China Unicom (600050): Performance stabilizes seasonally and warms up, waiting for 5G development potential
This report reads: The company ‘s first three quarter results are in line with expectations, raising its profit forecast and target price; the operating environment has continued to improve, and traditional businesses have begun to stabilize; co-construction and sharing have helped boost 5G network competition, and the era of industrial interconnection has performance flexibility.
Investment Highlights: Maintain “Overweight” rating, raise earnings forecast and target price.
The company achieved revenue of 2,171 million in the first three quarters of 2019, a decrease of one year.
2%, net profit attributed to mother 43.
20,000 yuan, an annual increase of 24.
4%, performance in line with market expectations.
Based on the improvement of the operator’s competitive environment and 5G will bring ARPU to users, we raise our net profit forecast for 2019-2021 to 59.
6.1 billion (+12.
7.6 billion (+21.
RMB 990,000 (+27.
92%), the corresponding EPS is 0.
19 yuan, 0.
25 yuan, 0.
With reference to the overall assessment level of the operator, taking into account the possible expansion and enhancement of China Unicom in the 5G era and the endogenous improvement brought by the mixed reform, the company is given January 2019.
5x PB, raise target price to 7.
51 yuan (+ 3%).
ARPU rebounded in the third quarter, and telecom business performance will stabilize.
With the easing of tariff competition, and the company’s strict control of user development costs and ultra-low tariff packages, the telecommunications business operating environment has gradually improved.
In the first three quarters of 2019, the company’s mobile billing user ARPU was 40.
6 yuan, about 40 in the first half.
4 yuan has begun to pick up.
In the third quarter of 19, the single 佛山桑拿网 quarter revenue was 72.2 billion yuan, a year-on-year increase of 2.
2%, ranking Q1 and Q2 single quarter revenue from negative to positive each year.
At the same time, the company’s net operating cash flow in the first three quarters was 768 trillion, equivalent to a significant increase of 43.6 billion in the half-year report.
Co-construction and sharing help reduce costs and enhance the competitive advantage of the network.
The company will work with China Telecom to build a 5G access network in the country, which will help reduce the differences in the coverage of mobile networks and juxtaposition under the cost of alternative network construction and maintenance, and form a better competitive landscape.
In the 5G era, the industrial Internet business has great potential.
In the first three quarters of 2019, the company’s industrial Internet revenue exceeded 40.
8%, the realization of 5G networks in the future will bring breakthrough performance improvements.
Risk Warning: The competition environment improves or falls short of expectations, and the development of 5G users may fall short of expectations.