Incidents. The company disclosed its 2024 semi-annual report. During the period, it achieved a total operating income of 546.744 billion yuan, an increase of 3.02% over the previous year, and achieved deduction of 73.038 billion yuan in non-net profit, an increase of 4.60% over the previous year. 2024Q2 achieved revenue of 283.037 billion yuan, a year-on-year increase of 1.09%, and achieved deduction of non-net profit of 46.938 billion yuan, an increase of 2.67% year-on-year. On the same day, it was announced that an interim dividend of HK$2.60 (tax included) per share for the six months ended June 30, 2024 will be distributed to all shareholders, an increase of 7.0% over the previous year. The A-share dividend will be paid in RMB.
24H1's revenue scale and profitability grew steadily, and capital expenditure declined on the basis of the increase in R&D expenditure. The company achieved revenue of 463.589 billion yuan, up 2.5% year on year, of which the personal market achieved revenue of 255.179 billion yuan, down 1.6% year on year, and main business accounted for 55.0%; the household market achieved revenue of 69.835 billion yuan, up 7.5% year on year, accounting for 15.1%; the government and enterprise market achieved revenue of 111.969 billion yuan, up 7.3% year on year, with main business accounting for 24.2%; emerging markets achieved revenue of 26.606 billion yuan billion yuan, 13.02% YoY, accounting for 5.7% of the main business. Among government and enterprise market revenue, the company achieved mobile cloud revenue of 50.4 billion yuan, an increase of 19.3% over the previous year, and achieved 18.4% bid share in the industry-wide public bidding market, an increase of 4.1 pct over the end of last year. During the 24H1 period, the company generated R&D expenditure of 11.971 billion yuan, up 41% year on year. During the same period, the company's capital expenditure reached 64 billion yuan, accounting for 36.99% of the annual planned capital expenditure. Compared with the same period last year, the capital expenditure decreased by 27.2%. Cash expenditure for fixed intangible long-term assets was 73.46 billion yuan, down 7.8% year on year.
The company's operating cash flow during the same period reached 131.377 billion yuan, down 29.148 billion yuan from the same period last year, and the revenue ratio was 96.11%, a decrease of 0.21pct compared to the same period last year.
C-end mobile users surpassed 1 billion and created a new quality productivity business. In the current context of the company's high mobile user penetration rate, the company achieved 1 billion mobile users at the end of 24Q2, an increase of 1.5% over the end of 24Q1. Among them, the number of 5G network customers was 0.514 billion, accounting for 51.4%, and an increase of 5.3% over the end of 24Q1. 24H1's mobile ARPU value was 51 yuan/household/month, down 2.7% from 23H1. The number of the company's limited broadband customers during the same period was 0.309 billion, up 7.9% year on year. Among them, the number of household broadband users was 0.272 billion, up 6.8% year on year; the company's comprehensive household ARPU value was 43.4 yuan/household/month, up 0.2% year on year.
The number of 24H1 company's government and enterprise customers was 30.38 million, an increase of 25% over the previous year, and the number of B-side users bucked the trend. According to China Mobile, 24H1 has opened a total of 2.29 million 5G base stations, added 0.351 million stations in the first half of the year, and has promoted 5G-A (5.5G) commercial deployment in over 280 cities. China Mobile said at the China Mobile performance conference that the first batch of 13 intelligent computing center nodes in the Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, Chengdu and Chongqing have been put into operation. At the same time, it has built the world's first 400G all-optical backbone network with the widest coverage, and has fully realized IPv6-based backbone network intelligence.
Investment advice: We expect the company to achieve net profit of 140.594/152.226/168.469 billion yuan in 2024/2025/2026, respectively, corresponding to 16/14/13 times PE, and maintain the “recommended” rating.
Risk warning: The decline in the company's capital expenditure fell short of expectations, and the penetration rate of C-end users increased and declined.