The Zhitong Finance App learned that Goldman Sachs released a research report saying that under the challenging macro environment, China Unicom (00762) maintained its performance guidelines for stable revenue and double-digit net profit growth this year, and believes that with the support of strong cash flow, the company will continue to improve dividends. The report gave Unicom a “buy” rating, with a target price of HK$7.

The bank pointed out that in 2023, the company's corporate business accounted for 25% of Unicom's service revenue (75 billion yuan), of which Unicom Cloud contributed 51 billion yuan. Looking forward to the future, in the context of China's continuing digitalization trend, driving demand for cloud, 5G industrial Internet, and big data services, enterprise business will continue to be the main revenue growth driver. Of Unicom's cloud revenue, 30% is public cloud and 70% is private cloud, which is conducive to revenue stability. From a competitive perspective, Unicom points out that telecom operators have not launched a price war to compete for market share, nor do they intend to use irrational pricing to compete in the enterprise/cloud sector. In particular, demand in the cloud market still has strong growth potential.

The report also said that Unicom expects net profit to grow faster than revenue in 2024. The network is continuously shared with China Telecom (00728), and network maintenance costs are stable. In terms of operating expenses, network operation/maintenance is still a key area of expenditure control. Drivers include 3G network decommissioning; 2G decommissioning has been completed; 3G base stations have been cut in half in 2023; decommissioning can save network maintenance and tower leases.