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China Telecom (HK: 0728)


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Not an investment idea, but interesting:




State-run China Telecom is set to raise 54.2 billion yuan ($8.4 billion) in its maiden share sale in Shanghai, mere months after being forced to delist from the New York Stock Exchange. The offering by one of China's three state telecom groups will be the mainland's largest listing in a decade. China Telecom in a filing on Friday said it will issue up to 11.96 billion shares at 4.53 yuan apiece. The company's Hong Kong-listed shares ended the morning session 0.3% lower at 2.92 Hong Kong dollars (38 U.S. cents), trimming gains for the year to 40%. The offer price in Shanghai represents close to a 90% premium over the current trading price in Hong Kong. "The issue price was determined based on several factors including the fundamentals of the issuer, valuation of comparable companies [and] market conditions," the company said in the statement.


Edison Lee, a telecom analyst at Jefferies, said on Friday following the IPO pricing that China Telecom remains to be "one of our top picks." "We believe China's industrial digitization in the next five years will be first led by state-run enterprises, and the Chinese telcos in general are strongly positioned to leverage that growth," he wrote in a note to clients. He sets his target price for Hong Kong-listed shares at HK$5.12, 75% higher than current levels.






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