[ET Net News Agency, 11 September 2018] HSBC Global Research resumed coverage on China
Unicom (00762) with "buy" rating, and a lower target price of HK$11 (from HK$13.1).
The research house suggested five reasons to own Unicom stock: (1) the operating
recovery is now well underway, but Unicom has the lowest 4G penetration, giving it the
most potential upside in upgrading existing customers to 4G; (2) the capital from the
Mixed Ownership Reform (MOR) should help it catch up in 4G and new business investments,
reduce debt level and interest expense; (3) initiatives with MOR partners should help it
differentiate its products and services; (4) HSBC expects the flexibility in cutting,
rewarding and relocating staff to provide support to margins and differentiate itself from
its peers (who are restricted from implementing similar policies); and (5) Unicom should
benefit materially from its sharing and co-operation agreements with China Telecom
(00728).
HSBC cut its net income forecasts for Unicom due to lower net income forecasts for China
Tower (00788). This affects Unicom particularly due to the low net income margins at this
business as it recovers. (KL)