Credit Suisse has maintained its ''neutral'' rating on China Unicom ahead of the company''s second quarter 2007 results, saying the company should see quarterly improvement from its global system for mobile communication (
GSM) growth and cost control at its code division multiple access (
CDMA) division.
But the brokerage added that an earnings recovery for Unicom could be slower than expected and that investors may seek more clarity on potential mergers and acquisitions, which could dampen a share price reaction.
Credit Suisse said it expects Unicom''s second quarter revenue to grow by 6 pct annually and earnings before interest, taxes, depreciation and amortization to grow by 12 pct annually on the back of a recovery in net subscriber additions and less aggressive marketing expenses.
However, it warned that Unicom''s average revenue per user could see downwards pressure from calling party pay packages and rural market expansion.
The brokerage said that the company''s results should continue to improve and noted that management has given guidance for a stronger second half in 2007 as it will focus on top-line growth from more promotions for both its GSM and CDMA divisions.
At 3:20 pm, Hong Kong-listed China Unicom (nyse: CHU - news - people ) was up 0.14 hkd, or 1.116 pct, at 12.68 hkd.
(1 usd = 7.56 yuan; 7.8 hkd)
Source: forbes
