Global Senior Analyst, Fundamental Equity Research

Emile Farsoun

Equity Bottom-Up

China Unicom Hong Kong / Equity Bottom-Up

<p>Although <a href="https://www.smartkarma.com/entities/china-unicom-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:1016:1" rel="noopener">China Unicom Hong Kong (762 HK)</a> is down c.15% since the end of October on worries of  intensifying competition and higher capex, we reiterate our positive view on the stock, which is trading at a forward EV/EBITDA of 2.8x. Our investment thesis is based on the view that 2020 will be a turning point for CU, after several years of ARPU declines, we see pricing stabilization, market share gains and improved ROIC for the company, which should drive a re-rating of the stock.  (see <a href="https://www.smartkarma.com/insights/china-unicom-762-hk-new-buy-idea" target="_blank" data-smartkarma-citation="insights:34054" rel="noopener">China Unicom (762 HK): New Buy Idea</a> ).</p>

Although China Unicom Hong Kong (762 HK) is down c.15% since the end of October on worries of  intensifying competition and higher capex, we reiterate our positive view on the stock, which is trading at a forward EV/EBITDA of 2.8x. Our investment thesis is based on the view that 2020 will be a turning point for CU, after several years of ARPU declines, we see pricing stabilization, market share gains and improved ROIC for the company, which should drive a re-rating of the stock.  (see China Unicom (762 HK): New Buy Idea ).

China Unicom (762 HK): Reiterate Buy After Monthly Data