The company released its 2023 annual report. It achieved operating income of 1,093 billion yuan for the full year of 2023, an increase of 7.7% over the previous year; realized net profit of 131,766 billion yuan, an increase of 5.0% over the previous year; and realized net profit of 117.98 billion yuan after deduction, an increase of 2.2% over the previous year. The company's total dividend for the full year of 2023 was HK$4.83 per share, an increase of 9.5% over 2022. It is planned to further increase the dividend ratio to over 75%.
The company achieved double growth in revenue and profit, mainly due to steady growth in its main business, with revenue reaching 863.5 billion yuan, an increase of 6.3% over the previous year. Profitability continued to increase throughout 2023, with gross margin of 28.23%, up 0.45pct year on year, and net profit margin of 13.1%, mainly due to good revenue growth and better cost control. In 2023, the company's four major expenses totaled 13.25%, an increase of 1.13pct over the previous year. In the context of revenue growth, the company continued to increase infrastructure construction, R&D investment, and market-side investment.
CHBN four-wheel drive transformation and upgrading increases revenue and kinetic energy to accelerate conversion. In 2023, personal market revenue reached 490.2 billion yuan, up 0.3% year on year; household market revenue reached 131.9 billion yuan, up 13.1% year on year; government and enterprise market revenue reached 192.1 billion yuan, up 14.2% year on year, and the number of government and enterprise customers reached 28.37 million, a net increase of 5.17 million; and revenue from emerging markets reached 49.3 billion yuan, up 28.2% year on year.
Looking ahead to 2024, the integrated development of information technology brings new opportunities. The company continues to advance the transformation from “5G+” to “AI+” and accelerate the pace of digital transformation. Digital intelligence is expected to drive the formation of a new value growth curve.
Capital expenditure is skewed from connectivity to computing power, capacity, and infrastructure to expand digital intelligence infrastructure. In 2024, it is estimated to be 173 billion yuan, down 4% from the previous year. It is mainly used to promote leading connectivity perception, accelerated computing power development, capacity-intensive efficiency and infrastructure expansion layout, and support CHBN's business development. Among them, 5G network capital expenditure is about 69 billion yuan, a decrease of 21.6% year on year. The company focuses on investing in network coverage, computing power and technical capabilities to continuously enhance domestic and international infrastructure capabilities.
Investment advice: The company's net profit for 2024-2026 is estimated to be 1415/1503/158.4 billion yuan, respectively, and the corresponding PE is 16/15/14 times, respectively, covered for the first time, giving it a “buy” rating.
Risk warning: Market competition intensifies; the second curve is not expanding smoothly; operators' capital expenditure falls short of expectations.