UBS: Raises China Telecom's target price to 7.4 Hong Kong dollars, traditional telecommunications business outlook stable.

UBS released a report stating that in the second quarter, China Telecom's service revenue was 124.4 billion yuan, an increase of 2.1% compared to the same period last year. Thanks to effective cost control, the EBITDA profit margin for the quarter increased by 1 percentage point year-on-year. Net profit was 14.2 billion yuan, a 7.1% increase from the same period last year, surpassing the bank and market forecasts by 2%, and also outperforming China Mobile and Unicom. The report pointed out that the most noteworthy aspect of China Telecom's performance is the stable prospects of its traditional telecommunications business. In the first half of the year, mobile ARPU was 46 yuan, which remained largely stable compared to the same period last year despite facing macroeconomic headwinds. Management expects traditional telecom revenue to maintain stable growth, with ARPU values staying steady with the support of value-added services and upgrades in artificial intelligence. Assuming improvements in cost control, the bank has raised its net profit forecast for 2025 to 2028 by 0% to 2.5%, raising the target price from 6.8 Hong Kong dollars to 7.4 Hong Kong dollars, with a rating of "buy".