In "The Big Banks," CITIC Securities expects that the stock prices of Chinese telecommunications companies will be under pressure in the short term

CICC published a report indicating that the Ministry of Finance and the State Administration of Taxation of China will raise the value-added tax on telecommunications services starting this year. The bank's analysis assumes that operators will not pass on the tax burden to customers in 2026, so the reduction in after-tax income will be fully reflected in profits.

CICC has set three scenarios. In the neutral scenario, it has revised its earnings forecasts for China Mobile (00941.HK) and China Telecom (00728.HK). The bank maintains its estimates for 2025 but has lowered its revenue and net profit forecasts for 2026. According to the new earnings forecasts, the implied expected dividend yields for 2026 based on current stock prices are robust, with China Mobile's A shares at 5.1% and H shares at 6.8%; China Telecom's A shares at 4.2% and H shares at 5.2%.

The report states that in the short term, the stock prices of Chinese telecommunications companies may face pressure due to the market digesting changes in tax policies and lower earnings outlooks. The original ratings are maintained, but the target prices have been lowered