Incidents. In 2023, the company achieved operating income of 1.01 trillion yuan, an increase of 7.69% over the previous year, and achieved net profit of 131,766 billion yuan to mother, an increase of 5.03% over the previous year. 2023Q4's revenue reached 233.749 billion yuan, up 9.35% year on year, and net profit attributable to mother was 26.260 billion yuan, a decrease of 2.48% year on year.
Revenue surpassed the trillion threshold, and the overall ARPU value of individuals and households continued to rise. The gross margin of Q1/Q2/Q3/Q4 companies in 2023 was 24.46%/32.71%/28.61%/26.52%, respectively, and 23Q4 gross margin decreased 2.09pct month-on-month. The cost rate for the 23Q4 period was 18.2%, an increase of 3.5 pct over the same period last year. Among them, the R&D rate increased significantly. Free cash flow was $123.5 billion, up 29.2% year over year.
By business, personal market revenue reached 490.2 billion yuan in 2023, an increase of 0.3% over the previous year, including 991 million mobile customers, a net increase of 15.99 million, 5G package customers reached 795 million, a net increase of 180 million, and the number of customers subscribed to AI applications exceeded 3.07 million. Mobile ARPU grew steadily at RMB 49.3, up 0.6% year over year. In 2023, household market revenue reached 131.9 billion yuan, up 13.1% year on year. Household broadband customers reached 264 million households, a net increase of 2012 million households, leading the industry in net growth for many years. The penetration rate of gigabit home broadband customers was 30.0%, up 14.3 percentage points from the end of 2022. The comprehensive ARPU for home customers increased 2.4% year over year to RMB 43.1. The company is still significantly leading the industry in terms of the number of mobile users, and 5G users surpassed the 800 million mark in 2024. In terms of customer/revenue/network size, the company maintains operator first.
Capital expenditure is skewed towards computing power networks, and mobile cloud entered the top five in the market in 2023. In 2023, government and enterprise market revenue reached 192.1 billion yuan, a year-on-year increase of 14.2%. In 2023, Mobile Cloud steadily ranked first among domestic cloud service providers, with revenue reaching 83.3 billion yuan, an increase of 65.6% over the previous year. The IaaS+PaaS revenue share ranking entered the top five in the industry. The company plans that the mobile cloud business will reach 150 billion yuan in the next three years. The total capital expenditure of the company in 2023 was about RMB 18.3 billion, and the capital expenditure is expected to drop to RMB 173 billion in 2024, of which the capital expenditure for 5G networks is about RMB 69 billion, down 21.6% from the previous month, and the capital expenditure on computing power is about RMB 47.5 billion, up 21.5% from the previous month. In 2023, the company continued to build a computing power network with leading scale and technology. Total computing (FP32) reached 8.0 EFLOPS, a year-on-year increase of 14%, and intelligent computing (FP16) reached 10.1 EFLOPS, an increase of 206% over the previous year. The construction of the Hohhot hyperscale Single Computing Center and 12 intelligent computing center regional nodes in 11 provinces was initiated to accelerate the formation of an “N+X” multi-level, full-coverage intelligent computing capability layout.
The annual shareholder dividend ratio increased to 71%, and is expected to increase to more than 75% in '26.
China Mobile's dividend payout rates for 2020/2021/2022/2023 are 53%/60%/67%/71%, respectively. Starting in 2024, the company expects the profit from cash distribution to gradually increase to more than 75% of the profit due to shareholders in the year within three years, and the company's cash dividend ratio will grow steadily and maintain a high level.
Investment advice: We expect the company to achieve net profit of 1405.66/1536.84/168.903 billion yuan in 2024/2025/2026, corresponding PE is 16/15/13 times, maintaining the “recommended” rating.
Risk warning: In 2024, the company's investment in computing power infrastructure construction fell short of expectations, and the increase in the company's mobile-side users slowed down.