Incident: China Telecom released its 2024 quarterly report, achieving operating income of 134.495 billion yuan, up 3.7% year on year, including main business of 124.347 billion yuan, up 5.0% year on year, net profit to mother of 8.597 billion yuan, up 7.7% year on year, net profit excluding non-return to mother of 9.160 billion yuan, up 5.4% year on year.
Here are our reviews:
Two-wheel drive for basic production continues to gain strength, and high-quality development continues to achieve new results in terms of mobile communication services. The company continues to improve the quality of 5G networks, accelerate the intelligent upgrading of 5G applications, and continue to expand special applications such as direct 5G mobile phone connectivity satellites and 5G quantum cryptography around the digital needs of users in different scenarios to promote the continuous increase in the scale and value of mobile users. 24Q1 mobile communication service revenue was 52.226 billion yuan, up 3.2% year on year, with a net increase of 3.88 million mobile users, reaching 412 million households, and a net increase of 10.06 million 5G package users to 329 million households. The penetration rate reached 79.9%, and the ARPU for mobile users was 45.8 yuan, an increase of 0.9% over last year.
In terms of fixed networks and smart home services, the company adheres to the integrated development of “5G+ gigabit broadband and gigabit WiFi”, accelerates the deep integration of products such as basic connectivity and smart home applications with new elements such as cloud, AI, and security, strongly promotes the integration and mutual promotion of smart communities and digital rural platforms, and continuously fills in high-quality digital products and scenario-based services. 24Q1's fixed network and smart home service revenue was 31,824 billion yuan, up 2.2% year on year, with wired broadband users reaching 192 million households. Smart household revenue increased 10.4% year on year, driving the comprehensive broadband ARPU to 48.6 yuan, an increase of 2.1% over last year, and the value contribution of smart homes continued to increase.
In terms of industrial digitalization, the company seizes the opportunities of economic and social digital transformation, continues to cultivate key industries, continuously expand ecological cooperation, meet the digital needs of thousands of households and industries with “network+cloud+AI+ applications”, promote the rapid development of strategic emerging businesses, and promote the deep integration of digital technology and the real economy. 24Q1 The company's industrial digitization business revenue was 38.679 billion yuan, an increase of 10.6% over the previous year.
Attach great importance to shareholder returns and continue to increase dividends
The company attaches great importance to shareholder returns and strives to enhance its ability to generate profits and cash flow. The dividend for the full year of 2023 was 0.2332 yuan (tax included), and the total amount of dividends distributed throughout the year increased 19.0% year-on-year, exceeding 70% of the company's shareholders' profit share share in 2023, successfully fulfilling the company's profit distribution promise when issuing A shares. Starting in 2024, profits distributed in cash within three years will gradually increase to more than 75% of the profits due to shareholders in that year, in an effort to create greater value for shareholders.
Profit forecasts and investment suggestions:
The company grasps opportunities for economic and social digital transformation, comprehensively and thoroughly implements the “cloud to digital transformation” strategy, integrates with new elements such as cloud, AI, security, and quantum. The basic business is growing steadily, and the industrial digital business is developing rapidly, and the company is optimistic about the future development of the company. The company's net profit for 24-26 is estimated to be 332/360/38.8 billion yuan, maintaining the “increase in holdings” rating.
Risk warning: industry competition intensifies, innovative business progress falls short of expectations, cost growth exceeds expectations, etc.