HK Stock Market Move | CHINA TOWER (00788) rises nearly 5% in the afternoon, the company suggests consolidating shares and reducing share capital. Goldman Sachs says it is favorable for the company's long-term dividend payment prospects.

CHINA TOWER (00788) increased by nearly 5% in the afternoon, rising by 4.63% to HKD 1.13 as of the time of writing, with a turnover of HKD 3.42 billion. On the news front, CHINA TOWER previously announced that its board of directors recommended a consolidation of 10 existing shares into 1 share and a reduction of share capital; the company's issued total share capital will be reduced from RMB 176.08 billion to RMB 176.01 billion. At the same time, the board of directors proposed that, after the share consolidation and reduction of share capital takes effect, the trading unit for existing H shares will be changed from 2000 shares to 500 shares post-consolidation and reduction. Pending approval, the above proposal is expected to come into effect on February 20, 2025. Goldman Sachs pointed out that the company's proposed capital reduction is favorable for its long-term dividend payment prospects. According to current regulations, CHINA TOWER needs to retain 10% of its net profit as statutory reserves until the reserve balance reaches 50% of the company's registered capital. This means that, before meeting the reserve requirement, 90% of its net profit can be distributed as dividends. With the reduction of capital and the decrease in the statutory reserve base, CHINA TOWER may reach this threshold faster, allowing for a higher dividend payout ratio.