China International Capital Corporation's research reports pointed out that China Mobile's revenue in the first half of the year was slightly lower than our expectations, mainly due to a year-on-year decline in personal market revenue; due to better-than-expected network operating cost control, net income in the first half of the year showed good growth. It is believed that mobile ARPU is expected to improve compared to the first half of the year for the whole year. The company actively builds up new growth points for smart home applications, believing that the revenue in the home market is expected to continue to achieve good growth. In addition, mobile cloud revenue continues to maintain rapid growth, with political and enterprise market revenue of 11.2 billion yuan in 1H24, a year-on-year increase of 7.3%.
The company's management team stated that accounts receivable will improve in the second half of the year, believing that the improvement in accounts receivable for the whole year is expected to promote the repair of the company's OCF. It is believed that the growth rate of accounts receivable for the whole year may decrease compared to the first half of the year, driving the repair of OCF and FCFF performance. In 1H24, capital expenditures were 6.4 billion yuan, a year-on-year decrease of 21.4%, while the capital expenditure guidance for the whole year was less than 17.3 billion yuan, which is better than expected.
The bank maintains its outperform rating and a target price of 110.0 yuan for A shares, corresponding to a price-to-earnings ratio of 17.0/16.2 times for 2024/25, with an upward potential of 5.8% compared to the current price. For Hong Kong stocks, it maintains an outperform rating and a target price of HKD 85.0, corresponding to a price-to-earnings ratio of 11.9/11.3 times for 2024/25, with an upward potential of 17.7% compared to the current price.