Hong Kong Stock Market Review: China Unicom plunges

China Unicom fell today like a stock disaster, mainly due to China Mobile's interim report. The latter's profit is still growing, but relying on cost control, and it reflects that the growth of data usage has slowed down, with the first decline in ARPU in the 5G era, leading to concerns about internal competition.

Previously, when China Unicom surged, it was mentioned that although the company's profit and dividends have high elasticity, they may not appear in the short term, more of speculation. Although China Unicom has fallen more than 9% in two days, its increase this year is still 25%, much higher than the other two. According to the company's profit guidance of double-digit growth, the dividend yield this year is close to 7%, similar to China Mobile, so the significant drop is also reasonable.

Optimistically, revenue pressure will also force China Unicom to strengthen cost control, and maybe even increase the dividend payout ratio faster to align with China Mobile and China Telecom.

Most importantly, telecom operators are originally based on the dividend logic of high cash flow and low debt, without high growth expectations, there will be no gap. Of course, the overall industry situation still needs to wait for the interim reports of China Telecom and China Unicom to be known.

This week, Tencent and Alibaba will also announce their performance. For Tencent, the market consensus is that driven by the new game "Underground City and Warriors", domestic game revenue will reverse the downward trend, while international game revenue will accelerate growth, with a profit growth of about 30% after adjustment, continuing to perform steadily, with a focus on resuming daily repurchases of 1 billion RMB.

The key focus for Alibaba is on the progress of its secondary listing in Hong Kong. If it can be completed as expected by the end of August, it could be included in the Hong Kong Stock Connect in the first week of September at the earliest