The first half of 2021 results are in line with our expectations.
The company reported 1H21 results: revenue rose 7.1 per cent year-on-year to HK $15.643 billion; EBITDA rose 3 per cent year-on-year to 5.715 billion yuan; and home net profit rose 0.1 per cent to HK $1.9 billion, in line with expectations.
Trend of development
Revenue from mobile services rebounded strongly. 1H21 mobile business revenue rose 12% year-on-year to HK $5.108 billion. Thanks to The Club's increased customer activity and loyalty, the number of mobile users increased to 3.263 million, and local revenue increased by 5% over the same period last year, offsetting the continued decline in roaming service contribution caused by global travel restrictions. Local ARPU rose 39 to HK $187 year-on-year, mainly due to increased penetration of 5G and increased price of 5G packages. As of early July 2021, the company had 528000 5G users, with a penetration rate of 16 per cent, and the mobile communications business EBTTDA grew 1 per cent year-on-year to HK $2.072 billion, corresponding to an EBITDA rate of 41 per cent. We expect that with the emergence of more applications and the popularity of people-friendly price terminals, the company's 5G penetration rate is expected to reach 25-30% by the end of 2021. As the first operator in Hong Kong to provide MTR 5G signal coverage, relying on the first-in advantage and extensive indoor and outdoor network coverage will attract more high-end 5G users to migrate and boost mobile service revenue.
Broadband services have maintained steady growth. Revenue from broadband networks and local data services fell 1 per cent year-on-year to HK $10.243 billion, of which the local business increased by 5 per cent to HK $6.926 billion, mainly due to the company's excellent and reliable optical fiber network and diversified services. to meet the broadband and telephone traffic needs of enterprises and residents during the epidemic; international voice service revenue fell 12 per cent year-on-year, offsetting the strong growth of local business. The company continues to increase the construction of optical fiber networks. by the end of June 2021, the number of optical fiber connections has increased by 57000 to 920000 compared with the end of last year, and the number of users of Wi-Fi solutions in the whole house has increased by 99 to 321000 compared with the same period last year, with a market share of 22%. We believe that with the high-speed and wide coverage of high-quality broadband network, the output of high-quality content resources in collaboration with Now TV, house-wide Wi-Fi and Smart Living and other solutions and value-added services, the company will continue to inject growth momentum into broadband business.
New business helps the digital transformation of enterprises. HKT Trust and HKT is actively expanding its digital business. 1H21's new business revenue rose 163 per cent year-on-year to HK $408 million, serving customers including Chow Tai Fook Jewellery, Fubon Bank and other large institutions. As of the first half of 2021, the number of The Club members reached 3.293 million, an increase of 8% over the same period last year, and the auction reward payment service account reached 3.003 million, an increase of 14% over the same period last year. Considering HKT Trust and HKT's leading user scale and new business diversity, we believe that HKT Trust and HKT will benefit from 5G application innovation and promote revenue to open up incremental space.
Profit forecast and valuation
Keep profit forecasts for 2021 and 2022 unchanged. The current share price corresponds to 9.7 times 2021 EV/EBITDA, maintaining an outperforming industry rating and a target price of HK $14.00, corresponding to 12 times 2021 EV/EBITDA, with 28.9% upside from the current share price.
Risk.
Uncertainty of macro environment and uncertainty of new business development.