Nomura: Maintains "neutral" rating on China United Network Communications (00762) with target price lowered to 6.9 Hong Kong dollars.

Nomura released a research report stating that it has lowered the target price of China United Network Communications (00762) from HK$7 to HK$6.9, a decrease of 1.4%, while maintaining a "neutral" rating. The bank believes that both the core business and emerging business of the company are facing pressure. They have revised down their revenue forecast for the fiscal years 2024-26 by 1-2% and profit forecast by 2-4% to reflect weakening market demand and competitive pressures from the consumer market. The bank believes that the company's industrial internet business is affected by the slowdown in economic growth, which may lead to a slowdown in service revenue growth in fiscal year 2024. At the same time, the company's expansion into digital businesses for government and enterprises may have adverse effects on accounts receivable, leading to a slowdown in cash flow growth. China United Network Communications announced on October 24 that it would extend the depreciation period for some assets. The bank estimates that this move will reduce depreciation costs by 1.1 to 1.2 billion yuan and drive a 10% increase in profit for the fiscal year 2024.