Citigroup has released a research note maintaining its "Buy" rating on China Telecom (00728), with a target price of HK$5.70.

The bank noted that China Telecom's second-quarter revenue declined 5% year-on-year, falling short of both its own and market expectations. EBITDA dropped 8% year-on-year, while net profit decreased 14% year-on-year, both of which exceeded the bank's projections. The interim dividend per share was set at RMB 16.06 cents, down 11.4% year-on-year, a smaller decline compared to the drop in net profit. The payout ratio also increased to 75% from 72% in the same period last year, reflecting management's commitment to continuously enhancing shareholder returns.

The report highlighted the rapid growth of artificial intelligence and the token economy, with daily token call volumes nearly doubling over the past two quarters. During the period, China Telecom saw computing revenue grow more than 50% year-on-year, while AIDC revenue increased 9.3% year-on-year. Management has maintained its targets for steady growth in revenue, EBITDA, and net profit.