**Event Overview**: China Unicom released its H1 2025 semi-annual report. In H1 2025, the company achieved operating revenue of RMB 200.2 billion, up 1.5% year-on-year; total profit of RMB 17.7 billion, up 5.2% year-on-year; and net profit attributable to shareholders of RMB 6.349 billion, up 5.1% year-on-year.

**Event Analysis**: Mobile and broadband connectivity maintain steady growth, with FTTR becoming the primary revenue growth engine. Both mobile and broadband user bases reached historical highs, with total connected users exceeding 1.2 billion. Mobile and broadband users saw net additions of over 11 million, reaching a new high for the same period in recent years, with total users reaching 480 million. IoT connections increased by over 60 million, totaling 690 million, including 86 million vehicle connections, further consolidating the company's dominant position.

Network quality upgrades continue with comprehensive low-frequency sharing implementation. Mobile network population coverage exceeds 99%; 5G-A commercial deployment spans over 330 cities; broadband network covers 570 million households, continuously improving gigabit optical networks and accelerating 10-gigabit optical network construction, with 10-gigabit optical network pilots reaching 106 cities.

Digital services continue to innovate, with 50% of China Unicom users choosing "dual gigabit" services. Services including Unicom Ultra HD, Unicom Home Security, Cloud Smart Phone, and "Smart Home" robots serve 270 million users, with converged business penetration exceeding 77% and ARPU exceeding RMB 100.

We believe the national subsidy opportunity for 5G phone trade-ins will enhance 5G value. Smart phones, smart homes, and car-home integration will become mainstream product formats. The company optimizes product experience through new convergence strategies. Home services are transitioning from localized to cloud-based applications, with home computing hosts becoming a trend. Cloud-integrated and intelligent products will open a second growth curve, with physical store delivery bringing new incremental growth (including video networking, home cloud, whole-house optical broadband for home customers, expanding smart home, intelligent security, and ultra-high-definition content).

**Computing Network Intelligence Expansion and Quality Enhancement, Seizing AI Opportunities for IDC Transformation**: Unicom Cloud's market share continues to expand, serving the Harbin Asian Winter Games as the first "Cloud-based Asian Winter Games." The cloud-native service platform CSK Turbo became the industry's only product selected for Beijing's First Set catalog. H1 2025 revenue reached RMB 37.6 billion, up 4.6% year-on-year.

Data center intelligent transformation shows significant results, with revenue of RMB 14.4 billion, up 9.4% year-on-year. AIDC contract value increased 60% year-on-year, with market position steadily improving. Intelligent services continue to expand, creating the multi-modal Yuanjing large model, launching the "Yuanjing Wanwu" intelligent agent development platform, building 30+ trusted data spaces, and creating hundreds of AI intelligent agents.

We believe computing power is penetrating from phones, PCs, and cameras to more terminal products. Edge-side intelligent agents continue to evolve in memory perception, reasoning planning, and decision-making, driving interaction method transformation and becoming super portals for vertical applications. The company will seize AI opportunities with intelligent computing as the foundation and Unicom Cloud as the core, deeply cultivating application scenarios, building distinctive capabilities, and promoting high-quality AI development.

**Maintaining Precise and Moderate Investment Strategy, Strengthening Computing Power Deployment**: For 2025, the company plans capital expenditure of RMB 55 billion, down 10.4% year-on-year. H1 investment completion was RMB 20.2 billion, down 15% year-on-year, with annualized OPEX savings of nearly RMB 1 billion and data center resource utilization exceeding 70%.

Building multi-level computing power supply, accelerating IDC to AIDC transition and general computing to intelligent computing upgrade. Construction and operation of 10,000-card intelligent computing centers in Shanghai Lingang, Hohhot, Ningxia Zhongwei, and Qinghai Sanjiangyuan, promoting integration of advanced computing power and green electricity. Data center capacity reserves reach 2,650MW, with total intelligent computing scale reaching 30 EFLOPS.

Completed the computing power intelligent network AINet, accelerating evolution toward 800G and 1.2T ultra-high bandwidth, achieving high-speed, secure, and lossless interconnection of computing power hub nodes. Continuously improving international network layout, with intelligent networking services for over 280 cloud service providers, connecting over 400 data centers. Built 5 new overseas intelligent computing centers for more comprehensive international intelligent computing layout. Created multiple benchmark projects including ASEAN intelligent manufacturing, Middle East intelligent warehousing, African smart mining, and European smart ports. International business revenue reached RMB 6.8 billion, up 11% year-on-year.

We believe that under the AI wave, the company's precise investment focuses on computing power, building a robust, comprehensive, and computing-network integrated international network. This is reflected in cost control, with network operation and support costs maintaining stable revenue ratios, depreciation and amortization down 4.8% year-on-year, and long-term gross margin levels expected to remain stable with gradual improvement.

**Future Outlook**: Continue achieving strong revenue and profit growth, significantly deploying computing power and AI business. For 2025, the company plans for strong growth in revenue, profit, and return on net assets, with planned capital expenditure of RMB 55 billion and special budget arrangements for AI key infrastructure and major projects. The company highly values shareholder returns, proposing an interim dividend of RMB 0.2841 per share, up 14.5% year-on-year.

**Earnings Forecast, Valuation Analysis, and Investment Recommendation**: We expect the company's net profit attributable to shareholders for 2025-2027 to be RMB 9.521/10.038/10.624 billion, representing year-on-year growth of 5.4%/5.4%/5.8%; corresponding EPS of RMB 0.30/0.32/0.34. Based on the closing price on August 22, 2025, the corresponding P/E ratios are 19.3/18.3/17.3 times. The company's performance growth is expected to maintain industry-leading levels, with future ROE and dividend ratios expected to continue improving. We maintain a "Buy-A" rating.