Revenue growth slowed in the first half of 2024, and profit growth remained at a good level. The company released its 2024 semi-annual report, achieving operating income of 5.47 billion yuan, a year-on-year increase of 3.02%; net profit to mother of 80.2 billion yuan, an increase of 5.29% over the previous year. Looking at a single quarter, the company achieved revenue of 283 billion yuan in the second quarter, up 1.09% year on year; realized net profit of 50.6 billion yuan to mother, an increase of 5.13% year on year. The company's revenue growth rate in the second quarter slowed compared to the first quarter, mainly due to the decline in mobile ARPU value from 52.4 yuan in the first half of last year to 51 yuan in the first half of this year. The company's profit growth rate in the first half of the year still maintained steady growth of more than 5%, exceeding the revenue growth rate, mainly due to the decline in depreciation and amortization, and effective control of expenses.
The company is expected to stabilize ARPU values in the second half of the year by strengthening personalized operations for TOC customers, the layout of whole-house WiFi and gigabit broadband in the home market, and the deployment of new businesses such as 5G and AI products.
Cash flow declined year over year, and subsequent improvements are expected. China Mobile's net operating cash flow for the first half of '24 was 131.4 billion yuan, down 18% year-on-year, mainly due to an increase in the share of government and enterprise businesses and an increase in accounts receivable. Highlights of China Mobile's subsequent cash flow improvements: first, focus on profitable and cash-flow projects to strengthen project management; second, strengthen hierarchical management of customer credit; third, focus on process control and establish a DICT system to manage the entire life cycle; and fourth, strengthen the collection of key arrears.
Increase investment in computing networks and cultivate new growth points. The company's capital expenditure in the first half of the year was RMB 64 billion, with a focus on computing power network construction to cultivate new growth points for the future. As of the first half of the year, China Mobile's general-purpose computing power scale reached 8.2 EFLOPS (FP32), accelerating the development of intelligent computing capabilities. The scale of intelligent computing power reached 19.6 EFLOPS (FP16).
Continue to improve dividends to return shareholders. China Mobile's mid-2024 dividend was HK$2.60 per share, up 7.0% year on year. The share of profit distributed in cash for the full year of 2024 as a proportion of the profit attributable to shareholders for the year was further increased compared to 2023, continuing to create greater value for shareholders.
Risk warning: 5G development falls short of expectations; industrial Internet business development falls short of expectations; computing power network deployment falls short of expectations.
Investment advice: Maintain profit forecasts and maintain a “better than the market” rating.
Maintaining the profit forecast, the 2024-2026 revenue is expected to be 1079.6/1145.5/1208.6 billion yuan (+7.0%/6.1%/5.5% year-on-year, respectively), and net profit to mother is 140.9/148.3/156.2 billion yuan (+6.9%/5.3% year-on-year, respectively); the current PE corresponding to H shares is 12/11/10x, and the corresponding PB for 2024 is 1.0x; the current PE corresponding to A shares is 16/15, respectively /14x, corresponding to the 2024 PB is 1.6x, maintaining the “better than the market” rating.