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The 2014 All-China Research Team: Telecommunications, No. 1: Xinnian (Sydney) Zhang
Xinnian(Sydney) ZhangBank of America
Merrill LynchFirst-Place Appearances: 1
Total Appearances: 3
Analyst Debut: 2012
Bank of America Merrill Lynch’s Xinnian (Sydney) Zhang seizes the top spot on this roster for the first time, rising from second place. China’s telecommunications shares jumped 13.2 percent over the 12 months through late November, besting the broad national market by 15.4 percentage points, and the Hong Kong-based analyst is bullish on the group. Zhang cites three reasons for his optimism. The first is the government’s imperative for telecom companies to improve efficiencies and returns via mandatory cuts in sales and marketing costs and through the formation of a joint venture cell tower company, which is designed to enable cost savings as well as eventual gains whenever that tower operator launches an initial public offering. Second, he foresees “significant potential” in mobile data growth because average usage per subscriber is less than 250 megabytes per month, far lower when compared with the levels in developed countries. Finally, the stocks boast attractive valuations relative to similar companies elsewhere in Asia, he says. Zhang, 43, maintains buy ratings on three Chinese telecom companies. The country’s No. 2 and No. 3 wireless services providers, by revenue — China Unicom (Hong Kong) and Beijing’s China Telecom Corp. — are long-standing favorites. The biggest such operator, Hong Kong-headquartered China Mobile, is also now among his preferred names. These companies “have good growth potential in the medium and long terms,” he explains, “and we view their valuations as attractive.” Zhang entered the equity research business in April 2011, joining BofA Merrill from China Unicom, where he served as director of investor relations. He earned an MBA at the Kelley School of Business at Indiana University, Bloomington, then spent more than a decade at media and telecommunications companies. “Zhang’s years of experience working in the telecom industry provide him with a wealth of knowledge to draw from as he reviews current and forward operating issues impacting the space,” applauds one fund manager.