BOCI Research International: Lower CHINACOMSERVICE (00552) target price to HK$4.57, bullish on AI computing power infrastructure demand.

China Communications Services released a research report, stating that considering the slowdown in telecom investment in the next two to three years, it has lowered the profit forecast for CHINACOMSERVICE (00552) for the next two years by 8.1% and 11.8%. The target price has been revised down from HK$5.15 to HK$4.57, equivalent to a forecasted P/E ratio of 7.5 times for 2026. The "buy" rating is reiterated, maintaining an optimistic view on medium-term growth and bullish on the demand for AI computing power infrastructure. In the second half of 2025, CHINACOMSERVICE's revenue decreased by 3.2% year-on-year, but net profit remained stable at RMB 14.8 billion, lower than the bank's and market's expectations, mainly due to a 4.1% year-on-year decline in revenue from domestic telecom operators. Non-telecom revenue increased by 5.5% year-on-year during the period, with non-telecom infrastructure services accounting for over half of total revenue, making the revenue structure more diversified and resilient. As of the end of the second half of last year, the company's free cash flow reached RMB 84.2 billion, a 14.1% year-on-year increase compared to the first half, mainly due to improved accounts receivable management.