China Unicom Profit Exceeds Market Expectations
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BEIJING -- China Unicom Ltd. more than doubled analysts' expectations by reporting that its Year 2000 net profits were RMB 3.2 Billion (US$387 million).
Officials at China Unicom, which is listed on the Hong Kong Stock Exchange as 0762 and the New York Stock Exchange as CHU, attribute the surge in profit to control of costs and rapid growth of the company's wireless business.
By the end of 2000, Unicom's GSM subscribers increased to 12.7 million, a 207.7% increase from the number of subscribers in 1999, according to the company report. The company's market share increased from 14.2 per cent in 1999 to 22.7 per cent in 2000 and its Mobile phone revenue rose 120.6 percent to RMB 12.9 billion (US$1.56 billion).
Analysts at ING Barings in Hong Kong indicated that the variance in projections was "mainly due to lower capex which in turn translated to lower depreciation and higher interest income."
China Unicom commenced offering WAP services in 28 cities in China, mainly including securities trading and information services.
In August 2000, Unicom started operating a trial GPRS commercial network in Shenzen which now reaches 5 cities in China.
Despite the positive news, the company's stock priced was down 2.4 per cent in New York and down around 6 per cent in Hong Kong on Wednesday.
ING Barings also forecasted that China Unicom was unlikely to outperform the market in the second quarter of 2001 and that the company required proof of execution in data and fixed line voice businesses. Nevertheless, the bank maintains a buy rating with a target price per share of HK$12.6 on the Hong Kong Stock Exchange.