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The 2013 All-China Research Team: Telecommunications, First: Haofei Chen

Haofei Chen
China International Capital Corp.
First-place appearances: 3

Total appearances: 4

Analyst debut: 2010

For a third consecutive year, Haofei Chen tops this roster. The China International Capital Corp. analyst, who also debuts at No. 3 in Internet, impresses clients with his ability to “provide independent data and views on the sector and its players,” as one portfolio manager says. Chen, 36, is negative on the group, in part because he judges the profit and market share balance among its major players “very uneven.” Furthermore, he predicts that pricing wars will intensify once the government issues licenses to allow virtual network operators to provide fourth-generation mobile technology services (expected by year’s end), since the telecommunications services companies will be fighting to attract users to fill their additional network capacities. At the same time, Chen explains, once 4G licensing takes place, the government could impose asymmetric regulations, which are designed to forestall monopolization. This move could aid the No. 2 and No. 3 mobile players, by revenue — Hong Kong’s China Unicom (Hong Kong) and Beijing-based China Telecom Corp., respectively — at the expense of No. 1 China Mobile, and “may also trigger more tough competition,” he notes. Another issue for this industry is a value-added tax, slated for introduction next year, that could be more onerous than the revenue tax it is intended to replace, he says, adding that the VAT will very likely hurt Hong Kong–based China Mobile, which currently enjoys high margins. On a long-term basis, Chen recommends that investors prefer China Telecom and China Unicom. “He’s very good at timing the ups and downs of stocks and grasping both the sector trend and individual company financials,” another backer asserts. — Carolyn Koo

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