[ET Net News Agency, 16 March 2018] HSBC Global Research cut its target price for China
Unicom (00762) to HK$13.5 from HK$14.6 primarily comes from the reduction in its EBITDA
forecasts, and reiterated its "buy" rating.
The research house cited management at the briefing expecting that the requirements to
reduce unit prices by 30% and increase speed and reduce costs for enterprise and
residential users should be met as a matter of course.
Unicom will rollout a 12-city 5G trial in 2018, but 5G costs are expected to be minimal.
Despite other markets bringing forward their 5G launches to March 2019, Unicom continues
to look at 2H 2019 for a low-key launch in top cities only. With the top-line and profits
under pressure from the data roaming edict, HSBC believes there is a low risk of Unicom
having to accelerate its 5G investment.
HSBC trimmed its 2019/20 revenue estimates by 1-3% and its 2019/20 EBITDA estimates by
3-5%, reflecting a cautious approach to the impact of data roaming cuts. It raised its
2018 net profit estimate by 9.4%, reflecting higher associate earnings than previously
forecast. (KL)