On March 21, the company released its 2023 annual report. During the reporting period, it achieved operating income of 1009.3 billion yuan, an increase of 7.7% over the previous year; net profit to mother was 131.8 billion yuan, an increase of 5.0% year on year.
EBITDA was RMB 341.5 billion, up 3.7% year over year. The performance was in line with expectations.
CHBN grew across the board, and capital expenditure support continued to decline. During the reporting period, the company's revenue increased 7.7% year on year, and the core business indicators continued to improve. By market, the individual market of 490.2 billion yuan increased slightly by 0.2% over the same period last year, and the total number of mobile customers was 991 million, of which the share of 5G customers increased to 80%, driving the mobile ARPU to 49.3 yuan. The household market transitioned to HDICT, and revenue of 131.9 billion yuan increased 13.1% year over year. The comprehensive customer ARPU was RMB 43.1, an increase of 2.4% year on year. The government and enterprise market strengthened the integrated development of cloud network DICT, achieving revenue of 192.1 billion yuan, an increase of 14.2% over the previous year. Capital expenditure of 1803 billion yuan, accounting for 20.9% of revenue, a year-on-year decrease of 1.9PP. The estimated capital expenditure in 2024 is 173 billion yuan, and the share of revenue is expected to fall below 20%.
Digital transformation is the first engine of growth, and new information infrastructure is constantly being improved. In '23, the company's digital transformation revenue reached 253.8 billion yuan, up 22.2% year on year, contributing 89.7% to main business revenue growth, accounting for 29.4% of main business revenue. Among them, the industry's digital DICT revenue increased 23.8% year-on-year to reach 107 billion yuan, driving the annual HBN revenue share to 43.2%. Mobile cloud revenue was 83.3 billion yuan, up 65.6% year over year, and IaaS+PaaS revenue share entered the top five in the industry. The scale of intelligent computing power reached 10.1EFLOPS, an increase of 206% over the previous year. The 24-year intelligent computing deployment target is 17EFLOPS, and the first batch is expected to be put into operation in April/May. By building “cloud+data” capabilities, the company is accelerating the transformation of the business model from “pipeline+traffic” to “connection+computational power+capacity”.
Improve shareholder returns and expectations for growth and transformation to open up future market capitalization space. The dividend payout rate in 2023 was 71%, and profits distributed in cash within three years from 2024 gradually increased to more than 75% of the profits due to shareholders in that year. In the digital economy and the AI+ era, I am optimistic that the company will transform from a demographic dividend to an information dividend as a computing power network base. Along with the trend improvement in the company's fundamentals and steady growth in operating profit, the market capitalization space is expected to gradually rise.
The company's net profit for 2024-2026 is estimated to be 142.4 billion/ 155.2 billion/ 1703 billion yuan, respectively, and the corresponding PE is 15/14/13 times, respectively, maintaining a “buy” rating.
The 5G business has not yet formed a clear business model, the organization and incentive mechanisms are unable to meet the needs of business transformation, and the digital transformation falls short of expectations.