This report is read as follows:
As a subsidiary of China Telecom Corporation and the main operator of telecom 5G applications, the company is expected to open room for performance growth under the background of rapid penetration of 5G and relying on the operation of value-added services in the 5G era.
Main points of investment:
Cover for the first time, the target price is 23.55 yuan, increase the rating. The popularity of 5G is imminent, and domestic operators have launched 5G services in 2019. It is expected that the number of domestic 5G users is expected to grow rapidly in 2020. As a subsidiary of China Telecom Corporation and the main operator of telecom 5G applications, the company is expected to enjoy the 5G promotion dividend. It is expected that the EPS0.37/0.64/0.75 will be RMB 23.55 yuan in 2019-2021.
Relying on China Telecom Corporation, many businesses go hand in hand. After the company completed a major asset restructuring and injected into Tianyi Video, colorful interaction, Tianyi Reading and Love Animation in 2016, its main businesses are video, games, reading, animation, points operation and business travel booking business. At present, the main products of the company's main video Internet applications include Tianyi Video, Love 4G, Tianyi Live and so on. Many businesses of the company go hand in hand and develop well.
5G era operator share is expected to reshuffle, China Telecom Corporation ushered in the opportunity. From 2G to 4G era, the three major operators rely on technology upgrading, the market pattern has changed significantly, China Telecom Corporation is fully prepared to meet the 5G layout in advance, is expected to increase market share. Compared with the three major operators in South Korea, the user share of LG Utility 5G is higher than that of traditional users. In October this year, 100 Holdings signed a cooperation agreement with LG U+, which is expected to help China Telecom Corporation copy the LG U+ path in the 5G era.
The company operates three of China Telecom Corporation's five 5G applications and is expected to fully enjoy the 5G development dividend. The company undertakes the expansion and operation of the three major entertainment product categories of China Telecom Corporation's 5G value-added business: 5G + Tianyi HD, 5G+VR and 5G cloud games, which is expected to benefit from the growth of telecom 5G users and achieve new performance growth points in the context of 5G rapid popularity.
Risk hint: 5G application expansion is less than expected risk, market competition risk
