中国铁塔：力量之塔.pdf

1 中国铁塔 0788.HK 中国铁塔股份有限公司(中国铁塔)是全球最大的通信铁塔基础设施服务提供商。根据沙利文报告，截止 2017年 12月 31日，按站址数量、租户数量及收入计，中国铁塔在全球通信铁塔基础设施服务提供商中均位列第一。截止 2017年 12月 31日，以站址数量计，中国铁塔在中国通信铁塔基础设施市场中的市场份额为 96.3%，以收入计，其市场份额为 97.3%。中国铁塔将受惠于电讯业务的稳定增长，以及非电讯相关业务的快速增长。我们预期公司 2017至 2020年间的收入、 EBITDA及净利润复合年增长率分别为 6.2%、 5.3%及 27.9%。电讯业务的收入于 2017至 2020年间的复合年增长率为 4.4%，较为稳定。我们相信公司的主要增长动力来自：( i) 4G网络扩张；( ii) 5G的推出；( iii)非电讯用家对电塔的应用；( iv) 较高的分享共享比率；及( v)并购活动。 5G发展的消息及越来越多的推广活动均是股价催化剂。近日股价承压，目前的估值相当于 6.1倍的 2018年 EV/EBITDA，我们认为这提供较佳的买入机会。首次覆盖个股，给予 买入 评级及 1.45港元的目标价 (相当于 7.2倍的 2018年 EV/EBITDA，低于其他全球同业)。 数据流量增加的受惠者。 根据 F and China Towers market share in the tele-communications tower infrastructure industry in China was 96.3% in terms of the number of sites and 97.3% in terms of revenue as at 31 Dec 2017. China Tower will benefit from steady growth in the telecom business and fast growth in non-telecom-related business. We forecast revenue CAGR of 6.2%, EBITDA CAGR of 5.3%, and net profit CAGR of 27.9% in 2017-2020E. Telco revenue will maintain gradual growth with a CAGR of 4.4% in 2017-2020E. We believe that the major growth drivers of China Tower are: a) 4G network expansion, b) 5G roll-out, c) usage of towers by non-telecommunications users, d) a high sharing ratio, and e) M RH S)5 China Tower will benefit from opportunities arising from the sustainable and rapid develop-ment of Chinas wireless communications industry, as well as favorable policy support from the government. Given the growth prospects of the telecommunications tower infrastructure service industry, China Towers compelling market position, the increasing demand from TSPs, in line with the further enhancement of the 4G network and the future roll-out of the 5G network, China Towers durable and reliable relationships with TSPs, support from gov-ernment policy, and new business opportunities and growth areas in the TSSAI business, we believe China Tower will continue to grow in, and benefit from, this sustainable and fa-vorable environment. Sharing-oriented business model: This allows China Tower to enhance its profitability by increasing its tenancy ratio and marginal profit. Stable and predictable sources of operating revenue and cash flow: China Towers major customers are globally leading TSPs, with whom China Tower has signed long-term agreements. Outstanding capability to provide comprehensive services: China Tower has a broad service scope in China, offering integrated services, which strengthens its market leading position and expands its customer base across sectors. Great potential for business with customers from different industries: Based on its unparalleled site resources and outstanding capability in providing integrated services, Chi-na Tower is exploring new business growth areas. Leading operational efficiency: An efficient, innovative and sophisticated management model allows China Tower to achieve operational efficiency and optimize operating costs. China Tower is promoting its non-telco business to diversify its revenue sources by provid-ing site resources services, such as infrastructure, maintenance services and site-based information services for data collection, backhaul, aggregation, analysis and application, to meet demand from clients in government and different industries. Chinas national strate-gies of “Cyber Power”, “Digital China”, and “Smart Society” promote the rapid development of IoT, big data, and artificial intelligence, leading to the rapid growth of informatization de-mand in a number of vertical industries. This provides China Tower with compelling oppor-tunities to grow its non-telco business. According to the Notice on Promoting Mobile Inter-net of Things (NB-IoT) Construction and Development, issued by the MIIT in Jun 2017, the Chinese governments target is to have 1.5m NB-IoT BTS and 600m NB-IoT connections by 2020. According to the Development Plan of Big Data Industry, issued by the MIIT in Jan 2017, Chinas target is to have over RMB1trn big data industry sales by 2020, representing a CAGR of 30%. Chinas target is for the information consumption scale to reach RMB6tr by 2020, representing a CAGR of over 11%, according to The Three-Year Action Plan to Expand and Upgrade Information Consumption (2018-2020), jointly released by the MIIT and the National Development and Reform Commission in Aug 2018. Partly because of government policies, wireless data traffic has increased significantly in China, tripling YoY, from 5.1m TB in 2H16 to 15.5m TB in 2H17. This growth in data volume is translating into higher demand for network capacity, which results in more demand for tower infrastructure, either through the installation of new towers or co-sharing of existing macro tower sites. We still expect China Tower to benefit from improvement in coverage of China Telecom and Unicom, which lag behind China Mobile. We also expect China Tower to benefit from the increasing tenancy ratio, given demand from China Telecom and China Unicom. Non-telco businesses will drive future growth Increasing data traffic will cre-ate demand for tower infra-structure 2) Next stage of the telecommunications industry cycle 6 Through a more proactive approach to the sharing of existing and new site resources, Chi-na Tower has effectively met market demand, while achieving reasonable savings in con-struction costs. By the end of June 2018, 71% of the new leases from the big three TSPs were based on co-location, which had a significant positive impact on overall performance. The Company is actively pursuing DAS projects in commercial buildings, large venues, subways and high-speed railways, covering a cumulative length of more than 13,000km of high-speed railways and 1,900km of subways, as well as large venues with an aggregate area of more than one billion square meters. In Jan-Sep 2018, China Towers DAS busi-ness recorded revenue of RMB1,325m, representing a YoY increase of 79.3%, and ac-counting for 2.5% of the Companys total turnover, up from 1.5% the previous year. China Tower started to engage in TSSAI business in 2016 to diversify its business lines and revenue sources by providing site resources services, such as infrastructure, maintenance services and power services, and site-based information services for data collection, back-haul, aggregation, analysis and application to meet the diverse needs of customers from different industries for information technology build-up. China Towers service offerings cov-er more than 16 industry applications, including environmental monitoring, maritime surveil-lance, seismic monitoring and satellite ground signal enhancement. At the end of June 2018, the Company had 57,000 TSSAI tenants, up from 19,000 at the end of 2017. The Companys TSSAI business recorded revenue of RMB675m in Jan-Sep 2018, significantly higher the revenue in FY2017. In its TSSAI business, China Tower has customers from different industries, such as envi-ronmental protection, broadcasting and digital television, satellite positioning, energy, ma-rine and agriculture. To develop its TSSAI business, China Tower plans to explore the growth potential for serving the informatization demands of customers from various indus-tries. In the next two to three years, China Tower will focus on the government and enter-prise private communications network market, video surveillance market, and data collec-tion market. The aggregate number of non-telco customers increased from 281 in 2016 to 1,758 in 1Q18, and the number of non-telco tenants increased from 2,169 in 2016 to 45,674 in 1Q18. China Tower signed a strategic cooperation agreement with Alibaba on 17 Aug 2018, ac-cording to Sina. According to news reports, China Tower and Alibaba will have deep cooperation in areas such as cloud computing, edge computing, and big data. China Tower will provide site resources for Alibaba to deploy its IoT network. In Apr 2018, China Tower also signed agreements with Chinas two major power grid operators, State Grid Corp of China and China Southern Power Grid Co Ltd, to share their power transmission towers for the deployment of macro cells. This network sharing could improve China Towers invest-ment returns in the 5G era. China Tower signed a strategic cooperation agreement with China Post on 20 Aug 2018. According to news flow, China Tower will consolidate China Posts public service facilities, such as offices and business premises, into site resources. China Tower will provide ser-vices such as video surveillance, smart IoT, multi-domain data information and advertising to China Post. The two parties will also explore cooperation in new business areas, such as smart societies, digital China, and e-commerce. Penetration of other industries Developing high-profile cus-tomers and partners 7 3) Reasonable asset structure compared to that of its peers The tower industry is capital intensive, requiring a large investment and usually a lot of fi-nancial leverage. Compared to its international peers, China Tower has a relatively low liability-to-asset ratio. China Towers high gearing ratio is due to the fact that the Company acquired its tower assets from the telecom operators, mainly China Mobile, China Telecom and China Unicom. However, China Towers net gearing ratio is still lower than that of its global peers. The high ROE achieved by China Towers global peers, in our view, is partly due to their high net gearing level. China Tower achieved an EBITDA margin of 58.8% in 2018, which is comparable to the range of 36.2%-63.8% of its globally listed peers. China Tower raised HK$58,796.46m in Aug 2018 by issuing 43,114,800,000 H-shares in an IPO and 3,549,056,000 H Shares as an over-allotment shares, at HK$1.26 per H share. According to the prospectus, approximately 60% is expected to be used to fund capital ex-penditure: a) 51% to 54% is expected to be used for new site construction and augmenta-tion; and b) 6% to 9% is expected to be used for ancillary facilities replacement and im-provement; approximately 30% is expected to be used to repay bank loans; and approxi-mately 10% is expected to be used for working capital and other general corporate purpos-es. The gearing ratio will be improved because China Tower will use nearly 30% of the funds from the IPO to pay off bank loans. After the IPO, China Towers gearing will be reduced from over 100% in 2017 over 48% in 2018. The improvement in gearing ratio offers China Tower the capacity to raise CAPEX for the 5G era, which is coming in the next two years. Comparable to peers Figure 2: China Towers repayment schedule for interest-bearing liabilities Source: Company Data, CGIS Research 2015 2016 2017 W ith in 1 y e a r 2 3 , 8 6 6 1 2 7 , 7 5 2 1 1 2 , 5 1 2 Be t w e e n 1 a nd 2 y e a r s 8 4 , 4 6 3 1 , 3 7 7 1 1 , 2 7 6 Be t w e e n 2 a nd 5 y e a r s 3 , 5 6 2 4 , 4 1 5 2 9 , 6 0 8 O v e r 5 y e a r s 6 , 2 9 2 6 , 4 8 8 2 , 9 0 9 T ot a l 1 1 8 , 1 8 3 1 4 0 , 0 3 2 1 5 6 , 3 0 5 Figure 3: China Towers Capital Expenditure (CAPEX) Source: Company Data, CGIS Research 7 , 447 5 , 779 4 , 680 53 , 321 36 , 918 29 , 898 010 , 0 0020 , 0 0030 , 0 0040 , 0 0050 , 0 0060 , 0 0070 , 0 0020 16 20 17 20 18EN ew s it e c o ns t r uc t ion a nd au gme ntat ionA nc ill ar y f ac ili t ie s r e pla c e men t an d i mpr ov eme ntTo w e r and s h elt er m a int ena nc eTo w e r A s s et A c q uis it io nsOt he r sRMB m8 1) Tower business Using its sites, China Tower carries out macro-cell and small-cell business with telecommu-nications service providers (TSPs). (i) Macro-cell business: China Tower provides site space, including towers and shelters or cabinets, to TSPs and hosts their antennas and other macro-cell equipment. Through its macro-cell business, China Tower supports TSPs by providing extensive coverage of their wireless communications networks in China. (ii) Small-cell business: China Tower provides site space, including towers, poles, and other infrastructure resources and cabinets, to TSPs and hosts their small-cell equipment. Through its small-cell business, China Tower supports TSPs to densify the coverage and increase the capacity of the wireless communications networks built up by macro-cell equipment, particularly in urban areas with a high density of people and buildings, and in certain non-urban areas. In 2015, 2016, 2017, 1Q18 and 1H18, China Towers revenue from its macro-cell business accounted for 99.5%, 99.2%, 97.3%, 96.5% and 95.5% of total revenue, respectively. China Tower commenced its small-cell business in 2017. In 2017, 1Q18 and 1H18, revenue de-rived from its small-cell business was RMB257m, RMB84m and RMB176m, respectively. As at 30 Jun 2018, China Tower had 21,045 TSP tenants for its small-cell business. In Jan-Sep 2018, revenue derived from tower business was RMB51,535m, up 3.7% YoY. China Tower aims to strengthen its leading position in the tower business indus-try. Development goals for macro-cell business: China Tower aims to grow together with the TSPs and reinforce its leading position in macro-cell business. China Tower will: a) leverage its strength in coordinating site planning with the TSPs network planning, and fully consolidate demand to improve its site co-location; b) lower its capital expenditure, satisfy its customers demands more quickly and help lower their costs in network deploy-ment by fully utilizing the resources of the public utility towers and poles and shortening the time for site construction; and c) extend the scope of its site co-location to more compre-hensive sharing by providing TSPs with integrated solutions. Development goals for small-cell business: China Tower seeks more small-cell orders from TSPs and to enhance its market competitiveness by providing quality services in a more cost-efficient manner with competitive service charges. In order to achieve this, China Tower plans to: a) lower con-struction costs and enhance delivery efficiency by using public utility towers and poles for small-cell installation; b) enrich its small-cell service offerings by providing self-built sites or public utility towers and poles, or procuring customers to share its power access, mainte-nance, site acquisition and property coordination services without site construction; c) offer quality facility maintenance and site operations through its experienced and dedicated pro-fessionals, and its comprehensive power supply assurance system and real-time monitoring services; and d) develop its small-cell business by providing integrated service solutions for indoor and outdoor wireless communications coverage through a mix of macro-cell and small-cell business. China Tower is a leading player Business 9 2) Indoor DAS (Distributed Antenna System) business China Tower provides indoor DASs to TSPs and to attach th