6 MONTH FIXED COUPON NOTE ON THE CHINESE TELCOs 0762 HK, 0728 HK, 0941 HK

HKD | 11% P.A. GUARANTEED COUPON | STRIKE 95% | MONTHLY KO OBSERVATIONS




China Mobile (941 HK), China Telecom (728 HK), and China Unicom (762 HK) are leading telecommunications providers in China. They operate in a highly regulated industry with an oligopolistic market structure.

Low beta for investors seeking stability. Stocks prices have not performed since the US placed sanctions on companies classified as “Chinese Military Companies” last year. However, prices have also remained relatively stable – providing a shelter for investors seeking capital preservation and lower volatility


Strong balance sheets and cash flows. CM, CT, and CU are net cash companies, with net cash representing 58%, 9%, and 18% of their market caps respectively. They also generate large and stable cash flows, with free cash flow yields of 18%, 11%, 25% respectively, indicating that their dividend distributions are well covered and sustainable.


Valuations highly attractive. Chinese telcos trade at attractive average PE ratio 6.5x of and dividend yield of 6.7%. Receive enhanced yield of 11% p.a. on Chinese telco stocks.



WEEKLY INVESTMENT IDEAS - 20211129 - Chinese Telco
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