Research from Quam Securities, Quam Securities

Quam Securities Research

Research from Quam Securities

Quam Securities

Since its inception in 1986, Quam Securities Limited (Quam Securities) has grown to become one of the few mid-tier securities brokerages in Hong Kong with global execution capabilities for both private and institutional clients. It boasts a well-established network in Greater China including Taiwan and in major world markets through the Global Alliance Partners (GAP). Quam Securities is well-positioned not only to harness and drive business within the China Tonghai International Financial Limited but also between China and the world markets.

Equity Bottom-Up

China Unicom Hong Kong / Equity Bottom-Up

<ul><li>China Unicom’s 2022 results were largely in line with our expectations with decent growth in service revenue, driven by strong growth in industrial internet and stable growth in mobile revenue.</li><li>Opex inflation has been well contained with no further material acceleration in opex growth.</li><li>On the back of China’s plan for further digitization of the country, achieving technology advancement and autonomy as well as the paramount importance of data security, we expect industrial internet remains the key top-line driver and, with further deceleration in opex growth, adjusted NP to sustain double-digit growth for FY23-25.</li></ul>

China Unicom’s 2022 results were largely in line with our expectations with decent growth in service revenue, driven by strong growth in industrial internet and stable growth in mobile revenue.Opex inflation has been well contained with no further material acceleration in opex growth.On the back of China’s plan for further digitization of the country, achieving technology advancement and autonomy as well as the paramount importance of data security, we expect industrial internet remains the key top-line driver and, with further deceleration in opex growth, adjusted NP to sustain double-digit growth for FY23-25.

China Unicom (762 HK) - In-Line Results Foster Resilient Growth Trend

Thematic (Sector/Industry)

<ul><li>The three Chinese telcos will report 2022 results in the coming weeks with China Unicom kicks starting next week on 8 Mar.</li><li>Although their avg. 2023 P/E has recovered markedly to the current level of 9.2x, we believe resilient growth in revenue for industrial internet (or its equivalent), which mainly incl. cloud, internet data center (IDC), IoT, big data, AI, etc., will continue to drive overall revenue and earnings growth and, together with growing payout, their share price performance is expected to be sustained.</li><li>We reiterate our BUY calls on China Mobile / China Unicom / China Telecom with upgraded TPs of HK$75.5 / HK$4.90 / HK$6.90.</li></ul>

The three Chinese telcos will report 2022 results in the coming weeks with China Unicom kicks starting next week on 8 Mar.Although their avg. 2023 P/E has recovered markedly to the current level of 9.2x, we believe resilient growth in revenue for industrial internet (or its equivalent), which mainly incl. cloud, internet data center (IDC), IoT, big data, AI, etc., will continue to drive overall revenue and earnings growth and, together with growing payout, their share price performance is expected to be sustained.We reiterate our BUY calls on China Mobile / China Unicom / China Telecom with upgraded TPs of HK$75.5 / HK$4.90 / HK$6.90.

TMT – Chinese Telcos Resilient Growth to Continue

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

<ul><li>Comba Telecom Systems (Comba) has a global customer base including major telecommunication operators such as Vodafone, Ooredoo, Airtel, Telenor, China Mobile, China Telecom, China Unicom, and other major telecommunication equipment providers.</li><li>The company owns over 5,500 patents globally, and offers a comprehensive suite of innovative products and services including base station antennas, network products and wireless transmission services.</li><li>In China, the demand for 5G base station antennas is driven by the deployment of 5G medium-frequency network and stable demand from the 3 largest telecommunication operators in China.</li></ul>

Comba Telecom Systems (Comba) has a global customer base including major telecommunication operators such as Vodafone, Ooredoo, Airtel, Telenor, China Mobile, China Telecom, China Unicom, and other major telecommunication equipment providers.The company owns over 5,500 patents globally, and offers a comprehensive suite of innovative products and services including base station antennas, network products and wireless transmission services.In China, the demand for 5G base station antennas is driven by the deployment of 5G medium-frequency network and stable demand from the 3 largest telecommunication operators in China.

Comba Telecom – Global solutions & service provider of wireless and information communications systems – Lists on SGX

Asia biased macro & technical analysis, Untying The Gordian Knot

Untying The Gordian Knot

Asia biased macro & technical analysis

A differentiated process with a primary focus on Asia. Technical Analysis as core and Macro drivers that could bring the view to fruition & changes that could make the idea fall apart. The objective is to be the best in class, hence corner shop.

Technical Analysis

Alibaba Group Holding  / Technical Analysis

<ul><li>The consensus of bottom in China Tech and China A shares continue to gain favour.</li><li>Bank of America is the latest to recommend selling US tech to buy China Tech.  </li><li>The Bullish China stocks call is predicated on reopening Pivot, yet the daily increase in cases and sporadic lockdown put the Pivot callers to double down.</li></ul>

The consensus of bottom in China Tech and China A shares continue to gain favour.Bank of America is the latest to recommend selling US tech to buy China Tech.  The Bullish China stocks call is predicated on reopening Pivot, yet the daily increase in cases and sporadic lockdown put the Pivot callers to double down.

US Vs China Technology, Alibaba, China Unicom, and New World Development

<ul><li>While CU has lagged peers in its Oct 5G net adds, the company still reported resilient 5G growth.</li><li>On the back of recent supportive policy on 5G and industry internet, which has been the key revenue growth driver, as well as a new JV with Tencent, which reinforces our view that Chinese telcos are keep gatekeepers of the online world in China, we believe the growth momentum remains intact.</li><li>We have trimmed our earnings forecasts and TP (HK$6.10), which reflects both faster than expected cost increase as well as a lowered FX assumption for the RMB.</li></ul>

While CU has lagged peers in its Oct 5G net adds, the company still reported resilient 5G growth.On the back of recent supportive policy on 5G and industry internet, which has been the key revenue growth driver, as well as a new JV with Tencent, which reinforces our view that Chinese telcos are keep gatekeepers of the online world in China, we believe the growth momentum remains intact.We have trimmed our earnings forecasts and TP (HK$6.10), which reflects both faster than expected cost increase as well as a lowered FX assumption for the RMB.

China Unicom (762 HK) - Policy Support to Sustain 5G Momentum

Hong Kong

China Unicom (Hong Kong) Limited, through its subsidiaries, provides telecommunications services in the People's Republic of China.  The Company's services include cellular, paging, long distance, data, and Internet services.

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China Unicom Hong Kong (Adr) (CHU US)

China Unicom (762 HK) - In-Line Results Foster Resilient Growth Trend

China Unicom’s 2022 results were largely in line with our expectations with decent growth in service revenue, driven by strong growth in industrial...

Quam Securities

TMT – Chinese Telcos Resilient Growth to Continue

The three Chinese telcos will report 2022 results in the coming weeks with China Unicom kicks starting next week on 8 Mar.

Quam Securities

Comba Telecom – Global solutions & service provider of wireless and information communications systems – Lists on SGX

Comba Telecom Systems (Comba) has a global customer base including major telecommunication operators such as Vodafone, Ooredoo, Airtel, Telenor,...

Singapore Exchange Ltd (SGX)

US Vs China Technology, Alibaba, China Unicom, and New World Development

The consensus of bottom in China Tech and China A shares continue to gain favour. Bank of America is the latest to recommend selling US tech to buy...

Untying The Gordian Knot

China Unicom (762 HK) - Policy Support to Sustain 5G Momentum

We have trimmed our earnings forecasts and TP (HK$6.10), which reflects both faster than expected cost increase as well as a lowered FX assumption...

Quam Securities

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