On Tuesday, Jefferies raised the stock price target on shares of China Unicom (NYSE:CHU) Ltd. (762:HK) (NYSE: CHU) to HK$7.79 from HK$7.24, while reaffirming a Buy rating on the stock. The firm noted that China Unicom's fourth-quarter service revenue met expectations, although EBITDA fell short due to higher salary costs.
The telecommunications company's capital expenditures (capex) for the fiscal year 2023 are reported at RMB 73.9 billion, which is 4% lower than their guidance.
For fiscal year 2024, China Unicom has set its capex guidance at RMB 65 billion, a reduction of 6% from Jefferies' estimates, suggesting a year-over-year decrease of 12%. This figure is also below the 20% capex-to-sales ratio. According to the firm, the trend of decreasing capex intensity at China Unicom continues, and their already below-consensus capex forecast might still be on the higher side.
Moreover, China Unicom has increased its dividend payout ratio by 5 percentage points to 55%, which is slightly above Jefferies' forecast of 54%. This adjustment translates to a dividend yield of 6.7%. The firm also highlighted that 55% of China Unicom's market capitalization is constituted by net cash, underscoring the company's strong cash position.
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