Five Asian Telecoms To Outperform Global Sector '01 - ING
Updated: Thursday, February 15, 2001 05:53 AM ET
HONG KONG (Dow Jones)--Five key Asian telecommunications stocks are expected to outperform their global peers this year, thanks to unique individual business opportunities, ING Barings' head of Asian telecoms research said Thursday.
However, the regional telecom sector as a whole deserves only a neutral rating, Craig Racine told reporters at a briefing.
In the first quarter especially, Asian telecom stocks will be unable to decouple from the negative sentiment towards global telecoms since there will likely be an absence of news, Racine said.
Asian telecom operators do, however, have one significant advantage over their European counterparts - they are already generating significant cash-flow through their existing operations to meet their capital expenditure on third generation technology, he said.
"That's the reason for our neutral rating rather than the global underweight that many have for telecoms," he added.
Five stocks are expected to do especially well, and ING recommends a selective overweighting on these in the second half.
Korea Telecom Corp. (KTC, news, msgs) is the investment bank's top pick in the region as the use of broadband is expected to increase sharply. The company's revenues from data communications could grow to 26.8% of total sales by the end of 2003 from 11.7% in 1999, Racine said.
ING also has buy recommendations on SK Telecom Co. (SKM, news, msgs), China Mobile (Hong Kong) Ltd. (CHL, news, msgs), China Unicom Ltd. (CHU, news, msgs) and Singapore Telecommunications Ltd. (P.SGT, news, msgs).
Apart from their individual strong points, these are also the companies that are expected to see the quickest return on their incremental investments, Racine said.
"We believe this will likely result in positive news flow and earnings upgrades for these stocks (in the second half), enabling the stock price to decouple from the general bearish sentiment toward telecom stocks," he said.
- - 15/02/01 10-53G
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