China Unicom Earnings: Growth Slowed by the Economy, but Still Good Value

China Unicom reported a broadly in-line second-quarter 2024 result with service revenue growing 2%, EBITDA increasing 2.1%, and net profit up 13%, all year on year. We note that the higher net profit growth was mostly driven by higher “other income - net,” which increased by CNY 587 million year on year instead of being reduced as we had expected. Contributions from this line in the first quarter were reduced by CNY 368 million because of the reduced contribution from the additional reduction in value-added tax, which finished at end-2023 and this should hit this line every quarter in 2024. We estimate that net profit would have increased by only around 5% in the second quarter if we had adjusted for one-offs in this revenue line.