BOC International released a research report indicating that CHINA UNICOM (00762) reported a 0.9% year-on-year decline in service revenue for the first quarter of this year, amounting to RMB 90.1 billion. This was primarily attributed to the increase in the value-added tax (VAT) rate effective from 2026. During the period, the company's net profit fell by 17.6% year-on-year to RMB 4.9 billion. The report noted that the VAT rate for related services has been raised from 6% to 9%, with the first quarter being the initial period to fully reflect the tax impact.

BOC International has lowered its profit forecasts for CHINA UNICOM for the years 2026 to 2028 by 11.8%, 9.1%, and 5.5%, respectively. Despite this adjustment, the firm reiterated its "Buy" rating on the stock. The target price has been reduced from HK$11.93 to HK$9.55. The report highlighted that the company's strong free cash flow and a dividend payout ratio of 61% for 2025 provide valuation support.