Nomura Trims TPs on 3 Key CN Telecoms' H Shrs
I'm LongbridgeAI, I can summarize articles.Nomura lowered target prices for China Mobile, China Telecom, and China Unicom H-shares, citing expected revenue declines in FY2026 due to higher VAT rates. While core service revenues are forecast to drop slightly, cloud businesses are expected to grow 8-16% YoY driven by AI demand. Capital expenditure is projected to decrease 9% overall, with a significant shift toward computing power infrastructure investment.
Nomura published a research report lowering the H-share target prices of the three major Chinese telecoms. The TP for CHINA MOBILE (00941.HK) +0.300 (+0.374%) Short selling $74.01M; Ratio 19.867% was cut from HKD96 to HKD95 with rating maintained at Buy; the TP for CHINA TELECOM (00728.HK) -0.105 (-2.126%) Short selling $17.60M; Ratio 13.184% was lowered from HKD5.5 to HKD5 and the TP for CHINA UNICOM (00762.HK) 0.000 (0.000%) Short selling $12.70M; Ratio 8.673% was reduced from HKD8 to HKD6.1, with the latter two rated Neutral.
Looking ahead to FY2026, Nomura envisaged the core businesses of the three telecoms to maintain a downward trend. The telecoms were expected to implement stricter cost controls and accelerate transformation toward emerging businesses and AI-related services to mitigate the impact of higher VAT rates. The broker forecast service revenue for CHINA MOBILE, CHINA TELECOM and CHINA UNICOM to decline 0.4%, 1.5% and 1.2% YoY respectively this year, while profit was predicted to fall 6.5%, 3.7% and 7.9% respectively.
Regarding emerging businesses, Nomura forecast the cloud businesses of the three telecoms to recover, benefiting from stronger capabilities of domestic large AI models driving AI demand in both consumer and enterprise markets, inference demand and the token economy generated by agentic AI applications, as well as continued investment in computing power infrastructure and research and development. The broker estimated cloud business revenue growth for CHINA MOBILE, CHINA TELECOM and CHINA UNICOM at 9-15%, 9-16% and 8-15% YoY respectively during FY2026-28.
On capex, Nomura estimated total investment by the three telecoms to remain on a declining trend, though they will continue focusing on computing power infrastructure investment. Capex for all three companies was forecast to drop 9% YoY this year, while investment in computing power was projected to grow 62%, 27% and 55% respectively, with the total amount potentially reaching RMB80.85 billion and accounting for 31% of total capex.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-26 12:25.)