China Unicom (600050): Multiple resonance inflection point to when the wind is good
This report reads: The simultaneous changes of multiple factors have brought about an improvement in the competitive environment of the industry, and operators have entered a gradual development stage.
At the same time, 5G brings new increases in the 2C and 2B markets, expands the company’s endogenous continuous improvement, and significantly improves profitability.
Investment Highlights: Maintain “Overweight” rating and target price for 20197.
51 yuan unchanged.
Based on cost and fee control considerations, we maintain our profit for 201959.
610,000 yuan unchanged, and raised 2020-2021 net profit forecast to 84.
100,000 yuan (+9.
6.6 billion (+19.
25%), corresponding to a BPS of 5.
00 yuan, 5.
37 yuan, 5.
With reference to the overall assessment level of the operator, the company will be given the year 2019.
5x PB, maintaining target price of 7.
The 51 yuan and “overweight” levels remain unchanged.
The improvement of the competitive development environment has brought about an inflection point, and the industry has entered a higher development stage.
In terms of macro policies, the “reduction in fees” requirements have been narrowed, and the assessment is shifting from “quantity” to “quality” to guide the rational allocation of specific resources for operators; in terms of the meso-industry environment, operators in the post 4G cycle face high investment and profitsThe dual pressure of declining capabilities, the rapid decline in competition, cost control and efficiency gains have become important targets, and the inflection point of multiple core indicators in the telecommunications market has arrived.
The commercialization of 5G starts, the 2C market stabilizes and rebounds, and the 2B market brings great opportunities.
The company has officially released a 5G package and started commercial use: in the 2C market, 5G will drive the ARPU of users to pick up; in the 2B market, 5G slicing and various features will be converted, and the business will penetrate into vertical fields such as industry, transportation, and power, opening up long-term market space.
Under the empowerment of 5G, the company is expected to become an incubator and creator of applications, go further in the value chain, and realize value revaluation.
The mixed reform was expanded and deepened, and the expected amount changed to qualitative change.
After the mixed reform, the company’s innovative business model has significantly improved profitability, 武汉夜生活网 various financial indicators have become better, and its internal governance structure has been efficient and complete.
The implementation of the Yunnan mixed reform has also proven its effectiveness, and Guangxi Unicom has also recently launched. We expect that more provinces and cities will gradually participate, bringing quantitative and qualitative changes to the group.
Risk reminder: mixed reforms may not be integrated as expected, and 5G investment costs and applications will be reduced