Regulatory Guidelines No. 10 - Market Value Management", effective from the date of its release. The guidelines require listed companies to improve their quality, enhance operational efficiency and profitability, and utilize methods such as mergers and reorganizations, equity incentives, employee stock ownership plans, cash dividends, investor relations management, information disclosure, and share repurchases in compliance with laws and regulations to promote the reasonable reflection of the investment value of listed companies on the quality of the listed companies. - Continued escalation of related policies in market value management. - Throughout this year, various departments such as the State-owned Assets Supervision and Administration Commission and the CSRC have successively issued market value management policies. We believe that with the official release of the CSRC's market value management guidelines, the performance, corporate governance, and shareholder returns of listed state-owned enterprises are expected to reach a new level. Recommendations focus on high-quality state-owned enterprises in the communication industry: main operators plus leading equipment suppliers. Risks: - Development of China's 5G technology falls short of expectations - Penetration rate of gigabit broadband in China falls short of expectations - Development of domestic digital economy falls short of expectations - Impact of speed increase and fee reduction exceeds expectations - Improvement in competition landscape falls short of expectations - Development of emerging businesses falls short of expectations - ARPU increase by operators falls short of expectations - Effectiveness of operator network sharing and co-construction falls short of expectations - Increase in dividend ratio falls short of expectations - Control of cost and expenses falls short of expectations - Development of cloud computing business falls short of expectations - Development of AI industry falls short of expectations - Long-distance fiber optic transmission demand falls short of expectations Investment strategy: On November 15, 2024, the CSRC officially issued the "Listed Company Regulatory Guidelines No. 10 - Market Value Management", aiming to promote the reasonable reflection of the investment value of listed companies on the quality of the listed companies. We are optimistic about the long-term growth prospects of high-quality state-owned enterprises in the communication industry and their subsidiary listed companies. High-quality state-owned enterprises in the communication industry are expected to further enhance market value management and increase shareholder returns through buybacks, holdings, equity incentives, and other means.