Incident: The company released its quarterly report on April 23. In 24Q1, the company achieved operating income of 1,344.95 yuan, up 3.65% year on year; realized net profit of 8.597 billion yuan, up 7.68% year on year; realized net profit of 9.160 billion yuan after deduction, up 5.40% year on year.
Steady growth in the first quarter. 2024Q1 achieved operating income of 1,344.95 yuan, up 3.65% year on year; realized net profit of 8.597 billion yuan, up 7.68% year on year; realized net profit after deduction of 9.160 billion yuan, up 5.40% year on year.
The number of mobile and fixed network users continues to increase, and the digitalization of the industry is developing rapidly.
In terms of mobile communication services: Accelerate the intelligent upgrading of 5G applications and promote the continuous increase in the scale and value of mobile users. As of March 31, 2024, the total number of the company's mobile customers was about 412 million, up 3.25% year on year; of these, the number of 5G package users reached 329 million, up 16.07% year on year, and the penetration rate reached 79.9%. The net increase of 2024Q1 mobile users was 3.88 million, down 48.40% from 17.52 million in 2023Q. In the first quarter, mobile internet traffic increased 30.62% year on year; mobile user ARPU was RMB 45.8, up 0.9% from last year; mobile communication service revenue reached RMB 52,226 billion, up 3.2% year on year.
In terms of fixed networks and smart home services: Adhere to the integrated development of “5G+ gigabit broadband + gigabit WiFi” to fill in high-quality digital products and scenario-based services. As of March 31, 2024, the number of wired broadband users reached 192 million, and smart household income increased 10.4% year-on-year, driving the comprehensive broadband ARPU to reach RMB 48.6, an increase of 2.1% over last year, and the value contribution of smart homes continues to increase.
In terms of industrial digitalization: The company uses “network+cloud+AI+ application” to meet the digital needs of thousands of households and industries, promote the rapid development of strategic emerging businesses, and promote the deep integration of digital technology and the real economy.
In the first quarter of 2024, the company's industrial digitization business revenue reached 38.679 billion yuan, an increase of 10.6% over the previous year.
The company strengthened digital operation cost reduction and efficiency, and continued to improve resource efficiency; 2024Q1's sales expenses were 14.162 billion yuan, down 0.1% year on year; management expenses were 9.12 billion yuan, down 3.0% year on year; R&D expenses were 1,571 billion yuan, up 13.8% year on year, mainly because the company focused on strategic emerging industries and future industries, continued to increase scientific and technological innovation efforts, strengthen key core technology research, and enhance core capabilities; financial expenses were 144 million yuan, 51.0% compared with the same period last year, mainly due to a decrease in interest expenses on leasing liabilities.
The company's net cash flow from 2024Q1 operating activities was 20.862 billion yuan, a year-on-year decrease of 27.87%. This is a normal seasonal fluctuation, mainly due to increased cash from purchasing goods and receiving labor payments. Net cash flow from investment activities was -20.029 billion yuan, a year-on-year decrease of 27.38%, mainly due to an increase in cash payments relating to other investment activities; net cash flow from financing activities was -10.130 billion yuan, a decrease of 5.73% year over year.
Investment advice: The company's net profit for 2024-2026 is expected to be 32.552 billion yuan, 34.950 billion yuan, and 37.327 billion yuan, respectively. The corresponding 2024-2026 PE is 17.1X, 16.0X, and 15.0X, respectively, and PB is 1.2 times, 1.1 times, and 1.0 times, respectively, maintaining the “Highly Recommended” rating.
Risk warning: 5G development falls short of expectations, innovative business development falls short of expectations, and cost control falls short of expectations.