CHINA UNICOM(00762) 国泰君安证券·2024-04-23 13:32Investment Rating - The report maintains a "Buy" rating for China Unicom with a target price of HKD 7.66, corresponding to a P/E ratio of 10.2x/9.3x/8.5x for the fiscal years 2024-2026 and dividend yields of 6.0%/7.1%/8.3% for the same periods [1][2]. Core Insights - The first quarter of 2024 saw earnings slightly below expectations, but the company is expected to maintain double-digit profit growth for the full year. Service revenue and net profit for Q1 2024 were RMB 89.043 billion (up 3.4% year-on-year) and RMB 5.613 billion (up 8.9% year-on-year), respectively. The slight miss in profit growth was attributed to a decrease in net income from joint ventures and other income, while operating profit increased by 22.3% year-on-year [1][2]. - The company is expected to continue improving shareholder returns and maintain high dividend payouts, with a projected dividend yield of 6.2% for 2023 and expected yields of 7.6%, 9.0%, and 10.6% for 2024, 2025, and 2026, respectively [1][2]. Summary by Sections Financial Performance - In Q1 2024, China Unicom's service revenue was RMB 89.043 billion, reflecting a year-on-year growth of 3.4%, while net profit was RMB 5.613 billion, up 8.9% year-on-year. Operating profit showed a significant increase of 22.3% year-on-year [1][2]. Capital Expenditure and Efficiency - The company plans to reduce capital expenditure by 12% year-on-year to RMB 65 billion in 2024, which is expected to alleviate depreciation pressure. The depreciation and amortization expenses accounted for 23.7% of total operating expenses in 2023. Efforts to enhance operational efficiency are also underway, with good control over employee benefits and sales expenses [2]. Dividend Policy - The report anticipates that China Unicom will continue to enhance shareholder returns through increased dividends, with a projected payout ratio of approximately 60% for 2024, which is expected to rise in 2025 and 2026 [1][2].