Zacks senior Chinese markets analyst Paul Cheung, CFA is reiterating his Hold recommendation on shares of China Unicom (CHU) at this time. We looked into his report to find out why:
China Unicom announced its financial results for the first quarter of 2007. Its net earnings increased by 41% because operating costs increased at a slower rate than revenues. Earnings growth was solid during the past year because of value-added services and cost controls. That being said, China Unicom will face stiff competition in the future as it operates two networks at the same time, diluting its focus.
All told, the stock appears fairly valued at current levels, considering its 3G opportunities in China and the possible restructuring in the telecom industry in China. Thus, we maintain our Hold recommendation.
With approximately 30% of the total mobile phone users in China, China Unicom is the second largest mobile operators in China behind China Mobile (CHL). The company's primary source of revenue is its wireless services, which are based on both the global system for mobile communications (GSM) and code division multiple access (CDMA) technologies.
Read the analyst report on CHU
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