China Unicom Earnings: Solid Growth and Still Very Good Value

China Unicom reported a broadly in-line first-quarter 2024 result, with service revenue and EBITDA each increasing 3.4% year on year and net profit up 8.9% year on year. Operating profit increased 22.3% year on year, with net profit growth negatively affected by a slightly higher tax rate and lower contribution from other income. The lower other income was caused by the additional reduction in value-added tax that ended in 2024, which reduced the first quarter profit before tax by CNY 450 million and will affect the full year by around CNY 1.7 billion. There was limited additional color with the first-quarter result, but cloud revenue increased 30% year on year, which we see as quite strong, despite the slowdown from the 49% growth generated in the second half of 2023.