China Unicom (600050) Company Dynamic Comment: Performance Meets Expectations

China Unicom (600050) Company Dynamic Comment: Performance Meets Expectations

Event: On the evening of March 13, 2019, the company released its 2018 annual report and achieved operating income of 2,908 in 2018.

800 million, a five-year growth of 5.

8%, of which main business income was 2,636.

800 million, a five-year growth of 5.

9%; realized net profit attributable to parent company 40.

800 million, an increase of 36 every year.

500 million, an increase of 8 times.

Investment suggestion: In 2018, the company insisted on business model innovation, and continued to develop mobile business rapidly and efficiently under the background of speeding up and reducing fees. Gradually, mobile main business revenue reached US $ 165.1 billion, which continued to grow5.

5%, ahead of the industry average of 0.

6% increase.

The innovation business benefits from deepening cooperation with strategic investors and complementary advantages, with annual growth of over 45%, which will gradually become the main growth driver of the company’s revenue.

At the same time that revenue continued to grow, the company increased capital expenditure control, optimized capital structure and employee incentives, significantly improved operating efficiency, strong performance conversion momentum, and achieved net profit attributable to the parent company.

800 million, an increase of 36 every year.

500 million.

In the future, with the further release of the dividends of mixed reforms and the vigorous development of innovative businesses, the company’s operating quality and efficiency will continue to improve, optimistic about the company’s future development.

We expect the company to achieve net profit attributable to mothers in 2019-2021, respectively.

6.7 billion, 78.

7.6 billion, 83.

16 trillion, the corresponding EPS is 0.

173 yuan, 0.

254 yuan, 0.

268 yuan, with reference to the current closing price, the 淡水桑拿网 corresponding PE is 41 times, 28 times and 27 times respectively, maintaining the “strongly recommended” level.

The main business revenue growth rate exceeded the industry average, and the momentum of performance conversion continued to increase: In 2018, the company actively differentiated mobile market competition with differentiated products and marketing strategies while segmenting national policies such as speeding up and reducing fees, and achieved good results.Effect.

Initially, the company’s main business income reached 263.7 billion yuan, an annual increase of 5.

9%, ahead of the industry average published on the Ministry of Industry and Information Technology website.

0% increase; EBITDA reached $ 85.2 billion, an annual increase of 4.

3%; Thanks to the good control of tower usage and the new commercial pricing of communications towers and related assets that took effect in January 2018, the tower usage fee was reported to have fallen by 5.

4 ‰; concentration, the company strengthened capital expenditure control, depreciation and amortization also decreased slightly, coupled with variables such as labor cost control and other variables, the company’s gross margin level rose by nearly 2 percentage points over the same period, to 26.

57%, profits totaled 12.1 billion, an increase of over 400% over the same period.

The net profit attributable to the parent company reached US $ 4.1 billion, an annual growth of 858%, mainly due to the improvement of the capital structure and the substantial decrease in financial expenses. Investment income was obtained from the equity method of the Tower Company.

Due to 63 trillion, the profit continued to rebound in a “V” shape.

The scale of the report, the company continued to strengthen the effective control of capital expenditures, reaching 44.9 billion in 2018 (less than the planned 50 billion).

Thanks to the continuous growth of revenue and good control of expenditures, the company’s free cash flow reached a record high of US $ 50 billion, and the net debt / EBITDA ratio also changed from 0 during the same period.

43 drops to zero.

04; the asset structure has continued to improve, and the asset-liability ratio is 46 from the same period last year.

5% dropped further to 41.

5%, interest-bearing debt exceeded 37 billion, while reducing by 50%.

The Internet-based transformation has achieved remarkable results, and mobile service revenue has increased every year.5%, ahead of the industry average of six quarters: In 2018, facing the dual pressure of “speeding up and reducing fees” and market competition, the company actively promoted mobile by continuously promoting the Internet-based transformation of operations and deepening its 2I2C business with Internet companies.Innovative business operations. With channel commissions down by 13% and mobile phone subsidies down by 24%, the mobile business achieved efficient growth, and the main mobile business revenue gradually reached US $ 165.1 billion, a continuous growth5.

5%, ahead of the industry average of 0.

6% increase.

In 2018, the company’s mobile billing users saw a net increase of 30.87 million, an increase of 51.

8%, the total reached 3.

200 million households; among them, 4G users have a net increase of 45.05 million households, bringing the total to 2.

200 million households, the market share of 4G users increased by 1.

3 segments, 4G users accounted for 70% of mobile billing users, up to 8 segments can be improved.

Facing the pressure of speeding up and reducing fees, the company promoted the smooth transition of users by optimizing packages and vigorously promoting high-traffic packages. In 2018, the company’s total mobile Internet traffic increased by 1%.

8 times, the average monthly data traffic of mobile phone users reached about 6GB, and the growth rate exceeded 200% over the same period; mobile phone Internet revenue reached 1,048 trillion, and increased by 13.


Looking forward to 2019, it is expected that the net growth potential of the company’s Internet package users will continue to be strong. At the same time, although the company’s current 4G penetration rate has increased significantly, it still has a certain gap with China Mobile (80%) and China Telecom (77%).With the further improvement of the rate and the promotion of Internet packages, the company’s 4G users are still expected to maintain rapid growth in 2019, driving the overall rise in mobile service revenue.

Proactive and comprehensive cooperation with strategic investors, the growth rate of industrial Internet business revenue exceeded 40%: the company deepened and complemented the advantages of strategic investors to provide new momentum for the company’s business transformation and innovation transformation.

In 2018, the company cooperated with Tencent, Alibaba, Baidu,, Didi, etc. to deepen its Internet connection and reach new users accurately and effectively. 2I2C users can net increase by 44 million, for a total of about 94 million.

In terms of content aggregation, dating high-quality video content such as Baidu, iQiyi, and Tencent strengthens the competition between IPTV and mobile video services.

In the field of industrial Internet, focus on cloud computing, big data, Internet of Things and AI, and deepen business cooperation with Tencent, Baidu, Ali,, Didi, etc.

Cooperated with Ali and Tencent to launch “Woyun” public cloud products and hybrid cloud products; and established joint ventures with Ali, Tencent, Tencent and Wangsu, etc. to deepen capital cooperation,Accelerate the development of the industrial Internet sector with an asset-light model.

In 2018, the company’s innovative business is gradually becoming the main driver of revenue growth, and the industrial Internet business revenue will gradually reach 23 billion, a growth rate of 45%, which will increase to 8% of the overall main business revenue.


Among them, ICT, IDC and cloud computing, Internet of Things business and big data business revenue were 56,147, 21, and 600 million yuan, respectively, an annual increase of 69%, 33%, 48% and 284%.

Benefiting from the rapid growth of new business and the continuous improvement of fixed-line broadband business development, the company’s fixed-line main business income reached US $ 96.3 billion, an increase of 6.


Broadband business development continues to improve: In 2018, the company actively responded to the competition challenges in the broadband field with “big video, big convergence, big bandwidth”.

Leveraging strategic investors’ superior resources and rich high-quality video content to enhance user stickiness and product competitiveness; at the same time, expand the promotion of converged products in all channels, and use the “cloud + smart network + smart application” new government and enterprise integrated marketing modelPromote the rapid development of government-enterprise broadband and Internet dedicated line services, and launched more than 300 signed projects in the first year.

The company’s fixed-line broadband access revenue in 2018 reached 42.3 billion U.S. dollars, and the year-on-year decline was significantly narrowed, which basically reached stability, of which IPTV revenue was 18.

900 million, an increase of 17% in ten years.

Initially, there was a net increase of 4.34 million fixed-line broadband users, an increase of 234%, with a total of more than 80 million, and an increase of 62 in January 2019.

70,000 households, the upward trend reappeared.

In addition, the penetration rate of video services among fixed-line broadband users reached 44%, increasing by about 9 increments each year.

Actively carry out 5G scale trials to create an industrial ecology: In December 2018, the Ministry of Industry and Information Technology agreed to use the company’s 3500-3600MHz frequency for 5G trials nationwide.

The company is actively carrying out 5G field test and industry application exploration in key cities. In 18 years, it has carried out 5G networking and industry application pilots of about 100 stations per city in 17 cities, and about 10 stations in provincial capital cities.Effect and equipment maturity, moderately expand the scale of the trial; at the same time, the NSA / SA industry chain is maturing simultaneously, the transformation of 5G supporting resources is stepped up, and the industry chain shares the new dividends brought by 5G.

In 2019, the company expects to invest $ 6-8 billion in 5G trials.

Risk reminder: the risks of mixed reforms are less than expected; the risk of increased competition among operators; the risk of rising CAPEX; the risk of customer churn caused by the number portability policy.