Revenue surpassed the trillion dollar level, with a dividend payout ratio of over 75% over the next three years: in 2023, the company achieved operating revenue of 100 million yuan (YoY +7.7%), of which communication service revenue was 863.5 billion yuan (YoY +6.3%), and profit attributable to shareholders was 131.8 billion yuan (YoY +5.0%). Revenue broke through the trillion mark, and profit reached a record high. EBITDA was 341.5 billion yuan (YoY +3.7%), and EBITDA accounted for the ratio of communications service revenue. Capital expenditure of 23 billion yuan (YoY -1.9%) declined further by 4.0% year-on-year to 100 million yuan in '24, and capital expenditure is expected to fall below 20% of revenue in the future. Free cash flow was $123.5 billion (YoY +29.2%), and the annual dividend payout ratio reached 71%. In order to better give back to shareholders, starting in 2024, profits distributed in cash over three years will gradually increase to more than 75% of the profits due to shareholders in that year.

Overall growth, revenue structure continued to be optimized: CHBN grew across the board, and HBN's revenue accounted for 43.2% of communications service revenue (YoY +3.4%). Personal market revenue of 490.2 billion yuan (YoY +0.3%), 991 million mobile users, a net increase of 15.99 million. Among them, 5G package customers reached 795 million, a net increase of 100 million. Mobile ARPU is 49.3 yuan (YoY +0.6%), maintaining steady growth. Household market revenue of 100 million yuan (YoY +13.1%), 264 million household broadband users, 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 1 percentage point from the end of 2022. Comprehensive ARPU of 43.1 yuan for home customers (YoY +2.4%). Government and enterprise market revenue of 100 million yuan (YoY +14.2%), of which DICT revenue was 107 billion yuan (YoY +23.8%), and the number of government and enterprise customers reached 28.37 million, a net increase of 5.17 million. Mobile cloud revenue was 83.3 billion yuan (YoY +65.6%), ranking first among domestic cloud service providers. The 5G DICT project contract amount reached 47.5 billion yuan (YoY +30.1%), and 5G private network revenue reached 5.4 billion yuan (YoY +113.1%).

Large-scale operation in emerging markets, increased contribution: In 2023, revenue from emerging markets was 49.3 billion yuan (YoY +28.2%), of which international business revenue was 20.7 billion yuan (YoY +24.2%), owned 12,200 aircraft from overseas, international/Hong Kong, Macao and Taiwan roaming services covered 264 directions, and 5G launch directions, maintaining global leadership. Digital content revenue is 28 billion yuan (YoY +31.6%), and Migu Video has 116 million monthly active customers. Fintech is 600 million yuan (YoY +17.5%), the financial business scale of the industrial chain is 76.6 billion yuan, and monthly active customers with payment packages increased by 51.8% year-on-year.

The target price is HK$80, maintaining the purchase rating: Entering the period of “improving quality, efficiency, and heavy return”, we believe that China Mobile's investment certainty has been further strengthened by excellent corporate governance, the world's largest To-C user base, a decline in capital expenditure, and an increase in the dividend dividend ratio. We are optimistic about the good growth in the company's revenue and profit, which is expected to continue for 2-3 years. Considering the continued release of the company's profits and the increase in the dividend ratio, and the short-term failure of the company's cloud business to achieve profit, we changed the past distribution valuation method and gave the company an 11 times valuation of 2024 profit, corresponding to the target price of HKD, and maintained a purchase rating.

Risk warning: Competition in the operator market intensifies; the company's dividends fall short of expectations; the development of the company's DICT business falls short of expectations; and the increase in the company's mobile and fixed broadband ARPU falls short of expectations.