HK Stock Market Move | CHINA TOWER (00788) rose nearly 3% in midday trading. The company expects the revenue from its telecom tower business to remain stable by 2025.

China Tower (00788) rose nearly 3% in midday trading, up 2.75% to 1.12 Hong Kong dollars as of the time of writing, with a trading volume of 77.8481 million Hong Kong dollars. On the news front, Goldman Sachs recently released a research report stating that China Tower is expected to achieve stable revenue growth in the mid single digits by 2025, with net profit growth remaining in the low double digits. This is mainly due to cost control and depreciation decline. With the advancement of 5G base station construction, the company expects stable revenue from telecom tower business in 2025, and indoor site business is expected to achieve stronger growth driven by telecom operators' focus on indoor coverage. At the same time, capital expenditure is expected to remain stable at around 30 billion yuan, which is in line with the guidance for 2024. The capital expenditure allocation for 2024 is as follows: new telecom towers 12 billion yuan, indoor sites 5 billion yuan, maintenance 7 billion yuan, energy and smart tower business 4-5 billion yuan, with the remaining 2 billion yuan for IT systems and construction. As accounts receivable recovery normalizes, the company's cash flow will also trend towards normal. Regarding depreciation, the 200 billion yuan tower assets acquired by China Tower in 2015-2016, with a depreciation period of 10 years for telecom towers, will expire in October 2025. Goldman Sachs expects a significant decrease in depreciation expenses related to the acquired assets in 2026, potentially reducing by 7.9 billion yuan, with total depreciation expenses decreasing by 6 billion yuan, bringing over 5 billion yuan of incremental pre-tax profit to the company, in line with Goldman Sachs' expectations.