To The Moon

Lets analyze this company which I recently invested in! $CHINA UNICOM(00762)$

In China, there is only 3 state owned Mobile Operators- China Unicom, $CHINA TELECOM(00728)$ and $CHINA MOBILE(00941)$ 

Mobile data and handphone connection is an essential need, and this 3 companies have no competitions at all. 

Lets take a look at the Financials:

1. China Unicom has 317 M suscribers, while China Mobile has 946M and China Telecom has 372 M.

2. Barriers on entry are very high in this industry, due to strict regulation and no competition. This creates a high moat for this 3 companies. 

3. China Unicom has a Free Cash Flow (FCF) OF 38.6B CNY, while they have a market cap of 98 B CNY. That gives is a free cash flow yield of 40%!!!

4. Free cash flow has been consistent and reliable. The company has also reduced CAPEX by co-building their 5G network with China Telecom, which helps increase their profitability.

5. Financial Health of the company is excellent. They have 54B of Cash on their balance sheet, while only have a debt of 45.6B. 

6. Compared to the other 2 mobile network operators, China Unicom, is the first company to provide "unlimented data". This has helped it increase its mobile suscribers over the past few years. 

7. Valuation of the company by using a 10% Discout Rate and a growth rate of 2% (in line with Inflation) over a 10Y horizon gives the company a valuation of 456B. 79% below market value.

DBS bank and many rating agency have also put a buy call on the company. Truly a defensive gem stock in the chinese market.

Let me know if you are also adding it into ur portfolio. Happy investing!