China Mobile released its 1H 2024 performance, with revenue of RMB 546.7 billion, up 3% YoY. Net income attributable to shareholders was RMB 80.2 billion, up 5.3% YoY. The company would distribute an interim dividend of HKD 2.6 per share.
Anxin International released a research report, maintaining the 'buy' rating for China Mobile (00941). The company's performance growth is stable, and its dividend payout ratio has increased year by year. It is expected to continue to benefit from the AI trend, and the net income attributable to shareholders is expected to be RMB 140.8/150.1/159.9 billion in 2024/2025/2026, with a target price of HKD 86. China Mobile released its 1H 2024 performance, with revenue of RMB 546.7 billion, up 3% YoY. Net income attributable to shareholders was RMB 80.2 billion, up 5.3% YoY. The company would distribute an interim dividend of HKD 2.6 per share.
Anxin International's main points are as follows:
Revenue maintains steady growth with high contribution from emerging markets.
During 1H 2024, the company recorded revenue of RMB 546.7 billion, up 3% YoY. Details are as follows:
1) Personal market: revenue decreased by 1.6% YoY to RMB 255.2 billion. The net increase in 5G network users was 49 million households for the first half, reaching 514 million households. The penetration of 5G networks increased by 11.5 pp YoY to 51.4%. The company’s mobile user base exceeded 1 billion, but mobile ARPU decreased by 2.7% YoY to RMB 51, mainly due to the development of large traffic applications and the separation of household scenarios, etc. Looking at the whole year, there is still room for ARPU value repair.
2) Home market: revenue increased by 7.5% YoY to RMB 69.8 billion, maintaining good growth. Net additions of broadband users in the first half of the year were 8.48 million households, reaching 272 million households. The penetration rate of gigabit broadband increased to 33.5%. The comprehensive ARPU of households increased by 0.2% YoY to RMB 43.4, achieving a rise in both quantity and price.
3) Government and enterprise market: revenue increased by 7.3% YoY to RMB 112 billion. The revenue of Mobile Cloud was RMB 50.4 billion, up 19.3% YoY and IaaS and PaaS revenue share ranking is among the top five in the industry. Benefiting from the integrated promotion of "Internet+cloud+DICT" to expand in scale, the company’s publicly won market share increased by 4.1 pp YoY to 18.4%, maintaining a leading position in the industry.
4) Emerging market: revenue increased by 13.2% YoY to RMB 26.6 billion. The company continued to optimize its international business layout, enrich its digital content represented by Migu Video, promote financial technology innovation and coordinated development of industry and investment. Operating cash flow net inflow in 1H 2024 was RMB 131.4 billion, down 18.2% YoY, and free cash flow was RMB 67.4 billion, down 14.9% YoY. It was mainly due to the extension of the payment cycle for government and enterprise clients in a complex operating environment, and the support of upstream and downstream development in the industrial chain accelerated the payment progress. In the future, with the recovery of the operating environment, cash flow is expected to return to a healthy level. At the same time, the company announced an interim dividend of HKD 2.6 per share, which increased YoY for the full year, and valued shareholder returns.
Capital expenditure and depreciation and amortization decreased, accelerating profit release.
In 1H 2024, the company's CAPEX was RMB 64 billion, a YoY decrease of 21.4%. The full-year CAPEX guidance is less than RMB 173 billion, and the proportion of revenue is reduced to within 20%. At the same time, the company adjusted the depreciation period for 5G equipment from 7 years to 10 years (5G/6G shared base stations), resulting in a decrease in depreciation and amortization expenses and accelerating profit release. In terms of computing power, the company's intelligent computing power reached 19.6EFLOPS(FP16), and the first 13 wisdom computing center nodes in regions such as Jing-Jin-Ji, Yangtze River Delta, South China Greater Bay Area, and Chengdu-Chongqing have been put into production, and released the "Jiutian" AI base composed of a ten-thousand-card-level intelligence computing cluster, a hundred-billion-model-modal large model, and a gathering of the top hundred elements. In addition, the company will deploy 5G-A in more than 300 cities, which is the first step from 5G to 6G.
Risk warning: intensified industry competition; changes in dividend payout policy; capital expenditure exceeds expectations.