Bank of China International: China United Network Communications (00762) has a solid fundamental outlook and continuing improvement in efficiency. Reiterates "buy" rating.

China International Capital Corporation released a research report stating that it reiterates a "buy" rating for China United Network Communications (00762), but lowers the target price from HK$15.02 to HK$11.93. This corresponds to a cloud business 2x P/S ratio and a group 2.8x EV/EBITDA valuation; the company also raised its 2026 fiscal year Unicom cloud revenue to 78.1 billion yuan and EBITDA to 100.3 billion yuan. China International Capital Corporation believes that with strong free cash flow and a 61.3% dividend payout ratio, the company has strong defensive attributes and can still provide stable valuation support in the background of moderate profit growth. For the 2025 fiscal year, Unicom's net profit attributable to the parent company increased by 1% to 20.8 billion yuan, mainly driven by a 0.5% increase in service revenue, which is in line with the expectations of China International Capital Corporation and the market. In terms of cloud business, Unicom's cloud revenue increased by 5.2% to 72.2 billion yuan, mainly driven by an increase in cabinet utilization rate to above 72%; during the same period, data center revenue increased by 8.5% to 28.1 billion yuan, reflecting the continuous release of computing power infrastructure demand. Looking ahead to the 2026 fiscal year, the company expects capital expenditures to be around 50 billion yuan, with over 35% going towards computative-related areas, showing a continued tilt in resource allocation towards emerging businesses.