Citi: China United Network Communications (00762) Q3 results broadly in line with expectations

Citi issued a research report stating that China United Network Communications (00762) recorded third-quarter revenue of RMB93.3 billion, up 1% year-on-year, broadly in line with the bank's expectation of a 1% increase and the market's expectation of flat growth, but down 5% quarter-on-quarter; the bank maintains its "Buy" rating and HK$7 target price on China United Network Communications' H-shares. The bank noted that China United Network Communications' third-quarter EBITDA was RMB22.8 billion, in line with both the bank's and market expectations, but down 10% year-on-year and 1% quarter-on-quarter; the EBITDA margin fell 2.9 percentage points year-on-year to 24.4%, mainly dragged down by the impact of value-added tax. Net profit was RMB3.812 billion, 9% below the bank's expectation and 5% below market consensus, down 31% year-on-year and 17% quarter-on-quarter, with a net profit margin of 4.1%, down 1.9 percentage points year-on-year; the earnings miss was mainly due to lower-than-expected non-operating income. First-nine-month revenue rose modestly by 0.6% year-on-year to RMB294.6 billion amid a challenging telecommunications industry environment, with computing power and international business revenue growing 12.2% and 14.5% year-on-year respectively, reflecting the company's continued transition toward AI infrastructure services.