Incident: On April 22, the company released its 2024 quarterly report. The company achieved operating revenue of 263.7 billion yuan, an increase of 5.2% over the same period; during the same period, the company achieved deduction of non-net profit of 26.1 billion yuan, an increase of 8.4% over the previous year.
24Q1 results were in line with expectations, with year-on-year improvement after deducting non-net profit. According to the company's disclosure, in the mobile business, 24Q1 improved its existing customer operation system, and further consolidated the scale and value base of growth. Mobile Internet traffic increased 3.3% year on year, and mobile Internet DOU reached 14.9GB; the home market built a “full gigabit+ cloud living” smart home ecosystem to promote the development of home security, mobile HD, and intelligent networking. The comprehensive ARPU for 24Q1 home customers was RMB 39.9, an increase of 1.8% year on year. In terms of the government and enterprise market, we are promoting “network+cloud+DICT” scale expansion, increasing merchant market expansion efforts, promoting standardization, commercialization and platformization of government and enterprise solutions, deepening industry digital intelligence services, and promoting high-quality development. The company's DICT business revenue maintained good growth in 24Q1. The 24Q1 company's ROE was 2.24%, up 0.21pct from 23Q4 and 0.04pct compared to 23Q1. At the same time, the company's 24q1 deducted non-net profit growth rate increased 7.88pct compared to last year's net profit growth rate, which was positive compared to 23Q4. In terms of the fee rate for the period, the company's 24Q1 rate was 11.6%, an increase of 0.2 pct compared to the same period last year. Among them, the management rate decreased by 0.2 pct compared to the same period last year, the financial rate decreased by 0.1 pct, and the sales rate increased by 0.4 pct compared to the same period last year. As of the end of 24Q1, the company's accounts receivable and notes were 88.057 billion yuan, up 24.2% year on year, of which accounts receivable were 87.070 billion yuan, up 24.9% year on year. In 24Q1, the company's cash expenditure “purchase and construction of fixed assets, intangible assets and other long-term assets” was approximately $34.478 billion, down 7.4% year on year. The downward trend was faster than the 4.0% decline in the 24-year capital expenditure guide. The company comprehensively promotes digital transformation and high-quality development. We believe that the company's revenue and profit will grow steadily in 24 years.
Investment in intelligent computing centers will be increased in anticipation of a 24-year reduction in capital expenditure. The total capital expenditure of the company in 2023 was approximately RMB 18.3 billion. Capital expenditure is expected to drop to RMB 173 billion in 2024, and computing power capital expenditure is about RMB 47.5 billion, an increase of 21.5% over the previous month. Computing power expenses bucked the trend from a 4% decline in overall Capex. At the beginning of April, Mobile announced the 2024-2025 new intelligent computing center procurement. Combined with the 2023-2024 procurement, Mobile purchased a total of 10,508 AI servers. The procurement scale surpassed that of China Unicom and China Telecom.
User operation data was released in March, and the number of mobile and fixed network users increased in 24Q1 compared to 23Q4. Although 5G user data fluctuated in the first three months, the overall 24Q1 data showed an upward trend compared to 23Q4 data. The number of mobile users reached 996 million, of which 799 million 5G package users, 23Q4 (+0.5%), fixed broadband users reached 305 million month-on-month, and 23Q4 (+2.3%) month-on-month. The mobile ARPU value increased to 47.9 yuan/household, and 23Q4 (+6.7%). The overall volume and price of 24Q1's mobile business continued to grow.
Investment advice: We expect the company to achieve net profit of 1406.03/1525.32/167.728 billion yuan in 2024/2025/2026, corresponding PE is 16/15/13 times, maintaining the “recommended” rating.
Risk warning: The decline in the company's capital expenditure in 2024 fell short of expectations, and the increase in the company's mobile-side users slowed.