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【出版时间及名称】：2010年4月中国电信行业研究报告
【作者】：瑞士信贷
【文件格式】：pdf
【页数】：28
【目录或简介】：
Consumption in China is set to grow: Minimum wages in some cities in
Guangdong have been raised by around 20%, and Credit Suisse economist
Dong Tao estimates the average monthly salaries of migrant workers (of
whom there are around 120-130 mn) are being raised by 15-20%. Similarly,
rural consumption is being pump-primed.
■
Telecoms stocks should also benefit: We now believe the China cellular
market can deliver double-digit (10.5%) revenue growth YoY into FY10, very
close to the 10.9% revenue growth we expect to be delivered in Indonesia
and far higher than the revenue growth we expect in other telecoms markets
in Asia (including India, which faces a tariff war). We raise our DCF-based
target price for China Mobile by 1.9% to HK$107, up China Unicom’s target
price by 2.3% to HK$12.95 and increase China Telecom’s target price by
1.3% to HK$3.95.
■
Yet China Mobile is not priced as a consumption winner: We note that
China Mobile trades at a discount to the regional cellular sector on P/E (9.6x
FY10 ex-cash), despite what we believe to be superior growth prospects.
Within Hong Kong, Mengniu trades at 26.4x FY10E /PE and Hengan trades
at 27.7x FY10E P/E. To support these valuations, our consumer team (and
the stock market) assumes far higher medium to long-term cash flow growth
from these stocks than we assume for China Mobile, despite “penetration”
levels (on dairy, sanitary products and noodles), which do not differ
significantly from that of cellular telephony.
Beneficiaries of rising consumption
Consumption in China is set to grow
The Chinese government has quite deliberately shifted the emphasis in 2010 towards
promoting consumption and away from infrastructure investment. This is being effected by
a blend of tax cuts, wage increases and subsidised car and white goods consumption in
rural areas. Minimum wages in some cities in Guangdong have been raised by around
20%, and Credit Suisse economist Dong Tao estimates the average monthly salaries of
migrant workers (of whom there are around 120-130 mn) are being raised by 15-20% to
about Rmb1,700-1,800 per month. Promoting income equality is another of the
government’s key objectives. Providing minimum safety nets and directly subsidising
consumption in rural areas are key parts of this strategy.
Telecoms consumption will also expand
We note that at 54.3% subscriber penetration and with an estimated 42.5% “traffic”
penetration, the cellular market in China has the highest growth potential of any telecoms
market in Asia, excluding India (which has 44.0% subscriber penetration). Our China
consumer analyst Kevin Yin notes that while penetration rates of some consumer products
in China are still very low, e.g., snacks at 3.3% and diapers at 27.3%, beer already has
84.6% penetration, sanitary products 70.8%, dairy 41.7% and instant noodles 60.0%. Thus
cellular penetration looks ‘mid-range’ among consumer products in China. Rising nominal
GDP, together with falling handset prices, will increase affordability and drive higher
cellular penetration in China.
Revenue forecasts revised up
On the back of rising urban wages and rural pump priming, we now believe the China
cellular market can deliver double-digit (10.5%) revenue growth YoY into FY10, very close
to the 10.9% revenue growth we expect to be delivered in Indonesia and far higher than
the revenue growth we expect in other telecoms markets in Asia (including India, which is
mired in a tariff war). For China Mobile, which is our preferred play (100% cellular, rural
dominance), our FY10 revenue and net profit forecasts have been revised up by 1.0% and
1.6%, respectively, and we note that our FY10 EPS forecast is now 4.1% ahead of
consensus. Our target price has been revised up 1.9% to HK$107. Our China Telecom
EPS forecast has been revised up 2.0% and our target price has been revised up by 1.3%
to HK$3.95. While our China Unicom cellular revenue forecast has been revised up by
2.0%, we have cut our FY10 EPS forecast by 5.5% on higher depreciation charges.
Nevertheless, our target price has been revised up by 2.3% to HK$12.95.
China Mobile is not priced as a consumption winner
Our DCF-based target prices for China Mobile and China Unicom suggest meaningful
upside (34.7% and 41.1% respectively). We also note that China Mobile trades at a
discount to the regional cellular sector on P/E (9.6x FY10E ex-cash), despite what we
believe to be superior growth prospects. China Mobile also trades at a 52.0% discount to
the region on P/B relative to ROE. In contrast, Mengniu trades at 26.4x FY10E /PE,
Hengan trades at 27.7x FY10E P/E and Tsingtao trades at 29.7x (consensus). Mengniu
and Hengan trade at 155.9% and 201.6% respective premiums to the region on P/B
relative to ROE. To support these valuations, our consumer team (and the stock market)
assumes far higher medium-to-long term cash flow growth from these stocks than we
assume for China Mobile. Investors must therefore believe that these companies can pass
on higher prices (inflation) to their consumers, without facing material increases in cost
which would cramp cash flows, or that these companies can amend their product mix into
higher growth areas as they arise (e.g., snacks) to a greater degree than China Mobile can
successfully penetrate new growth areas (such as m-commerce).
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