Incidents:
On March 22, 2024, the company released its 2023 annual report. During the reporting period, the company achieved revenue of 1009.309 billion yuan, up 7.69% year on year, of which main business revenue was 863,514 billion yuan, up 6.34% year on year; the company achieved net profit of 131,766 billion yuan, an increase of 5.03% year on year.
The company emphasizes value management, and the scale of revenue continues to increase
The company deepens value management based on scale, promotes CHBN's omnidirectional and integrated development, and achieves good revenue growth. Among them, the annual wireless Internet business revenue was 394.797 billion yuan, a year-on-year decrease of 0.29%; cable broadband revenue reached 118.768 billion yuan, an increase of 13.08% over the previous year. Revenue from application and information services reached $221,642 billion, up 21.47% year over year. In terms of other business, driven by sales of mobile phones and other terminals, other business revenue was 145.795 billion yuan, an increase of 16.45% over the previous year.
Adhere to accurate investment and accelerate high-quality development
In 2023, the company's leading edge continued to be consolidated, maintaining the three “number one global operator” in terms of user size, revenue scale, and network size. Digital transformation revenue was 253.8 billion yuan, up 22.2% year on year; accounting for 29.4% of main business revenue, up 3.8PP year on year. The total capital expenses of the company in 2023 were approximately RMB 18.3 billion. China Mobile's total capital expenditure budget for 2024 is about 173 billion yuan. Among them, capital expenditure in the connectivity direction fell to 87.4 billion yuan, increasing capital expenditure investment in the three areas of computing power, capacity, and infrastructure, and continuing to promote digital transformation and high-quality development.
Stimulate new momentum and strive to achieve good growth in 2024
In 2024, the company strives to accelerate the “AI+” campaign to accelerate breakthroughs, and make every effort to stimulate the growth of new types of businesses such as mobile clouds, cloud phones, and cloud computers. The company's business goals for 2024 include: net increase of 80 million 5G network customers and steady growth in mobile ARPU; net increase of 18 million household broadband customers, steady growth in comprehensive ARPU for household customers; net increase of 4 million government and enterprise customers, good growth in government and enterprise market revenue; and rapid revenue growth in emerging markets.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2024-2026 to be 10697.80/11312.38/119.00.76 billion yuan, respectively, with year-on-year growth rates of 5.99%/5.74%/5.20%, net profit to mother of 1404.25/1498.40/159.038 billion yuan respectively, 6.57%/6.70%/6.14% for EPS, 6.56/7.00/7.43 yuan/share respectively, and 6.47% CAGR for 3 years. In view of the comprehensive development of the company's core business and the continuous increase in revenue scale, based on comparable company valuations, we gave the company 18 times PE in 2024, with a target price of 118.08 yuan, maintaining the “increase in wealth” rating.
Risk warning: User growth falls short of expected risk, ARPU increase falls short of expected risk, and business growth in emerging markets falls short of expected risk.