[ET Net News Agency, 20 February 2020] Nomura chopped its target price for China Unicom
(CU)(00762) to HK$7.4 from HK$9.9 and downgraded its rating to "neutral" from "buy".
The research house said CU was hit more severely than its competitors in 2019 as the
company lost market share in both mobile and broadband. Nomura thinks CU urgently needs
new growth engines, i.e., 5G and industrial internet, and it needs to try harder to unlock
the potential from mixed-ownership reform before it is too late.
Nomura estimated 4% service revenue growth in 2020, which would come mainly from the
industry internet business (IoT, big data, cloud, etc). Meanwhile, CU needs to stabilize
its market share in both 4G and 5G, as a strategy based on low pricing does not offer a
sustainable growth path.
The research house cut its 2019-2021 revenue forecasts by 4-7%, following 18-25% cuts to
its earnings forecasts after the company's disappointing 2019 preliminary results. (KL)