Goldman Sachs released a research report saying that in the challenging macro environment, China Unicom (00762) maintained stable revenue and double-digit net profit growth this yearworldheroes2According to its performance guidance, the company believes that with the support of strong cash flow, the company will continue to improve dividend payments. The report gave Unicom a "buy" rating with a target price of HK$7.
The bank pointed out that the company's corporate business accounted for 25%(RMB 75 billion) of Unicom's service revenue in 2023, of which Unicom Cloud contributed RMB 51 billion. Looking to the future, under China's continued digitalization trend and driving demand for cloud, 5G industrial Internet and big data services, corporate business continues to be the main revenue growth driver. Of Unicom's cloud revenue, 30% is public cloud and 70% is private cloud, which is conducive to revenue stability. From a competitive perspective, China Unicom pointed out that telecom companies have not launched price wars to compete for market share, nor have they intended to use irrational pricing to compete in the enterprise/cloud sector, especially since the current cloud market demand still has strong growth potential.
The report also stated that Unicom expects net profit growth in 2024 to be faster than revenue growth. Continue to share the network with China Telecom (00728), and network maintenance costs are stable. In terms of operating expenses, network operation/maintenance remains a key area for expenditure control. Driving factors include the retirement of 3G networks; 2G retirement has been completed, and 3G base stations will be cut in half in 2023; and retirement can save on network maintenance and tower leasing.