[ET Net News Agency, 20 January 2020] Morgan Stanley lowered its target price for China
Unicom (CU)(00762) to HK$8.5 from HK$12 and maintained its "overweight" rating.
The research house lowered CU's revenue by 2% and 2.9% in 2020 and 2021, respectively,
as it assumed a stable mobile market share in the 5G cycle versus previously assuming CU
gains mobile market share. With costs mostly fixed, net profit is lowered by 20% and 27%
in 2020 and 2021, respectively.
Morgan said CU is uniquely exposed to five industrial Internet businesses that require
both telecom infrastructure and Internet capability - Internet data centers (IDC), IT
services (ICT), Internet of things (IoT), cloud, and big data.
Morgan forecast a 22% revenue CAGR in 2019-22, contributing 20% of service revenue 2022.
At trough valuation, risk-reward is attractive given limited downside seen from
traditional telecoms and unique exposure to the industrial Internet, which is not in the
price. (KL)