[ET Net News Agency, 23 January 2020] Morgan Stanley said China Unicom's (CU)(00762)
2019 preliminary net profit of Rmb11.3bn was 10% below the research house's estimate. It
expects a near-term decline in the share price but views downside risk as limited.
Morgan also expects another round of cuts to consensus earnings estimates after 2019
results. However, it noted that CU is already trading at a trough valuation of 1.7x 2020
EV/EBITDA. It believes the market has overlooked a potential earnings inflection driven by
5G ARPU lift.
Morgan expects a stable market share in the 5G cycle versus market share gain for CU and
China Telecom (CT)(00728) at the expense of China Mobile (CM)(00941) previously. It views
CM as a key 5G play entering a multi-year re-rating cycle, and forecast a 5% CAGR in CM's
earnings and dividends for 2019-22. (KL)