Chunghwa Telecom Co., Ltd. (CHT): what the price assumes

In the published model solve dated 2026-Q2, anchored at $42.02, Chunghwa Telecom Co., Ltd. (CHT) is priced for +7.2% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/CHT

Headline

FieldValue
TickerCHT
CompanyChunghwa Telecom Co., Ltd.
Sector / IndustryCommunication Services
Current price$42.02/sh
CompositionConsumer Business - Mobile services 25% / Consumer Business - Fixed-line services 18% / Consumer Business - Sales 16% / Consumer Business - Others 1% / Enterprise Business - Fixed-line services 14% / Enterprise Business - ICT business 13% / Enterprise Business - Mobile services 4% / Enterprise Business - Others 2% / International Business - Fixed-line services 2% / International Business - ICT business 2% / International Business - Others 0% / Other activities - Sales 2% / Other activities - Others 0%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)14.1%
Operating margin today20.4%
Margin compression (value-band)-6.3pp
Implied growth7.2%
Multiple paid22x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7.6% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.9pp.

Reconcile: at the x-ray's 9.3% required return this reads ~19.9%/yr; the models below use their own rates.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history+1.36σ
implied end-window share0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.51x5expensive
Earnings2.52x4expensive
Relative3.97x2expensive
Growth1.72x4expensive

Families that call it expensive: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.8%); the inversion above states its own rate.

Per-Model Detail (n=15)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$21.801.93xyesFCF base $1.5B, growth -1% (input: historical growth), terminal g 0.5%, WACC 8.8%, 5yr projection
DCF Exit MultipleGrowth$37.521.12xyesExit EV/EBITDA: 10.4x / 12.4x / 14.4x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative——noP/E 16.73x (blended: static sector reference 12x + trailing (TTM) 28x), scenarios: 14.1x / 16.7x / 19.4x (bear / base = reference held flat / bull), EV/EBITDA 8.62x
Simple DDMGrowth——no—
Two-Stage DDMGrowth$23.101.82xyesStage 1: 0% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$16.362.57xyesBV/sh $15.56, ROE (TTM) 9.7%, ke 9.3%
Two-Stage Excess ReturnAsset$16.772.51xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$25.811.63xyesRev $7.0B, growth -1% (input: historical growth; tapered), Terminal P/S: 3.9x / 4.6x / 5.4x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$18.002.33xyesEPS $1.50, growth 0% (input: historical EPS growth), PEG=55.93 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$17.092.46xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.52B × (1−20%) / WACC 8.8% → EPV (no growth)
Residual IncomeAsset$16.842.50xyesBV $15.56 + 5yr PV of (ROE (TTM) 9.7% − Kₑ 9.3%) × BV; BV grows 6.3%/yr
Graham NumberAsset$22.921.83xyes√(22.5 × EPS $1.50 × BVPS $15.56) — Graham's conservative floor
EV/EBITDA RelativeRelative——noEBITDA $2.68B × sector EV/EBITDA 7.0x
FCF YieldEarnings$20.672.03xyesFCF $1540.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$11.933.52xyesEPS $1.50 × (8.5 + 2×0.5%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$16.012.62xyesBV $15.56 × (ROIC 9.1% / WACC 8.8%)
P/Sales SectorRelative——noRevenue $7.01B × sector P/S 1.5x
PEG Fair ValueRelative$7.505.60xyesEPS $1.50 × (PEG 1.5 × growth 0.5% (input: historical EPS growth)) → PE 0.7x
Earnings YieldEarnings$16.222.59xyesEPS $1.50 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
Consumer Businessoperatingenterprise146.3B reported-currency—withheldunresolved no unit value
Enterprise Businessoperatingenterprise78.3B reported-currency—withheldunresolved no unit value
International Businessoperatingenterprise10.5B reported-currency—withheldunresolved no unit value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

FieldValue
Net cash$807.6m
Net debt / NOPAT (after-tax)-0.70x (net cash)
Net debt / operating income (pre-tax)-0.57x (net cash)
Interest coverage142.9x
Burning cashno

Bullet Takeaways

Bull Case

Taiwan's mobile market stopped being a five-way fight in December 2023. Two mergers closed that month, and the annual report describes the result without ceremony: "the number of mobile network operators in Taiwan decreased from five to three, including us, and the degree of concentration of the telecommunication industry in Taiwan has been increasing". Chunghwa is the operator that arrived at a three-player market without having to buy anyone. It reports "a market share of approximately 39.7% in terms of total mobile customers (excluding IoT) and approximately 40.8% in terms of total mobile services revenues in Taiwan as of December 31, 2025". Revenue share running ahead of customer share is the detail worth pausing on. It means the average Chunghwa subscriber pays a little more than the average Taiwanese subscriber, in an industry where scale usually arrives attached to discounting.

That position shows up in the income statement as an operating margin near 20% of revenue on the trailing annual basis, which for a network business with mostly fixed costs is the return on having built the network first. The balance sheet is the quieter half of the same story. The company holds net cash rather than net debt, and operating profit covers the interest bill about 142.9 times over, which is a technical way of saying the interest bill barely exists. An operator that funds its own fibre and spectrum out of cash flow does not have to time the credit markets, and does not have to choose between the dividend and the capital plan when rates move against it.

The growth argument sits in the enterprise book rather than the consumer one. The filing states that "Our enterprise business focuses on creating synergy and enhancing our integrated ICT services." and that "It also promotes the development of emerging businesses, which focus on IDC, cloud, cybersecurity, 5G+AIoT, big data, AI, enterprises' digital transformation and system integration." Translated, the same trenches and exchanges that carry consumer broadband also host corporate data centres, security services and systems-integration contracts. Those contracts are stickier than a mobile plan and, importantly, they are not priced by a regulator. The 20-F names who it is up against there: "We offer the best IDC service quality, and our major competitors include Far EasTone, Taiwan Fixed Network and Acer Cyber Security." The self-assessment is the company's own. The competitor list is the useful part, because it is short.

Capital return here is written into the constitution rather than into a press release. Under the Articles of Incorporation, "at least 50% of the remaining portion of the net income, less accumulated losses, outstanding taxes, the legal reserve and any special reserve, plus accumulated retained earnings from prior years will be distributed as dividends to stockholders". A charter-level payout floor is a different order of commitment from a board authorisation, because walking it back requires a shareholder vote rather than a change of mind.

The bear has a fair point about the legacy lines, and the bull case does not need to argue with it. The filing attributes recent revenue movement to "the revenue decreases in local and long distance voice services, partially offset by the increases in mobile and fixed broadband services". Voice is not coming back. What the bull needs is narrower and more achievable: broadband and enterprise growing faster than voice shrinks, on a cost base that has already been paid for.

Bear Case

In Taiwan the price of a minute is not entirely a commercial decision. The company acknowledges that "We also from time to time are required to adjust our pricing in line with domestic regulations." and the regulator runs periodic rounds of mandated reductions. The annual report is blunt about where that can lead: "We cannot assure you that we will not be required to further reduce our tariffs again in the future. Any mandatory tariff reductions could have a material adverse effect on our revenues." The mechanism deserves precision. A mandated cut removes revenue without removing a single kilometre of fibre, one base station, or one employee, so almost the whole of it lands on operating profit. For a business whose costs are largely fixed and largely already spent, that is the most damaging shape a revenue hit can take. Interconnection rates, the wholesale prices operators charge each other for carrying traffic, have already been stepped down again in the current round.

The second exposure is geographic and cannot be diversified away by a domestic operator. The 20-F states that "the ROC and the PRC and other factors affecting military, political or economic conditions in Taiwan could materially and adversely affect our financial condition and results of operations, as well as the market price and the liquidity of our securities." Effectively all of the revenue, all of the network and all of the customers sit on one island. That risk is neither new nor hidden, which is exactly why it tends to be priced in bursts when it reaches the headlines rather than continuously in the multiple.

Now set those two pressures against what the price is asking for. At $42.77 the market is paying about 22.7 dollars for each dollar of annual operating profit, and that level requires operating profit to compound at roughly 7.8% a year for five straight years. Measured against the company's own recent record, that pace is not impossible, but it sits above the average of what has actually been delivered, and the real demand is not the rate. It is the persistence: five consecutive years of it, in a three-operator market, under a regulator that periodically legislates prices downward, with a legacy voice base still eroding underneath. If that pace reverts toward the low-single-digit trend the current mix implies, the multiple paid for each dollar of operating profit compresses toward what the earnings-power and asset-value methods support, and both of those sit a long way below today's price.

Two structural details round out the picture. Chunghwa consolidates SENAO, its retail distribution affiliate, and the filing flags that "We might be unable to maintain control over SENAO's relevant activities", which would reshape the reported top line without anything changing in the underlying network business. Ownership is also capped by statute: "the total amount of our shares directly held by foreigners shall not exceed 49%, and the total amount of our shares directly and indirectly held by foreigners shall not exceed 60%", and the company reports that "As of April 1, 2026, foreign direct holdings of our outstanding share capital was at approximately 17.69%." There is plenty of room under the ceiling today. The point is that the ceiling exists at all, and a limit on who may own the shares is also a limit on who may bid for them.

Valuation

Begin with what today's price asks of the business. At $42.77 on July 25, 2026, the market pays about 22.7 dollars for each dollar of annual operating profit, and working that backwards produces an assumption of roughly 7.8% operating-profit growth a year for five years, computed at a 7.6% cost of capital with 4% long-run growth beyond the fifth year. Against the company's own record that pace sits inside the range it has touched, though above its average. The difficulty is not the rate. It is holding the rate for five consecutive years.

The methods used to triangulate this business agree with each other far more than usual, and what they agree on is unhelpful for the holder. All of them land under today's price. The forward-growth methods come closest, with the price sitting about 41% above their central estimate. The peer-multiple methods put the price about 138% above theirs, the asset-value lens about 155% above, and the earnings-power methods about 157% above. When no family reaches the price, the bet is not that one lens is right and another wrong. It is a bet beyond what any of the standard frames encode.

It is worth seeing how the nearest of them gets there. The exit-multiple cash-flow model lands closest of any single approach, and it does so on one assumption: that the business is sold at the end of the projection on the same EBITDA multiple it trades at today, held flat, with the bear scenario compressing that multiple and the bull expanding it. That is not a criticism of the method. It is simply what the method requires to reach where it reaches. An investor who believes today's multiple is also the right exit multiple gets a number close to the price. An investor who thinks a regulated, three-player, slow-growth network operator should eventually change hands for less than it fetches today does not.

The demand behind the growth number is a demand about mix, not about pricing. The filing attributes recent revenue movement to "the revenue decreases in local and long distance voice services, partially offset by the increases in mobile and fixed broadband services", and the incremental growth has to come from the enterprise book, where the company says "It also promotes the development of emerging businesses, which focus on IDC, cloud, cybersecurity, 5G+AIoT, big data, AI, enterprises' digital transformation and system integration." Operating margin runs near 20% of revenue on the trailing annual basis. Holding that margin while tilting revenue toward systems integration and data-centre work, which carry equipment and labour costs a mobile plan does not, is the operating question sitting underneath the financial one.

The balance sheet removes most of the downside tail. The company holds net cash rather than net debt, is not burning cash, and covers its interest obligations by so wide a margin that coverage is not a constraint on anything management wants to do. A business in that position can absorb a mandated tariff round, keep paying the charter-level dividend and keep building, all in the same year. What it cannot absorb is a change in the discount rate. Each additional percentage point of cost of capital lifts the growth the price requires by roughly 7.9 percentage points, which is the arithmetic of a long-duration, slow-growth cash-flow stream: most of the value sits in the distant years, and the distant years are precisely what a higher rate discounts hardest.

Catalysts

The recent catalysts are routine for a stable incumbent. The board approved the 2026 cash dividend of NT$5.2 per share on June 5, 2026, with an ex-dividend date of July 9, a record date of July 15, and payment on August 7. The most recent results showed full-year revenue up 2.7% to NT$236.1 billion and an eight-year-high EPS of NT$4.99, and the company reported higher May 2026 sales with solid year-to-date earnings, consistent with the 2% growth plan.

The forward watch items fit the profile. First, the dividend trajectory, since the payout is the core of the thesis and its year-over-year direction is what income holders track; 2026 EPS guidance of NT$4.82 to NT$5.02 sets the envelope for next year's payout. Second, enterprise and ICT growth, where Chunghwa is pushing into Southeast Asia and the US to offset a saturated domestic consumer market, the one area that could lift the growth rate. Third, the Taiwan dollar exchange rate, which directly affects the US-dollar value of the ADR dividend and is an external variable outside the company's control. Fourth, the cadence of capital spending on 5G, AI, and satellite, since heavier capex would pressure free cash flow and, by extension, the dividend coverage that underpins the stock.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive CHT report on boothcheck