China Unicom (600050): Mixed reform continues to expand and deepen 5G enablement to realize value revaluation

China Unicom (600050): Mixed reform continues to expand and deepen 5G enablement to realize value revaluation

Event: The company issued an announcement saying that it would launch open recruitment of socialized operating partners of seven city branches including Liuzhou, and continue to expand and deepen mixed reforms to continue to stimulate corporate vitality.

  Comment: Maintain “Overweight” rating and maintain 2019 target price of 7.

51 yuan unchanged.

We maintain China Unicom’s net profit for 2019-202159.

6.1 billion, 76.

7.6 billion, 96.

99 trillion is unchanged, the corresponding EPS is 0.

19 yuan, 0.

25 yuan, 0.

31 yuan.

Maintain 2019 target price of 7.

The 51 yuan and overweight levels remain unchanged.

  The “Yunnan Model” is effective and significant, and has become a model for mixed reform of central enterprises.

Yunnan Unicom’s mixed ownership reform successfully built a network of social capital dates, stimulated employee motivation and internal vitality of the company through employee equity incentives, and optimized corporate management systems to promote company operating efficiency.

The first phase of the 7 local network reforms of the Yunnan Branch Company realized the construction capital of 1.2 billion by the date of 2018 and the construction of 7,400 4G base stations. The unit construction cost decreased significantly. The revenue in 2018 increased by 17.

7%, much higher than the industry average; Yunnan Branch reduced losses by 2 in 2018.

500 million, financial improvement is obvious.

The Yunnan model is completely unique to China Unicom’s hybrid, and also provides a model for other hybrids.

  Guangxi Unicom relayed, the continuous expansion and deepening of mixed reforms may exceed expectations.

The company announced that Guangxi Unicom will launch open recruitment of social operation partners in seven cities, including Liuzhou, which means that another provincial company will have changes in its operating mechanism and capital expenditures.

Guangxi Unicom’s competition in Guangxi’s user market and network deployment is relatively weak. Taking the Yunnan effect as an example, it will effectively stimulate the vitality of the organization and employees, change and generate operational difficulties, and it is expected to have obvious financial improvements.

At the same time, we expect that more provinces and cities will gradually participate in the implementation of mixed reforms, bringing quantitative and qualitative 淡水桑拿网 changes to the Group.

  With the launch of 5G commercialization, endogenous changes in the company bring great possibilities.

On October 31, 2019, China Unicom officially released a 5G package and started commercial use.

In the 2C market, 5G will drive the user’s ARPU to pick up and improve; the 2B market, through 5G slicing and a variety of features, business will penetrate into vertical fields such as industry, transportation, and electricity, opening up long-term market space.

At the same time, after the mixed reforms in 2017, the company’s innovative business model has significantly improved the level of asset-liability ratio and profitability, financial indicators have become better, and its internal governance structure has been efficient and complete.

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.

  Risk Warning: The competition environment improves or falls short of expectations, and the development of 5G users may fall short of expectations.