CAPEX and OPEX of telecom operators and non-operator customers are huge and are expected to be relatively stable. 5G will bring huge network construction and maintenance requirements, and the development of "new infrastructure" will drive up demand for information services.
　　China Comservice (00552 HK) is the largest telecom support service group in China. The Company's services are relatively comprehensive, which allows it to offer one-stop services and various specialized services according to the requirements of its customers. The Company has stable relationships with telecom operators, government agencies and corporate customers, and is constantly expanding its customer base.
　　We forecast the Company's revenue and shareholders' net profit to grow at CAGR of 7.7% and 4.0%, respectively, in 2021-2024. Based on CAPEX and OPEX growth that 5G and other "new infrastructure" brings to operator and non-operator customers, we forecast the Company's revenue to increase by 8.3%/ 8.0%/ 6.6% in FY22-FY24, respectively. Based on our forecasts for revenue growth, gross margin and operating expenses, we forecast EPS to be RMB0.467/ RMB0.491/ RMB0.513 in FY22-FY24, respectively.
　　We initiate our coverage on China Comservice with a TP of HK$4.05 and an investment rating of "Accumulate". Our TP corresponds to 7.0x/ 6.7x/ 6.4x FY22-FY24 PE ratio.