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Investment keys:
1. In the first three quarters, realize main business income of 60.31 billion Yuan, increasing 5.5% year on year. Realize net profit of 2.63 billion Yuan, increasing 17.3% year on year. Each stock earns 0.124 Yuan.
2. Returns of GSM reduce slightly, however, returns of CDMA increase slightly, which is on the precondition of no earning increasing, the profit obtained by controlling expense, so the profit base is not solid.
3. Comparing with current stock price of Unicom in Hong Kong, it has reduced value of 17%.
4. The number of shareholders in three quarter reduces further, and the stock holding intensity improved.
Risk factors:
1. 2005-2006 CDMA Network Lease Rental Agreement signed by Unicom Operation Company and Unicom New Age in 2005 is expired at the end of 2006; in 2007 to 2008, it may increase to 31%, which will increase cost of company.
2. Issue time and method of 3G license plate and reorganization of Telecom industry exist uncertainty.
3. Returning of China Mobile and Telecom will make Unicoom not the single investment choice of Telecom operation industry.
Profit of each stock in 2006, 2007 and 2008 are estimated respectively 0.153 Yuan, 0.166 Yuan and 0.182 Yuan; comparing with current average P/E value and P/B value of each company in Telecom operation industry and comprehensively considering the premium factor 3G to Company’s future profit, give holding rating.
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