Elevator Pitch
Hong Kong-listed China Tower Corporation Limited (CTOWY) [788:HK] currently trades at 8.1 times consensus forward FY2019 EV/EBITDA, which represents a significant discount to U.S. tower peers which are valued by the market at forward EV/EBITDA multiples in the mid-twenties.
I like China Tower's status as a beneficiary of accelerated 5G deployment in China and its potential to improve profitability with the increase in tenancy ratio and new business diversification.
However, China Tower has limited pricing power with its major customers which are also its largest shareholders. China Tower's cost margin was