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Hong Kong / China Industry Focus China Telecom Sector DBS Group Research . Equity 24 February 2010 Pick the Restructuring Winners HSI: 20,623 • Restructuring has created near-term turmoil, but ANALYST also provided opportunity for re-entry. Steven Liu, CFA (852) 2971 1780 steven_liu@ • China Telecom (CT) remains our top pick for the services sector as we see decent double-digit annual Recommendation and valuation growth in the next few years. • Strong domestic sales have given Chinese Company Price Mkt FY10F Recom Tar get equipment vendors ammunition to overtake global Cap* PE Price HK$ HK$bn x HK$ rivals to sustain long-term growth. Comba remains our top pick for the telecom equipment sector. China Telecom 3.32 46.1 11.0 BUY 4.5 (728 HK) Telecom sector: time for re-entry. Underpinned by ZTE 46.8 16.4 26.8 BUY 56.0 low penetration (57% as of Jan10), economic growth (763 HK) and rapid technological evolution, China is taking a Comba 8.17 8.7 14.9 BUY 12.5 shortcut to the forefront in global 3G development and (2342 HK) 4G commitmen