Net profit increased by double digits for the full year. The company achieved operating income of 372.6 billion yuan in 2023, including main business revenue of 335.2 billion yuan (+5.0% YoY); net profit of 18.71 billion yuan, net profit to mother of 8.17 billion yuan (+12.0% YoY); and EBITDA of 99.6 billion yuan. In the fourth quarter of a single year, the company achieved revenue of 90.9 billion yuan (basically the same as the previous year) and achieved net profit of 600 million yuan (+27.1% over the same period last year).
In 2024, the company guided steady revenue growth and maintained double-digit profit growth.
The mobile networking business is progressing steadily. The company's networked communications business includes six major segments: mobile networking, broadband networking, television networking, dedicated line networking, communications business and information business, and achieved revenue of 244.6 billion yuan in 2023. In terms of mobile networking, the company's mobile users reached 333 million, a net increase of 10.6 million, and mobile ARPU of 44.0 yuan, a slight decline over the previous year. In terms of broadband networking, fixed broadband users reached 113 million, a net increase of 9.79 million over the previous year. The comprehensive broadband ARPU value was 47.6 yuan, a slight decrease over the previous year. The information business (Personal Digital Smart Life+Unicom Smart Home) achieved revenue of 10.7 billion yuan, an increase of 16% over the previous year, and the personal digital smart lifestyle business and Unicom Smart Home business reached the level of 100 million households.
The computing network and digital intelligence business is improving. In 2023, the Computing Network Digital Intelligence business achieved revenue of 75.2 billion yuan, including the six major sectors of Unicom Cloud, Data Center, Mathematical Integration, Data Services, Digital Intelligence Applications, and Internet Communications Security. The revenue scale accounts for about a quarter of the total revenue of the two main businesses. Among them, Unicom Cloud achieved revenue of 51 billion yuan, an increase of 41.6%; the data service business achieved revenue of 5.3 billion yuan, an increase of 32% year on year, with an industry share of more than 50% for 5 consecutive years; digital intelligence applications achieved revenue of 5.6 billion yuan (+17.5% year over year), and the number of 5G private network service customers reached 8,563; and Netcom Security achieved revenue of 1.7 billion yuan (+120% year over year).
Internet investment showed an inflection point. The company's capital expenditure in 2023 was $73.87 billion (-0.4% YoY), slightly lower than previous guidance ($76.9 billion), of which 5G completed an investment of 37.37 billion yuan (+13.1% YoY).
With a planned capital expenditure of 65 billion yuan in 2024 (estimated -12% year over year), network investment is showing an inflection point. The investment focus is shifting from a stable network communication business to a high-growth network digital intelligence business.
The payout ratio increased to 55%. The planned dividend rate for 2023 is 55%. The dividend plan for the end of 2023 is to distribute dividends of $0.1336 per share. Considering the mid-term dividend of $0.203, a cumulative dividend of 0.3366 yuan per share for the whole year.
Risk warning: 5G development falls short of expectations; industrial Internet business development falls short of expectations; computing power network deployment falls short of expectations.
Investment advice: Maintain the 2024-2025 profit forecast and add the 2026 profit forecast. The company's net profit for 2024-2026 is estimated to be 212/234/25.3 billion yuan, respectively, and net profit to mother is 92/101/10.8 billion yuan, respectively. The current PE corresponding to the A-share price is 16/15/14x, and the corresponding PB is 0.9/0.9/0.9x; the corresponding PE for the current H share price is 8/7/7x, and the corresponding PB is 0.5/0.5/0.4x, respectively, to maintain the “buy” evaluation grade.