JPMorgan: China Telecom Corporation (00728) business remains resilient in Q3; maintain "Overweight" rating.

JPMorgan released a research report maintaining its "Overweight" rating and HK$5.2 target price for China Telecom Corporation (00728), believing the company's expected dividend yield of approximately 6.2% for 2026 is attractive. Telecom's third-quarter net profit fell 14.7% year-on-year to RMB6.6 billion, while service revenue declined 1.5% year-on-year to RMB115.2 billion, broadly in line with market expectations. The year-on-year declines in service revenue and operating profit narrowed from 2.6% and 16.7% respectively in the second quarter to 1.5% and 14.1% in the third quarter. The bank noted that excluding the impact of VAT item adjustments, China Telecom Corporation's operating revenue was broadly stable on a comparable basis, with net profit maintaining steady growth, reflecting the resilience of its core business and no deterioration in fundamentals. The bank continues to believe that China Telecom Corporation's earnings can resume growth next year. JPMorgan also noted that China Telecom Corporation demonstrated good expense discipline in the first nine months of this year, and together with healthy operating cash flow, this helps enhance its financial capacity and supports future dividend payments. The bank prefers China Mobile Limited (00941), given its more resilient earnings this year and higher dividend yield of 7%.